Russian group Vimpelcom will have to rethink its development strategy should its shareholders reject a $6 billion-plus purchase of Orascom Telecom, its chief executive said on Wednesday.
"I don’t think we’ll do anything drastic. I think we’ll pull back, reassess and maybe revisit the strategy but in principle I would still like to think that we would go ahead with the deal," Alexander Izosimov told Reuters Insider Television.
Vimpelcom’s bid for control of Egyptian tycoon Naguib Sawiris’s Orascom is opposed by Vimpelcom’s major shareholder Norway’s Telenor.
The row threatens a deal struck in 2009 after years of acrimony between Telenor and Russian billionaire Mikhail Fridman’s Alfa group which resulted in them combining telecom holdings into New York-listed Vimpelcom. Alfa owns its stake in Vimpelcom via its Altimo telecoms group.
"Those two spent a year negotiating how conflicts are being resolved. Now we have a very robust framework and that is being put to a test," said Izosimov.
"The shareholder community is divided. We’re not exactly going to get a unanimous response but I hope they will support it," he said, adding the key moment will come on March 17 when the shareholders will hold a meeting.
Orascom has been locked in long-running dispute with Algeria, which appointed a law firm to advise it on the nationalization of Orascom’s Algerian unit Djezzy.
Djezzy has been Orascom Telecom’s biggest single source of revenue, and uncertainty over its future has confused the deal.
Speaking about protests that have spread across the region including in Tunisia and Egypt, Izosimov said the company was well aware of the risks associated with the potential purchase.
"As you go into emerging markets, it’s not unfortunately only growth and high returns, sometimes you have to deal with the risks. We’ve seen those situations in our existing territories in the CIS and I hope that it goes in waves and the environment will stabilize. People need to talk," he said.
