On July 21, VimpelCom made an official announcement that it had acquired 90% of Sotelco, which holds licenses for cellular communication services in Cambodia, from its own shareholder, Altimo. The remaining 10% of Sotelco shares are owned by a Cambodian entrepreneur, who is VimpelCom's partner.
VimpelCom plans to invest nearly USD 200 million into the project in the next few years. Within 3 or 4 years, the company's plans to raise its market share in Cambodia to about 20% and increase its customer base to nearly 2 million subscribers. It is noteworthy that, in line with the management's estimates, about 18% of the 14 million population of Cambodia use mobile communications.
Cambodia is a poor country in Southeast Asia with high rates of economic growth (the country's GDP for FY 2007 is expected to be 9.6%), but low per capita GDP (nearly USD 1,800, which approximates the level of Chad and North Korea). The country's economy is based on clothes and textile manufacturing.
However, we are upbeat on VimpelCom's expansion into the new markets, since the cost of this expansion is insignificant for the company, while the synergy and the marketing effects may be very large. We note that this is the second landmark deal in the region: earlier, VimpelCom approached the Vietnamese market.
VimpelCom's main rival, MTS, currently operates only in CIS countries. However, AFK Sistema, MTS's largest shareholder, has a subsidiary company in India and plans to acquire a mobile operator in Bangladesh. In general, we are prone to the conclusion that MTS falls slightly behind VimpelCom in terms of development, but this lag is not critical, since the key market for both companies is the CIS.
We currently do not have a recommendation for VimpelCom shares, while our recommendation for MTS is currently under review.
1.169
115.98
