UPDATE 2-Vimpelcom buys Armenia telco for 382 mln euros
By Julie Tolkacheva
Reuters, UK
Nov 3 2006
MOSCOW, Nov 3 (Reuters) – Russia’s number two mobile phone firm
Vimpelcom (VIP.N: Quote, Profile, Research) outbid Abu Dhabi-based
Etisalat and Russian conglomerate Sistema (SSAq.L: Quote, Profile,
Research) to buy Armenian Armentel for 382 million euros ($488
million), Vimpelcom said on Friday.
Vimpelcom said in a statement that it had signed a deal to buy 90
percent of Armentel from Greece’s largest telecoms operator OTE
(OTEr.AT: Quote, Profile, Research) for 341.9 million euros for the
stake and assume around 40 million euros in net debt and obligations.
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Armentel is a fixed-line operator in Armenia with mobile licences on
the GSM, the world’s most widely used cell phone technology, and CDMA
standards, the dominant technology standard for U.S. cell phones. It
has 600,000 fixed-line subscribers and 400,000 GSM clients.
"With approximately 40 percent mobile market share, Armentel occupies
a strong position in the Armenian market and we will work to enhance
the position," the statement quoted Vimpelcom Chief Executive
Alexander Izosimov as saying.
"It is a wonderful deal," said Deutsche UFG analyst Alexei
Yakovitsky, adding that Armentel was acquired at 6 times 2005 EBITDA.
"This is very cheap."
By 1540 GMT, Vimpelcom traded down 0.33 percent at $64.43.
Yakovitsky said the deal did not have much impact on the price as it
was about 3 percent Vimpelcom’s enterprise value of $15 billion.
"This is not a major deal, but it is good and is certainly value
accretive," Yakovitsky said.
OTE bought Armentel in 1998 but said earlier this year it would sell
it because the unit was not in line with its strategic focus. In
June, OTE short-listed four bidders, including Etisalat and Sistema.
"It’s good news because OTE exited Armenia, a country away from its
core portfolio in the Balkans at a fair price," HSBC Pantelakis
analyst Vangelis Karanikas said.
OTE shares rose 0.48 percent to close at 20.80 euros in Athens.
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The bidding was over on Sept. 18 and since then the market has been
rife with rumours as to who had won the tender.
The world mobile phone market is now short of acquisition targets
with cash-rich international majors hunting for purchases to expand
beyond their satiated markets.
Russian cellphone companies have joined the rush as local market
penetration reaches more than 100 percent.
Vimpelcom spokeswoman Yekaterina Osadchaya said that Vimpelcom, a
purely mobile phone firm, did not plan to sell the fixed-line part of
Armentel.
"When we bid for the company, we understood pretty well that the
fixed-line business is very important for it. We will try to combine
fixed-line and mobile services for the first time," she said.
(Additional reporting by George Hatzidakis in Athens)