“Beeline” receives a residence permit – Business – Kommersant

Veon holding, which owns the Russian telecom operator Vimpelcom (Beeline brand), announced its intention to withdraw from the asset. The foreign origin of the shareholder has imposed many restrictions on the operator in the current political situation, VimpelCom admits. In particular, the company lost access to the state order. Sources of “Kommersant” claim that we are talking about the transfer of management of Russian business to top management. The transfer of the asset to Russian jurisdiction, lawyers believe, will allow Veon to avoid possible sanctions, and VimpelCom to satisfy the requirements of the regulator.

Dutch holding Veon announced about holding a competitive sale process in respect of its Russian asset Vimpelcom, follows from the message of the holding. Veon is currently exploring options to “ensure that the best possible outcome is achieved for all stakeholders,” it said. Vimpelcom itself confirmed that the shareholder has launched the process of restructuring the ownership of the operator. A Kommersant source familiar with the details of the process claims that we are talking about transferring control of Russian business to top management.

A lot of regulatory restrictions were imposed on the company due to the fact that the company’s shareholder is a foreign holding company from an unfriendly jurisdiction, the press service of VimpelCom noted: “This has led to the fact that the company is in a less favorable position compared to other telecom players. -market”.

In particular, taking into account the previously adopted amendments to the law on public procurement (see “Kommersant” dated February 20th and June 15 2021) from 2023, structures of international groups of companies doing business in the Russian Federation with a share of direct or indirect ownership of more than 10% will not be able to participate in the state order. In September, the Ministry of Digital Transformation asked to make an exception for VimpelCom so that it could supply services to departments until January 1, 2024. From 2018 to 2022 inclusive, the company participated as a public procurement contractor worth RUB 9.2 billion.

Veon’s annual report stated that the holding’s reputation had suffered “as a result of the association of sanctioned persons with the largest shareholder.” In August, the company also admitted that it would have to stop the development of networks in Russia due to sanctions. Veon also said it was exploring the possibility of optimizing assets in “inappropriate” markets. Earlier, in June, Veon sold an asset in Georgia to a local businessman, by 2023 it is planned to sell tower assets in Bangladesh, Pakistan and Ukraine.

According to Veon, in the second quarter of 2022, Russia accounted for more than half of the holding’s revenue, that is, a little over $1 billion. In terms of the number of mobile subscribers (47 million), PJSC VimpelCom was second only to Pakistani assets (75.5 million subscribers). PJSC revenue in 2021 amounted to RUB 286 billion. with a net profit of 3 billion rubles.

By leaving Vimpelcom, Veon will primarily reduce its reputational risks, says Sergey Glandin, a partner at the NSP law firm: “Foreign companies are now being pressured to leave the Russian market.” Veon, this will help to avoid possible imposition of sanctions, Sergey Glandin noted. Veon has long been interested in leaving VimpelCom.

Back in 2019, Bloomberg reported that the holding was going to sell VimpelCom in 2018 and was negotiating with Rostelecom, but the parties could not agree on a price.

In the current situation, it is the sale of VimpelCom to a third-party Russian investor that would be difficult, since there are restrictions on the withdrawal of capital from the country, notes the interlocutor of Kommersant in the telecommunications market: “Such a deal required the approval of a government commission. In this case, the transaction will be cashless. In addition, finding a buyer for such an asset is not easy in general, given the economic situation, he adds. According to Finam analyst Leonid Delitsyn, the business value of the entire Veon holding is $10.7 billion, but the market capitalization differs by the amount of debt and amounts to only $911 million. He estimates VimpelCom’s business at about $5 billion.

Taking into account the situation that has been developing over the past eight months, the most logical and reasonable way for Veon to exit VimpelCom is to transfer the asset to management, says Valery Zinchenko, Senior Partner at Pen & Paper: “This form will allow us to maintain the correct market status and avoid operational difficulties for the operator, as well as meet the legal needs of regulators.” The transfer of business to top management is the second most popular way for foreign companies to leave Russia, noted at Oks Labs. At the end of July, out of more than 50 closed deals, management acted as a buyer in about 30% of cases.

TelecomDaily CEO Denis Kuskov believes that the Russian ownership of VimpelCom may have a positive impact on the company’s business: “After the merger with the Ukrainian Kyivstar in 2009, the company did not receive significant investments to develop the network.” Now the company will be most focused on development, taking into account the economic and political situation in the country.

Anastasia Gavrilyuk, Yulia Tishina