VimpelCom, a leading Russian mobile operator, is considering a North American expansion amid negative market sentiments over the company’s already weighty debt level.
VimpelCom CEO Jo Lunder told Bloomberg earlier this year that his company “has an interesting opportunity in Canada” and may consider organic growth or acquisitions there. He declined to elaborate, however, leaving it to analysts to ponder which of Canada’s three largest mobile operators – Rogers Wireless Communications, Bell Mobility or Telus – might be involved.
A fourth possibility is Toronto-based Globalive Wireless, serving a modest 2% of Canada’s mobile clients under the Wind Mobile brand name and controlled since January by Orascom Telecom Holding, a Cairo-headquartered VimpelCom asset. VimpelCom first bought into OTH in 2011 following a major merger with Italy’s Wind Telecom that created the world’s sixth biggest mobile firm by subscribers.
Analysts shared with Bloomberg in late February that with the Canadian move, Russia’s third largest mobile company risks increasing its current debt-to-EBITDA ratio, the third highest among Russia’s “Big Three” telecom operators. Bloomberg estimated the ratio at 2.52 as of Feb. 27, 2013. American depositary receipts of VimpelCom traded at that time at “the lowest valuation in seven weeks versus MegaFon,” which ousted VimpelCom from its runner-up position in Russia in 2010.
Canada was not on the list of priority markets that VimpelCom announced last November. While in Russia, its priority area, the company has been watching its revenue shrink, Bloomberg reported.
VimpelCom already has a history of dropping the ball on some of its international investments. Last October it announced the selling of its units in sub-Saharan Africa. Exiting from Vietnam, and later from Cambodia and Laos, capped the firm’s April decision to bow out of the entire southeast Asian market.
Update March 21, 2013
Vimpelcom is putting up for sale its subsidiary Wind Mobile, Canada’s largest new wireless company, reports The Globe and Mail. UBS AG is said to be working for VimpelCom on the sale. Another person close to the situation said Wind CEO Anthony Lacavera’s holding company, AAL Corp., is teaming up with Egyptian billionaire and telecom magnate Naguib Sawiris’s investment firm Accelero Capital to consider a bid, for which they had already secured additional financing, the Canadian newspaper adds.
