Alfa Group to pour billions into European telecoms

June 03, 2014 - 1:12:28 am

MOSCOW: 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.

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 $7bn deal for Germany’s RWE’s 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 around $20m-$200m — 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.

Reznikovich, CEO of Alfa’s telecoms vehicle LetterOne Telecom, said he was interested in up to five possible acquisition targets in Europe, declining to give more specifics. “We are looking at Russia and southeast Asia, too, but we think that Europe is the most obvious candidate given the dynamic of the sector’s development,” he added.

Alfa Group is flush with cash from last year’s sale of its $14bn stake in TNK-BP to state major Rosneft. After the deal, President Vladimir Putin said he hoped the tycoons would invest the proceeds into Russia. However, tensions between Russia and the West over the Ukraine crisis this year have seen billions of dollars in capital leave Russia despite Putin’s calls for investors to keep their funds at home.

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.

While the company has not yet asked for any regulatory approvals in Europe, Reznikovich said Russia’s tensions with the West could complicate getting clearance from regulators which he said also tend to give preference to local players. Reuters