(Releads, adds Vimpelcom stock suspension)
By Maria Kiselyova and Victoria Howley
MOSCOW/LONDON, Oct 4 (Reuters) - Trading in Vimpelcom's
U.S.-listed shares was suspended pending news on Monday after
sources said it was set to unveil a $6.5 billion deal to buy
Egypt's Orascom Telecom and Italy's Wind, a move that could
create the world's fifth-largest mobile operator.
Sources close to the deal said an announcement could be made
as early as Monday, but analysts said the plan may yet crumble
due to uncertainty over whether Orascom's Algerian unit Djezzy,
its biggest single source of revenue, would be included.
Trading of its ADRs on NYSE was suspended, with latest price
fixed at $15.23, up 3.46 percent, NYSE said in a statement.
Algiers, which had rejected Orascom's plans to sell Djezzy
to South Africa's MTN, is trying to nationalise the unit and is
expected to make an offer in the coming months.
"We continue to see the complexity of the deal as an
obstacle to its completion. It is not clear to us why Algeria
would halt the process of buying out Orascom Telecom Algeria,"
Credit Suisse analyst Richard Barker wrote in a note.
If finalised, the deal would help Orascom's holding company
lighten its debt burden and become a player in the one of
world's top five telecoms firms, a goal its Egyptian tycoon
owner, Naguib Sawiris, has talked about since 2006.
The acquisition would mark a major expansion into Asia,
North Africa and the developed European market, for Vimplecom,
which is part controlled by Russian billionaire Mikhail Fridman.
Vimpelcom's chief executive Alexander Izosimov told Reuters
last month that now was a good time for the emerging markets
specialist to expand into developed markets -- which could
include Italy -- to target data services growth.
He added the entire telecoms sector was undervalued, making
acquisitions "more relevant than ever".
Sources familiar with the issue told Reuters the planned
deal was worth a potential $6.5 billion, comprising cash and 20
percent of Vimpelcom's shares.
Trading in Orascom was suspended on Monday after speculation
of the tie-up drove its shares up 4.8 percent on Sunday, and
traders said they expected more gains. Orascom's
London-listed global depositary receipts (GDRs) were up 7.1
percent by 0922 GMT.
SMOOTHING THE WAY
Algerian law gives the government the right to block any
sale of Djezzy to Vimplecom but analysts hope Russian President
Dmitry Medvedev's visit to Algeria on Oct. 6 could help ensure
the lucrative business is not stripped out after a deal is done.
"President Medvedev's visit to Algeria could be an
opportunity to smooth some hurdles to a deal and we cannot rule
out that an announcement may come this week," Barker said.
Medvedev's impending visit has not dissuaded Algeria's
government from questioning Djezzy's chief executive as recently
as last week over allegations that the company violated foreign
exchange rules. Algiers has also hit Djezzy with bills for
hundreds of millions in back taxes.
And previous attempts at high-level political persuasion
have not worked.
Egyptian President Hosni Mubarak has personally lobbied his
Algerian counterpart Abdelaziz Bouteflika on the issue of Djezzy
ownership, even making an impromptu trip to Algeria to offer his
condolences when Bouteflika's brother died.
According to a source close to Orascom Telecom, South
African President Jacob Zuma, on a visit to Algiers, pressed
Bouteflika to allow MTN to buy the unit, also to no avail.
Sources said, however, that the Russians may have more sway.
"There's more of a commercial dimension to relations between
Russia and Algeria than to relations between South Africa and
Algeria," a person familiar with the matter said.
Vimpelcom is jointly owned by Norway's Telenor and Russia's
Alfa Group -- a business empire of billionaire Mikhail Fridman
which also comprises Russia's No.3 oil firm TNK-BP and top
grocery chain X5 Retail Group.
Telenor's shares were down 2 percent at 90.9 Norwegian
crowns on Monday on concerns that a Vimpelcom purchase of the
Sawiris assets will weaken dividend payouts.
Sawiris has also recently been pushing interest in Eastern
Europe -- he said in July Weather was considering a move into
Poland and Serbia, while Orascom last month bid for Kosovo's
state-owned telecom company.
Orascom already operates in markets as diverse as Pakistan
and North Korea.
(Additional reporting by Alexander Dziadosz in Cairo, Christian
Lowe in Algiers and Anastasia Teterevleva in Moscow, Editing by
John Bowker and Lin Noueihed)