Political turmoil puts Orascom Telecom, Vimpelcom merger at risk: Beltone

Ahram Online, Monday 7 Feb 2011

The ongoing uncertainty surrounding Egypt's political future has created a further stumbling block to the already complicated deal

The political turmoil engulfing Egypt for the past two weeks has jeopardised the planned merger between Orascom Telecom (OT) and Wind Italy with Vimpelcom, according to Beltone Financial.

"Telenor’s strong opposition to the deal still puts the deal’s completion at risk, especially given the added political risk arising over the last two weeks in Egypt, which strengthens Telenor’s position in the arbitration against the deal," reads a Beltone report.

Earlier this week, OT and Wind Italy were reported by Reuters to be continuing to work on the planned merger deal with Vimpelcom, despite arbitration procedures by Telenor, the latter’s major shareholder against the potential deal which started in January 2011.

"This could create serious complications for the merged entity’s future, given that the three major shareholders would be in dispute (Alfa and Wind Telecom against Telenor)" Beltone expects. "We think this is very negative in terms of making strategic decisions in the future for the merged telecom entity."

The investment bank added in its release that if Wind Telecom failed to finalise this deal with Vimpelcom, it will be the second time in less than 12 months that it fails to close an M&A deal, which can be considered "an alarming fact meaning that the group will not be able to close any deals unless it reaches a resolution with the Algerian government" (which has been the major stumbling block to all of OT’s planned deals).

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