VimpelCom Group: Telecel’s new Russian Parent

We’ve just found out that VimpelCom; the Russian based telecom’s giant recently merged with Egypt’s Orascom. What this effectively means is that Telecel Zimbabwe is now part of the world’s sixth largest mobile services group (with over 186 million subscribers worldwide). Orascom has a 60% stake in Telecel Zimbabwe. The local operation falls into the Orasom-VimpelCom group’s African interests along with Leo (Namibia), Telecel (Burundi & Central African Republic), Djeezy (Algeria), and Mobinil (Egypt).

By right of a 51.7% stake in Orascom Telecom Holding S.A.E and 100% of WIND Telecomunicazioni S.p.A, (Italy), VimpelCom is now the controlling shareholder of the new behemoth. VimpelCom’s other operations around the world can be found in Russia (its roots), Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Armenia, Georgia, Kyrgyzstan, Vietnam, Cambodia, Laos, Bangladesh, Pakistan, Italy and Canada. The company’s operations are divided into five core regions, namely:

• Europe and North America
• Russia
• Ukraine
• Commonwealth of Independent States (CIS)
• Africa and Asia

According to the company’s fact sheet, the five units report to global headquarters in Amsterdam (Netherlands), while it is listed on the New York Stock Exchange (NYSE). VimpelCom represents once another affirmation of the shift in global economics from the traditional western markets, to emerging markets like the BRICS (Brazil, Russia, India, China, and South Africa). Through complex structures it has emerged from its Russian base to scale the world. Its Russian unit is the most valuable brand in the nation, commanding a 7.9 billion Euro value.

We expect Telecel Zimbabwe to build on the critical mass of the VimpelCom Group. On the capital raising front VimpelCom has a bottomless war chest, in the first quarter results of 2011 the company generated revenues of US$5,5 billion across its markets. It has also recently raised US$2.2 Billion on the European financial markets, which makes for a deep capital expenditure pool. Overall the group’s African interests south of the Sahara are not significant assets; a takeover bid by an Africa focused operator is possible in future.

For the time being the key factors at play in Zimbabwe are to do with Telecel’s longstanding ownership issues and whether or not VimpelCom can dedicate serious money to the Zimbabwe operations.