The Cellular Operator VimpelCom and its shareholder Altimo attempting to enter the Belorussian market since 2001 are likely to fail again. Velcom Cellular Operator Shareholders, whose purchase is negotiated by the Russians, have also got a bid from Telekom Austria.
One of the largest Eastern Europe companies Telekom Austria is negotiating the purchase of the controlling interest in a Belorussian cellular operator, the information agency Reuters informs referring to the Austrian agency APA. The transaction charge is estimated at €1,6 billion. ($2.2 billion.) According to one of the investment bankers, whose words are recited in APA, the question is of Velcom (its legal name is Cellular Digital Communication, CDC). The Austrian Company refused to give any comments.
Telekom Austria provides cellular and fixed-line telephony services, as well as the internet access. The company’s fixed-line subdivision eTel operates in Austria, Czech Republic, Slovakia, Liechtenstein, Hungary, Slovenia, Serbia, and Bulgaria. The company serves more that 10.2 million cellular subscribers. Its revenue in 2006 came to €4,8 billion ($6.62 billion), net profit amounting to €561 million ($773 million).
64,5% of Belorussia ten million population use cellular communication, GSM and CDMA-2000/450 communication provided by three and one operators, relatively. CDC is the second after the local MTS subsidiary in Belorussia, servicing 2.6 million. of subscribers. The Operator CDC was created by Samavi bothers, the Belorussia Syrian Community men. In 2004 the Belorussian Government nationalized the enterprise, forcing the enterprise shareholders hand over the controlling interest to the Government (51%).
However, after Russia barred Belorussia from privilaged oil and gas deliveries the Government had to start active privatization, including telecommunication. In particular, in August the State institutions were known to sell their shares in CDC, so the operator’s shares concentrated in Brothers Telecom (SB Telecom), Samavi offshore, the given step estimated by experts as intermediary before the operator’s sale to a large investor.
The Russians have been considered the main bidders for CDC so far. The information concerning negotiations between Altimo and CDC owners seeped into the Russian market last year. Alexander Izosimov, VimpelCom Director General confirmed the company’s interest in the Belorussian market (VimpelCom 44% of voting shares belongs to Altimo). VimpelCom refused to give any comments.
CDC possible bidders are to face political problems as well. Thus, Anatoly Lebedko, the leader of the opposition United Civil Party of Belorussia turned to the Prosecutor’s Office claiming to investigate the CDC State share alienation. “No one was engaged in holding the tender, that is why everything that happens might be closely connected with corruption”, - the Belorussian politician says. (cnews.ru)
VimpelCom Group includes cellular companies operating in Russia, Kazakhstan, Ukraine, Uzbekistan and Tajikistan, and recently acquired companies in Georgia and Armenia. The Company operates under the ‘Beeline’ brand. The VimpelCom Group’s license portfolio covers approximately 240 million people. Geographically it covers 78 regions of Russia with 136.5 million people, representing 94% of Russia’s population as well as the entire territories of Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Georgia and Armenia. The company’s net income and revenue for Q3 2006 was $268,4 million and $1,358 million respectively.
Altimo was created in 2005 from Alfa Telecom, which itself was established in 2004 to hold the telecoms investments of the Alfa Group Consortium. Those assets are in Russia, the CIS and other markets. The companies in which Altimo invested have a footprint, which covers a total population of 334 million people and have over 150 million subscribers. Growth levels in the Russian telecommunications market are impressive, increasing by over 50% in recent years.