VimpelCom Says Wind Isn’t for Sale in Rebuff for Sawiris
VimpelCom Ltd. (VIP) Chief Executive Officer Jo Lunder said the mobile carrier will stick to its Wind Telecomunicazioni SpA unit, keeping the Italian asset off limits to former ownerNaguib Sawiris, the Egyptian billionaire who is seeking to re-enter the market.
VimpelCom today reported a 4 percent gain in Italian customers for the past year as first-quarter net income for the Amsterdam-based carrier with divisions from Russia to Bangladesh rose 28 percent. Lunder said Wind, VimpelCom’s second-biggest business, is a keeper because it’s growing faster than rivals.
“We are proud of Wind, which is outperforming competitors by growth in subscribers and revenue,” Lunder said in a phone interview. “We don’t plan to sell.”
Sawiris, who sold Wind along with assets in Algeria, Pakistan and Bangladesh to VimpelCom two years ago, told Bloomberg News this month he is seeking to re-enter the Italian market and may look into assets including Wind. Late last year, he tried unsuccessfully to buy a stake of at least 2 billion euros ($2.6 billion) in market leader Telecom Italia SpA. (TIT) Telecom Italia is now studying a combination with H3G, the Italian unit of Li Ka-shing’s Hutchison Whampoa Ltd. (13)
Italy accounts for about 29 percent of VimpelCom’s revenue, trailing only Russia. VimpelCom said Wind’s fixed-broadband revenue increased 9 percent in local currency in the first quarter and mobile Internet revenue added 29 percent as the unit gained market share. Subscribers rose to 22 million from 21.1 million a year earlier.
American depositary receipts of VimpelCom rose 0.5 percent to $11.31 yesterday in New York, valuing the company at $19.9 billion.
For the company as a whole, earnings before interest, taxes, depreciation and amortization increased to $2.35 billion from $2.31 billion a year earlier. Profit was in line with analyst estimates. The Ebitda margin widened to 42 percent of sales from 41.1 percent. Net income rose to $408 million from $318 million a year earlier.
VimpelCom is working to reduce spending and improve operations to help cut $28.6 billion in debt resulting from the acquisition of Wind and other assets from Sawiris in 2011.
The company is still reviewing options for its Canadian business, where it can either expand or sell its assets, Lunder said today. The company isn’t able to estimate when its long-running discussions with the Algerian government will be concluded, he said. Algerian government has been in talks with the company for more than a year about buying a controlling stake in its local Djezzy carrier.
VimpelCom also controls Cairo-based Orascom Telecom Holding SAE after buying a majority stake in the mobile carrier in 2011. That unit reported a first-quarter loss of $208.3 million after a $115.7 million profit a year earlier as revenue slid 5.6 percent, hurt by declines in Algeria’s and Pakistan’s currencies against the U.S. dollar.
Orascom Telecom, which operates in the Middle East, Africa, and Asia, yesterday told holders to reject a buyout offer from billionaire Mikhail Fridman, whose investment firm is the biggest shareholder in VimpelCom. Orascom shares were valued at 86 cents a share by its adviser, HC Securities & Investments, compared with Fridman’s offer of 70 cents, Orascom said.
Vimpelcom’s total mobile subscribers rose 4 percent from a year earlier to 215 million users, boosted in part by a competitor’s shutdown in Uzbekistan. VimpelCom cut commercial costs in Russia by shifting to a revenue-sharing model with distributors and reduced human-resources costs.
Net debt on March 31 widened 4 percent from the end of December to $22.9 billion, while the ratio of net debt to Ebitda narrowed to 2.3 from 2.6 in the fourth quarter.
To contact the reporter on this story: Ilya Khrennikov in Moscow at email@example.com