WIND TELECOM S.p.A. (“WIND TELECOM”) welcomes the positive vote expressed by the majority of VimpelCom Ltd. (“VimpelCom”) shareholders in today’s Special General Meeting (“VimpelCom SGM”) in favour of the issuance of VimpelCom common shares and convertible preferred shares and the increase of VimpelCom’s authorized share capital needed to complete the combination of VimpelCom and WIND TELECOM (the “Transaction”). Following this favourable outcome, the management teams of VimpelCom and WIND TELECOM will proceed in satisfying the conditions precedent for the completion of the Transaction, which is expected to take place in the first half of 2011.
The VimpelCom common and convertible preferred shares that will be issued to WIND TELECOM’s shareholders at the closing of the Transaction as per today’s VimpelCom SGM decision will together represent approximately a 20.0{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} economic interest and a 30.6{e1f18614b95d3cd6e4b3128e1cd15d99b042a60a5a19c19b7a8e07e7495efa10} voting interest in the enlarged VimpelCom group, which will temporarily counterbalance WIND TELECOM’s lack of representation in VimpelCom’s board. The voting rights associated with the convertible preferred shares are expected to expire in five years, unless the WIND TELECOM shareholders elect to convert their preferred shares into common shares at the then prevailing full market VimpelCom share price.
WIND TELECOM’s management confirms its strong belief in the merits of this combination which will create the world’s sixth largest mobile telecommunications carrier by subscribers with pro forma net operating revenues of US$21.3 billion and pro forma EBITDA of US$9.4 billion for the year ended 31 December, 2009, and in the synergies and value to be created through it as reiterated in VimpelCom’s statement of today.
The stronger cash flow of the combined group will allow the enlarged VimpelCom to strengthen its balance sheet over time, leading to growing shareholder value, while the net debt-to-EBITDA ratio is expected to decline below 2.0x within two years, placing the company in a stronger position that other global telecom industry players.
The individual operations held by Orascom Telecom are expected to further solidify their position by securing the advantages of greater scale and scope allowing them to continue to compete and maintain their market leadership in an industry moving rapidly towards consolidation, while capitalising on a more robust free cash flow structure to support in-market investment and expansion. Furthermore, the extension of the international footprint of the enlarged VimpelCom will provide Wind Telecomunicazioni with more development opportunities through an increased investment potential thereby placing the leading alternative fully integrated Italian operator in a perfect position to capitalize on its successes over the last 5 years and to leverage on the boom of data services in Italy, one of the most profitable telecoms markets in Europe.
WIND TELECOM is progressing in the work required to de-merge certain assets of OTH (“Orascom Telecom Spin-off”) and Wind Telecomunicazioni (“Wind Italy Spin-off”) in line with the strategic rationale mentioned in previous press releases. The WIND TELECOM interests in these assets, which principally comprise Orascom Telecom’s investments in Egypt and North Korea and Wind Telecomunicazioni investment in WIS, the international voice, data and IP services and Libero, a leading Italian portal, will be transferred to the current shareholders of WIND TELECOM. Both the Orascom Telecom Spin-off and the Wind Italy Spin-off are subject to a number of conditions precedent, including, in the case of the Orascom Telecom Spin-off, regulatory approval and approval at an Extraordinary General Meeting of Orascom Telecom shareholders. The final envisaged structure aims to sustain future growth and value creation for shareholders.
Naguib Sawiris, Executive Chairman of WIND TELECOM, said: “Following the industry trend of consolidation, we believe there will be only space for larger global operators in the market that will be able to benefit from economies of scale and scope. We look forward to continuing to play a significant role in the global telecom industry as part of one of the biggest telco players in the world.”