ECONOMY

Vimpelcom buys Armentel

MOSCOW – Russia’s No 2 mobile phone firm Vimpelcom outbid Abu Dhabi-based Etisalat and Russian conglomerate Sistema to buy Armenian Armentel for 382 million euros ($488 million), Vimpelcom said yesterday. Vimpelcom said in a statement that it had signed a deal to buy 90 percent of Armentel from Greece’s largest telecoms operator OTE for 341.9 million euros for the stake and assume around 40 million euros in its net debt and obligations. Armentel is a fixed-line operator in Armenia with mobile licenses on the GSM, the world’s most widely used cell phone technology, and CDMA standards, the dominant technology standard for US cell phones. It has 600,000 fixed-line subscribers and 400,000 GSM clients. «With approximately 40 percent mobile market share, Armentel occupies a strong position in the Armenian market and we will work to enhance the position,» the statement quoted Vimpelcom Chief Executive Alexander Izosimov as saying. «It is a wonderful deal,» said Deutsche UFG analyst Alexei Yakovitsky, adding that Armentel was acquired at six times 2005 EBITDA. «This is very cheap.» Yakovitsky said the deal did not have much impact on the price, as it was about 3 percent of Vimpelcom’s enterprise value of $15 billion. «This is not a major deal, but it is good and is certainly value accretive,» Yakovitsky said. OTE bought Armentel in 1998 but said earlier this year it would sell it because the unit was not in line with its strategic focus. In June, OTE short-listed four bidders, including Etisalat and Sistema. «It’s good news because OTE exited Armenia, a country away from its core portfolio in the Balkans, at a fair price,» HSBC Pantelakis analyst Vangelis Karanikas said. OTE shares rose 0.48 percent to close at 20.80 euros in Athens. The world mobile phone market is now short of acquisition targets with cash-rich international majors hunting for purchases to expand beyond their satiated markets. Russian cell phone companies have joined the rush as local market penetration reaches more than 100 percent.