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. Last Updated: 07/27/2016

VimpelCom, Golden in $4.3Bln Deal

Itar-TassVimpelCom's Izosimov, left, and Golden Telecom's Vandromme toasting their deal after a signing ceremony Friday.
VimpelCom, the country's second-largest mobile phone operator, announced Friday that it would acquire fixed-line and Internet firm Golden Telecom for $4.3 billion, a deal that could give it a head start over its rivals in providing one-stop services.

Under the deal, VimpelCom will pay $105 in cash for each of all the outstanding shares of Golden Telecom, the two operators said in a joint statement.

The acquisition, which still has to be formalized by Jan. 18, has been unanimously approved by the boards of both companies and would not require shareholder backing.

"We are delighted to offer the advantages and growth potential of this powerful strategic combination to our shareholders," VimpelCom chief executive Alexander Izosimov said Friday in the statement.

Jean-Pierre Vandromme, chief executive and director of Golden Telecom, also praised the deal, calling it "a positive development for Golden Telecom shareholders and employees.

"It represents an opportunity for our shareholders to capture the significant value that has been created at Golden Telecom over the last few years," he said.

The companies said last month they were in talks that might lead to a merger.

The deal brings together VimpelCom's 62 million mobile subscribers across Russia, Ukraine and Kazakhstan with Golden Telecom's 400,000 broadband customers and its Wi-Fi networks in Moscow and St. Petersburg.

Altimo, the telecoms arm of Mikhail Fridman's Alfa Group, has a 44 percent voting stake in VimpelCom, while Norway's Telenor owns 29.9 percent.

Alfa and Telenor also own 26.6 percent and 18.3 percent, respectively, in Golden Telecom, the country's largest independent fixed-line operator.

The acquisition could signal a thawing in relations between Altimo and Telenor, which have been locked in a dispute over Ukrainian mobile operator Kyivstar, which they own jointly.

"This looks like a strategic rapprochement for the sake of clinching a good deal," said Nadezhda Golubeva, a telecoms analyst at Aton. "The larger picture may be slightly different though, since Altimo and Telenor had never had any disputes over Golden Telecom."

Altimo vice president Kirill Babayev expressed cautious optimism Friday that the consensual purchase of Golden Telecom was "another step forward toward restoring full working relations between both companies."

A Telenor official declined to comment Friday, citing company policy.

The deal, which had been widely expected, will better position VimpelCom to diversify services and provide new solutions for its clients, capitalizing on Golden Telecom's strong position in the broadband market, analysts said.

"The acquisition would allow VimpelCom to provide new fixed-line services, which its rival MTS is already providing through its ownership of MGTS and Comstar," said Irina Astafiyeva, a senior analyst at J'son & Partners.

The communications market is moving increasingly toward the consolidation of fixed-line and mobile services, Astafiyeva said. "Apart from expanding its profit base through the new addition, VimpelCom would be able to leverage those extra capabilities to provide its clients with a plethora of additional services, such as broadband Internet access and Wi-Fi."

"With the acquisition, VimpelCom becomes the first and only telecoms operator that can provide convergence mobile services in Russia," Aton's Golubeva said. "Those services are going to be the main drivers and sources of earnings growth for mobile-services providers in the future."