Telenor Group today announced its intention to sell all of its shares in VimpelCom Ltd., where the company has an economic stake of 33 per cent. Telenor Group said that it will now fully focus on creating value in telecom business of its own where it operates in 14 markets.
Telenor Group and VimpelCom both have presence in Pakistan through Telenor Pakistan, wholly owned subsidy of Telenor Group, while Mobilink is wholly owned operations of Vimpelcom.
“The VimpelCom asset, where Telenor holds a minority position without the possibility to fully control the company, has been challenging. Based on a strategic review by the Board and the CEO, and after due considerations, Telenor Group has decided to divest its shares in VimpelCom Ltd.” said Mr. Svein Aaser, Chairman of the Board of Directors of Telenor Group.
Telenor said that its VimpelCom Ltd. stakes has gradually contributed less to the value of Telenor Group, however on the other hands the value of Telenor’s core operations have increased rapidly. This is evident from the fact that the market value of the VimpelCom Ltd. shares represents approximately eight per cent of Telenor’s market capitalization, said Telenor Group in a statement.
“We have maintained growth through solid performance from our controlled operations and will continue to focus on value creation in our core operations. Our ambition is to drive profitable growth in the telecom business, where Telenor will continue to monetize on the exponential data usage taking place across our footprint,” said Mr. Sigve Brekke, President and CEO of Telenor Group.
Telenor Group has invested NOK 15 billion in VimpelCom. The company has received NOK 20 billion in dividends and the current market value of the ownership stake is approximately NOK 20 billion.
Telenor Group will explore all options to divest its shares in VimpelCom Ltd., and will seek to find the best solution for Telenor and its shareholders.
A timeframe for the divestment has not been set, but a process like this will normally take some time. As a result of today’s announcement Telenor will not convert its VimpelCom Ltd. preferred shares into common shares.
The Vimpelcom Ltd stock declined in the third quarter and ended at USD 4.11 per share vs book value of USD 5.64 per share.
Vimpelcom Share Value over last three months
As a consequence of the intention to divest, impairment evaluations going forward will be based on the market price of the Vimpelcom Ltd share.This will result in a non-cash impairment of approximately NOK 7.5 billion in the third quarter.