CAIRO/MOSCOW: Emerging markets telecoms group Vimpelcom wants to delist Cairo-based subsidiary Orascom Telecom Holding (OTH) from the Egyptian and London stock exchanges so it can manage it directly, two sources said yesterday.
The move will also allow Vimpelcom to cut costs associated with running the Egyptian office and avoid regulatory and political risks, a source familiar with Vimpelcom’s plans and a source close to Vimpelcom said. Vimpelcom acquired a controlling stake in OTH in 2011 along with 100 percent in Italy’s Wind from Egyptian tycoon Naguib Sawiris in a $6bn-plus deal, expanding outside its Russian home market.
Together with subsidiaries, Vimpelcom owns 51.92 percent of OTH, which has mobile businesses in Canada, Algeria and other emerging markets such as Bangladesh.
The purchase of Wind and Orascom, which was overshadowed by a bitter shareholder dispute at Vimpelcom, saddled the company with heavy debts and prompted it to launch a strategic review of the assets.
The company has already sold businesses in Vietnam and Cambodia and sources say it may exit more emerging markets.
It is also struggling to end uncertainty over the fate of its lucrative Algerian business Djezzy that the Algerian government wants to nationalise.
“This is part of the strategy. There is a task to run the assets directly, which will help to improve the quality of management of the businesses such as (Djezzy) in Algeria,” a source close to Vimpelcom said. “Vimpelcom spends around $50m a year on its Cairo HQ, and taxes in Egypt are very high,” said another source familiar with Vimpelcom’s plans.
The source said material regulatory risks, such as extra tax claims, and political risks due to broader instability, added to the reasons for the move.
Reuters
