Egyptian mogul confident over Russian telecom merger

By ASSOCIATED PRESS
October 5, 2010 23:14
1 minute read.

CAIRO — Orascom Telecom's chairman said Tuesday there was 90 percent chance that the planned merger of his investment company and Russia's VimpelCom Ltd. will be finalized, despite uncertainty over the fate the Egyptian telecom giant's Algerian subsidiary.

VimpelCom and Naguib Sawiris' Weather Investments SpA — which owns most of Orascom Telecom — had announced on Monday a $6.6 billion deal that would create the world's fifth largest mobile telecommunication service provider.

The deal would give VimpelCom, via Weather, 51.7 percent of Orascom Telecom and all of Italy's Wind Telecomunicazioni SpA, both of which are headed by Sawiris. A potential question mark was Djezzy, OT's lucrative Algeria subsidiary that has been locked in a bitter feud with Algiers over taxes.

Sawiris told reporters that Djezzy's struggles had been a key factor in his decision to strike a deal with VimpelCom, and that he believed Russia's relationship with Algeria may help solve the dispute that has already scuttled an earlier deal between OT and South Africa's MTN Group.

Weather and VimpelCom "have signed a deal that is subject to some refinancing of the debt, some regulatory issues," Sawiris said when asked if he thought Algeria could scuttle the planned merger. "But my gut feeling, the answer would be 'No'."

"But as you know, in any deal, before the closing, you can never be sure," he said, adding that he believed there was a "90 percent" chance the planned merger would be finalized.

OT's shares are up almost 5.6 percent to 5.48 Egyptian pounds near market close Tuesday, a day after the Egyptian stock exchange halted trading in the stock pending a reply from OT about the reports of the possible merger.

The deal is one Sawiris said he would have preferred to wait to conclude to get a better price. But he said he saw little choice given the Algeria dispute with what was OT's chief revenue earner.


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