Alfa Telecom, a telecom subsidiary of Russia’s top investment consortium Alfa Group, is looking for a Western partner to establish a joint telecom company. The information was reported by the British The Independent on Sunday, which quoted Alfa Telecom’s chief executive Alexei Reznikovich.
Reznikovich told the paper that the company has recently been in “concrete discussions” with Western companies about a merger or forming a joint venture. These discussions have ended. He declined to identify the Western companies, but analysts speculated it could include UK firm Vodafone.
Alfa Telecom owns around 32.9 percent of voting stock in Russia’s second largest mobile operator VimpelCom, which is listed on Nasdaq with a valuation of just under $8 billion. It also has a blocking stake of 25 percent plus one share in rival Russian company Megafon. Alfa Telecom also owes a large stake in Ukraine’s top mobile operator Kyivstar and in Russia’s alternative fixed line operator Golden Telecom. It has recently concluded a $3.3 billion deal with Turkey’s Cukurova Group that will allow it to get a 17 percent stake in Turkcell, Turkey’s largest mobile operator.
Reznikovich said the group was also looking to expand into emerging markets such as Indonesia. The experience in Russia’s new market gave it an advantage over Western competitors, he said. “We want to merge with a Western company or create a joint venture where we will bring expertise in developing markets and they bring expertise in technology,” he said. “We have been in concrete discussions lately. We might be in discussions in the future.”
Mark James, an analyst at Nomura, told The Independent: “Growth is slowing in developed markets. Vodafone has got developed Western European markets relatively sewn up and has stated its desire to expand in places like Russia and India, making it a potential merger partner. But companies like Telefonica, Belgacom or Swisscom could also be interested.”
