VimpelCom's Vietnam exit «credit positive»

Dylan Bushell-Embling
26 Apr 2012


VimpelCom's $45 million deal to sell its stake in Vietnamese joint venture GTel Mobile is a “credit positive” move, despite the price being much less than the company has invested, according to Moody's.


VimpelCom this week announced it will sell its entire indirect 49% stake in GTEL Mobile to local partner GTEL.


GTEL will discontinue use of VimpelCom's Beeline brand in the Vietnamese market after a six month transition period.


GTEL Mobile launched services in July 2009 under the Beeline brand. Wireless Intelligence estimated that the operator had an estimated 3.8 million subscribers in 1Q12, around 3% of the Vietnamese mobile market.


VimpelCom bought into the joint venture by paying $269 million for a 40% stake in 2008, and raised that stake to 49% with a further $196 million investment in 2011.


But in a statement, credit ratings agency Moody's said it believed the sale of the stake to be “a credit positive despite the fact that cash proceeds from the disposal of this stake will be incomparably lower than VimpelCom's investment in the business.”


Moody's said VimpelCom's South East Asian operations have consistently generated negative EBITDA, and hinted that VimpelCom might decide to divest its remaining SEA assets in Laos and Cambodia, which have “demonstrated poor subscriber base growth.”


While the disposal of VimpelCom's SEA assets would alone have no impact on VimpelCom's credit rating as they generate less than 2% of the group's revenue, it would be evidence that the company is taking its new efficiency strategy seriously.


Moody's currently rates VimpelCom at Ba3 with a stable outlook.


Dylan Bushell-Embling

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