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VimpelCom to sell emerging market units

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VimpelCom will sell several of its emerging market businesses in Africa and Asia as part of a rationalisation of its global telecoms operations to focus on core growth areas.

The Russian telecoms group, which is the world’s sixth largest by customer numbers, has spoken to potential buyers of its sub-Saharan African units from Burundi and the Central African Republic. 

It is also expected to sell its Zimbabwean business – Telecel Zimbabwe – after resolving outstanding ownership and licensing issues.

The three businesses could be valued at more than $60m, according to one person with knowledge of the situation, with about $94m of revenues generated from about 2.8m mobile subscribers across the businesses.

The move is part of a strategy to focus on more mature markets such as Russia and Italy, which make up about 70 per cent of the group’s business.

In Asia, VimpelCom is lining up the sale of its three businesses in Cambodia, where it has more than 1m subscribers, and in Laos, which has about 400,000 subscribers. Including Vietnam, which has already been sold, the unit generated revenues of $69m last year.

VimpelCom created five distinct business units spanning the world following a series of large acquisitions including the purchase of a controlling stake in Italy’s Wind Telecom for $6bn in April last year.

The five decentralised units – Europe and North America, Russia, Ukraine, the Commonwealth of Independent States (CIS), and Africa and Asia – all report to headquarters in Amsterdam.

But the company is now focusing on increasing core earnings and reducing debt. Standard Chartered is advising VimpelCom on the review.

People with knowledge of the strategy said that it was seeking to create a more unified “story” around the telecoms group, which has been criticised by analysts as resembling more of a collection of disparate telecoms assets than a cohesive operator with resulting synergies.

Interest in the African assets has mainly come from telecoms groups looking to buy a first foothold in the markets, he people said. In Asia on the other hand there have been talks with companies already present in the markets seeking to consolidate their position.

Such markets are challenging but also offer potentially high growth given low levels of mobile phone penetration. In Laos, 3G services were launched last year with data bundles offered to customers, and are already present in Zimbabwe and Burundi.

VimpelCom will keep key growth emerging market businesses such as in Algeria – where it is in negotiations with the government over the future ownership structure of its Djezzy business – as well as Pakistan and Bangladesh.

The company has been at the centre of an ownership battle between its largest shareholders, Norway’s Telenor and Russia’s Altimo.

The Financial Times

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