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We are moderately upbeat on news that VimpelCom acquired a wireless company in the Irkutsk region. One the one hand, this is quite profitable transaction, while on the other, the amount is insignificant for the operator. For this reason, we will not likely see the company’s stock valuations head north.
VimpelCom reported on August 13 an acquisition of 100% in wireless company Korporatsiya Severnaya Korona (Corporation North Crown) which holds licenses to render wireless services in the GSM-900/1800 and D-AMPS standards in the Irkutsk region for $232 mln from Tele2. As of the end of June 2007, KSK’s subscriber base topped 571,000 users (around 21.5% of the market). VimpelCom’s total subscriber base exceeds 57 mln users.
We are upbeat on news that VimpelCom has gained a foothold in a new and promising region of the Siberian Federal District. Although cellular penetration in the Irkutsk region tops 100%, the price paid by the company per user ($406) is not high even compared to cost per user in VimpelCom itself (around $400), since it is of vital importance for the company to have full coverage in all Russian regions in order to be a full-fledged federal mobile operator.
Overall, this development is upbeat. However, the amount of the transaction is so small (around 1% of the company’s market cap) that we do not think it will produce any tangible impact on VimpelCom’s stock valuations.
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VimpelCom
Capitalization: $7 312 673 737,20
Common shares:
Price: $7,13
Delta week: 0,00%
Delta month: -19,0%
Delta year: -82,7%
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0.244
0.616
