Head winds

5 October 2010 By Jason Bush

The Russian mobile operator is paying up for Weather, the holding company of Egyptian tycoon Naguib Sawiris. The $6.6 billion price tag looks inflated given the high debt of Italian operator Wind and the risks weighing on Algerian business Djezzy. Investors are right to worry.

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Russian mobile operator Vimpelcom and Weather Investments, the telecoms holding of Egyptian tycoon Naguib Sawiris, have announced a merger that will create the world's fifthlargest mobile operator, worth around $23 billion and with 174 million mobile subscribers.

Under the deal, Vimpelcom will receive 51.7 percent of Sawaris's Orascom Telecom, a telecoms holding that has investments in several African and Asian countries, together with 100 percent of Italian mobile operator Wind. Orascom's investments in Egypt and North Korea are excluded from the merger. Sawaris will receive 20 percent of Vimpelcom, worth $4.8 billion, together with $1.8 billion in cash.

Vimpelcom's American Depositary Receipts fell 2.17 percent on Oct. 4, the day of the announcement. The company's share price has fallen 14.3 percent since the planned merger was first reported on Aug. 12.

Reuters story

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