Russian operator Vimpelcom and Wind Telecom have completed a $6 billion cash and shares transaction to combine the two companies. As a result of the deal Vimpelcom owns 51.7 per cent of Orascom Telecom Holding S.A.E. and 100% of WIND Telecomunicazioni S.p.A.
The combination of Vimpelcom and Wind Telecom creates a new European-based global operator with operations in 20 countries and a total mobile subscriber base that reached 181 million as of the end of 2010.
In a statement, Vimpelcom claimed this makes it the sixth largest mobile operator in the world by subscribers. However, based on data from the respective companies it is eighth behind China Mobile, Vodafone, America Movil, Telefonica, Orange, Telenor and Bharti Airtel. Not included in the new company are Orascom Telecom's investments in Egypt and North Korea and Wind Italy's Wind International Services S.p.A, all of which are to be demerged.
Still under negotiation is the future of Orascom Telecom Algeria (OTA), which is the Orascom Telecom's biggest single source of revenue. Vimpelcom states that OTA remains a strategically important asset and it is interested in exploring a resolution with the Algerian government which would allow Vimpelcom to retain OTA.
The long-running dispute has so far seen Algeria's government say it will nationalise Djezzy, the brand name for OTA, and has hit the unit with hundreds of millions of dollars in back taxes and barred it from moving profits abroad. It also blocked Orascom from selling the unit to South Africa's MTN, according to an Arab Finance report.
However, Reuters reported that Naguib Sawiris, Chairman of Orascom Telecom was less than hopeful and told a shareholders' meeting on Thursday April 14, "I do not think Vimpelcom will succeed in negotiations in Algeria."
Orascom Telecom CEO Khaled Bichara, who has been appointed to the newly created position of President and Chief Operating Officer of the new company, told the meeting that if Vimpelcom negotiations did not succeed, Orascom would seek international arbitration.
The new company's corporate headquarters are in Amsterdam and it will operate centralized corporate functions with Vimpelcom 's Alexander Izosimov as CEO. The day-to-day business will be run by Bichara through five geographically-based businesses, which include Europe and North America (including Italy and Canada, Russia, Ukraine, CIS, Africa and Asia (including Orascom and South East Asia).
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