VimpelCom-Weather merger allows Altimo to bid for Ukrtelecom

Yesterday VimpelCom Ltd. (VIP US) and Weather Investments signed an agreement to combine the two groups, creating the world’s fifth largest mobile telecommunications carrier by subscribers. The combined entity had pro forma net operating revenue of USD 21.5 billion and pro forma EBITDA of USD 9.5 billion in 2009. VimpelCom, which owns 100% of the leading Ukrainian mobile operator Kyivstar, will pay USD 1.8 bln in cash and issue a 20% stake in the combined entity to Weather shareholders. Weather will contribute 51.7% in Orascom Telecom Holding and 100% of Wind Telecomunicazioni. Yegor Samusenko: This deal allows Altimo, VimpelCom’s major shareholder, to participate in the privatization for Ukrtelecom (UX: UTLM UK). Earlier, the Antimonopoly Committee of Ukraine started an investigation into Altimo’s possible indirect control of the Ukrainian telecommunication market. Through VimpelCom, Altimo could control two of the four largest mobile operators in Ukraine, while controlling the third one through Turkcell. Given that after the merger of VimpelCom and Weather, Altimo’s stake in VimpelCom would be limited to a non-controlling 31.4%, we expect the Antimonopoly Committee to stop its current investigation. Earlier, the media had listed Altimo as a likely bidder for Ukrtelecom.