Vimpelcom, the Russian parent company of the Egyptian Orascom Telecom Holding (OTH), plans to dispose of OTH’s African businesses.
OTH confirmed that there is an intention to sell its Sub-Saharan African businesses, though the company stressed that selling is not the only option.
OTH is considering strategic alternatives; therefore the company is currently performing a strategic review and valuation of its operations in Burundi, Central African Republic and Zimbabwe.
These alternatives include the sale of all, or a material part, of the sub-Saharan African operations either in one transaction or in a series of transactions, the company said.
Vimpelcom is speaking to potential buyers of its Sub-Saharan African units Burundi and the Central African Republic, according to a news report by the Financial Times Sunday. The report also adds that there are expectations to sell Telecel Zimbabwe after resolving outstanding ownership and licensing issues with the Zimbabwean government.
The Vimpelcom move is reportedly part of a strategy that targets more mature markets in Russia and Italy, which make up to 70 per cent of the group’s business.
Head of research at Mubasher Financial Services, Omar El-Alfy said “it’s a move toward lifting burdens.” El-Alfy said that OTH had encountered legal problems with African states; therefore, the company limited its African presence to these three Sub-Saharan businesses.
“OTH stock will not be impacted by this decision, given the small proportion that these three African businesses represent, compared to OTH Algerian subsidiary” El-Alfy said.
Vimpelcom obtained its African businesses after taking control of OTH acquiring a 51.7 per cent stake of OTH’s shares. OTH announced on 19 October that the board members will propose key changes to the company for shareholders to approve. These changes include rebranding the company to Global Telecom Holding, plus a mutual service agreement with the Russian parent company that will help boost and guarantee the quality of services provided by the two entities.