A Russian investment group backed by billionaire Mikhail Fridman has plans to invest up to $16bn in struggling European and US telecoms companies.
Fridman is co-founder of the Alfa Group, an investment company with multiple interests including a 48% stake in Russian telco VimpelCom and a 13% interest in Turkish operator Turkcell. The Alfa Group is also behind LetterOne, an investment company registered in Luxembourg which claimed to have $15.6bn in credit, equity securities, loan deposits and funds as well as $13.5bn in telecoms assets as of 31st December 2013, though it is not clear if continued political and economic unrest in Russia has devalued those assets in the meantime.
‘LetterOne Technology will be developed through additional acquisitions of controlling and significant influence stakes of sizeable companies (transaction value >$1bn) in the sector, focusing on special situations such as turnaround of distressed and underperforming assets’ reads a statement on the company’s website.
The missive appears to signal Alfa Group’s intention to spread its risks and establish a firmer footing in the European Union as the continuing dispute between Ukraine and Russia destabilises the local economy (Fridman himself hails from Lviv in Ukraine). VimpelCom has seen a series of disappointing financial results in the last twelve months for example, filing a net loss of $700mn for the full financial year ending 31st December 2014. Yearly revenue was down 13%, and 21% in the fourth quarter year on year with adverse currency movements downgrading the value of the rouble blamed.
Other cash rich investors who have previously taken advantage of low stock valuations for European telecoms companies include Carlos Slim, the Mexican billionaire and business magnate behind pan Latin American telco América Móvil. Slim secured a majority stake in Telekom Austria in 2014 after a reported $9.6bn bid to buy out Dutch telco KPN was rejected in 2013.