Russia-focussed telco VimpelCom is considering selling mobile towers belonging to Italian unit Wind Telecomunicazioni (Wind Italy), reportedly valued at about €500m (US$688m).
VimpelCom is looking at the potential sale as a way to help cut Wind’s…
Russia-focussed telco VimpelCom is considering selling mobile towers belonging to Italian unit Wind Telecomunicazioni (Wind Italy), reportedly valued at about €500m (US$688m).
VimpelCom is looking at the potential sale as a way to help cut Wind’s debt pile, which totals about US$14.5bn).
Italian towerco EI Towers and media group Mediaset are seen as natural buyers of towers belonging to either Wind or Telecom Italia (TI), which is also in the process of disposing off towers.
Telecom Italia is advised by Deutsche Bank, sources told TelecomFinance.
According to Italian newspaper Il Sol 24 Ore, EI Towers could seek a financial partner for the transaction. Spanish infrastructure operator Abertis and infrastructure funds such as F2I could also be interested, the report continued.
The paper claimed Wind may decide to sell its approximate 7,000 towers in multiple packages rather than altogether.
VimpelCom’s plans for Wind have been the subject of speculation for some time. Wind and Hutchison Whampoa’s 3 Italia are said to be discussing a potential merger, although both have declined to comment on the matter. Telecom Italia CEO Marco Patuano commented at an investor roadshow last November it was an “open secret” that the companies are back in talks, adding that the two could merge within a year.
A Russian telecoms banker, speaking to TelecomFinance, described Wind’s high leverage as a major problem for VimpelCom, noting that the parent company had big debt issues of its own.
Today, the CEO of major VimpelCom shareholder Telenor, Jon Fredrik Baksaas, had criticised Vimpelcom’s stock performance and some of its operational figures.
The Russian banker played down the idea that VimpelCom could sell Wind, suggesting it might either pursue a merger or divest parts of the business, such as towers or broadband assets.
VimpelCom would be reluctant to proceed with a merger if it meant ceding control of the combined company, he argued. But this might be difficult to avoid given Wind’s high level of debt and consequent low equity value.
As for selling towers, the source said that while this would raise capital, it might not be the best strategic option.
In 2008, Wind and 3 Italia attempted to sell 18,000 of their combined mobile towers through newly-founded company Eiffel which, at the time, were expected to fetch €1.5bn to €2bn (US$2.06bn to US$2.75bn). The process was put on hold and finally abandoned. Abertis and, separately, Italian tower operator DMT in partnership with F2I had expressed interest in the towers.
Meanwhile, TI is also considering selling its domestic towers, said to be worth about €1bn-€1.2bn (US$1.38bn to US$1.65bn). Banca IMI is advising the incumbent alongside Deutsche Bank, according to Il Sol 24 Ore.
An EMEA telecoms infrastructure banker told TelecomFinance that, while any deal would be complicated and take some time, there would be “clear appetite” for the incumbent’s towers. Potential buyers could include a consortium, the source suggested, who is not directly involved in the process.
TI announced last November that it was looking at a valuation of towers in Italy and Brazil as part of its new strategic plan aimed at cutting debt and generally strengthening the balance sheet. In the company’s Q3 conference call, CEO Marco Patuano said these sales would together raise around €2bn (US$2.7bn).
