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Russian mobile phone company gets EBRD finance
A US$ 30 million (€32.1 million) equity investment by the European Bank for Reconstruction and Development (EBRD) in VimpelCom, the leading Russian mobile phone provider, should lead to an expanded and improved service for mobile phones users in and around Moscow. The EBRD investment represents about 3.2 per cent of VimpelCom’s capital.
The investment is being made as part of VimpelCom’s equity and convertible bond offerings on the New York Stock Exchange and alongside a US$ 51.9 million (€55.5 million) equity investment by Norway’s Telenor Mobile Communications. VimpelCom is raising a total of US$ 225.4 million (€241.2 million), which will be used to further the development of its cellular telecommunications business, including expanding its GSM coverage, broadening subscription and improving the IT infrastructure.
"VimpelCom has been one of the pioneers in the Russian mobile phone market and with our support will continue to improve its services," said Izzet Guney, EBRD Director for Telecommunications, Informatics and Media. "As Russia works to overcome uncertain economic conditions, the EBRD’s role in facilitating financing is more important than ever. This deal will send a positive signal to international capital markets of the long-term potential of the telecommunications sector in Russia."
Dmitri Zimin, President and Chief Executive Officer of VimpelCom, said: "We are very pleased to have the EBRD as our shareholder. The EBRD is a very important financial institution for European emerging markets, and its investment in VimpelCom demonstrates its growing commitment to Russia and approval of VimpelCom’s policy of transparency and strong corporate governance."
The EBRD will make its investment alongside Telenor Mobile Communications, a business area of Telenor AS, the leading provider of telecommunications, data and media communication services in Norway. In 1998, Telenor Mobile Communications took a strategic partnership stake in VimpelCom. VimpelCom was the first Russian company to be listed on the New York Stock Exchange.
The EBRD has extensive experience with cellular operators, having financed NMT-450 analogue projects and GSM-900 digital transactions, including Kyivstar in Ukraine, Baltcom in Latvia, Mobifon in Romania and Vipnet in Croatia. In total the EBRD has invested €1.5 billion in telecommunications across central and eastern Europe and the Commonwealth of Independent States.
The EBRD is also working to improve the complex telecommunications regulatory environment in Russia. Mr Guney said: "To achieve further reassurances for private investors, it is necessary that the Russian telecommunications regulatory environment is strengthened, something the EBRD will continue to address in its ongoing policy dialogue with government."
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