Austrians Suspend VimpelCom Entering Byelorussia

AUSTRIANS SUSPEND VIMPELCOM ENTERING BYELORUSSIA

Budapest Business Journal, Hungary
10 Sep 2007 bbj.hu

The Cellular Operator VimpelCom and its shareholder Altimo attempting
to enter the Byelorussian 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 Byelorussian
cellular operator, the information agency Reuters informs referring
to the Austrian agency APA. The transaction charge is estimated at
[email protected],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 [email protected],8 billion ($6.62 billion), net profit
amounting to [email protected] million ($773 million).

64,5% of Byelorussia 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 Byelorussia, servicing 2.6 million. of subscribers. The Operator
CDC was created by Samavi bothers, the Byelorussia Syrian Community
men. In 2004 the Byelorussian Government nationalized the enterprise,
forcing the enterprise shareholders hand over the controlling interest
to the Government (51%).

However, after Russia barred Byelorussia 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 Byelorussian
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
Byelorussia 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 Byelorussian 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.

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