Russian billionaire Mikhail Fridman’s Alfa-Group wants to invest billions of dollars of proceeds from the sale of oil firm TNK-BP into telecoms assets in Europe, looking to capitalise as the industry consolidates.
Mr Fridman has one of the most international portfolios of Russia’s tycoons and has already invested in telecoms, including Amsterdam-based Vimpelcom and Turkey’s Turkcell. His energy fund also recently struck a $7 billion deal for Germany’s RWE oil and gas production arm.
Alexei Reznikovich, in charge of managing Fridman’s telecoms assets, said he was looking at telecoms deals worth “one billion plus” dollars primarily in Europe, as well as smaller deals – worth some $20 million-$200 million – in the United States in adjacent sectors, such as building data centres.
“We think that Europe is currently most attractive because of the consolidation processes that are gathering strength there . . . The time is right [to invest],” he said.
Mr Reznikovich, chief executive of Alfa’s telecoms vehicle LetterOne Telecom, said he was interested in up to five possible acquisition targets in Europe.
Alfa Group is flush with cash from last year’s sale of its $14 billion stake in TNK-BP to state major Rosneft.
After the deal, Russian president Vladimir Putin said he hoped the tycoons would invest the proceeds in Russia. However, tensions between Russia and the West over the Ukraine crisis this year have meant billions of dollars in capital leave Russia.
Mr Reznikovich said the Ukraine crisis had no impact yet on the business, which has over the past few years diversified outside of Russia. The telecom holding firm is incorporated in Luxembourg with headquarters in London.
Fridman’s interest in the challenging European telecoms market comes after another billionaire, Mexico’s Carlos Slim, made a similar bet on the sector in 2012 by buying stakes in Dutch operator KPN and Telekom Austria.
Slim has lost money so far but his lieutenants have said he will stay for the long term and believes in a rebound.
Europe’s telecom companies have been hit by five straight years of revenue declines because of price competition and by regulatory limits on “termination fees”.
Mr Reznikovich said new deals could involve buying firms with significant debt. – (Reuters)
