VEON sells its VimpelCom Laos operations to the Government of Laos for USD 22 million

ລາກ່ອນ Beeline – Its goodbye to Beeline in Lao PDR

VEON has announced that its subsidiary, VimpelCom Holding Laos B.V., has entered into an agreement to sell its 78% stake in VimpelCom Lao Co. Ltd to the Government of Lao PDR for gross proceeds of USD 22 million.

Following the sale, the Government of the Lao PDR will own 100% of the share capital of VimpelCom Laos, as it already held 22%.

The sale of VEON’s operations in Lao PDR has been expected for a while. As at 30 June 2017, VimpelCom Lao had only 289,000 customers, and the mobile operator has been hovering around this low subscriber numbers for the last couple of years.

In 2011, after almost two years of delay, Vimpelcom completed the purchase of the 78% stake in the Laotian mobile network operator Tigo (formerly Millicom Lao). VimpelCom paid USD 65 million for the equity, and approximately USD 23 million for the repayment of debt, repayment of shareholder loan and intra-group indebtedness. At the time of sale, Tigo had managed to obtain 1.2 million subscribers.

While re-branding from Tigo to Beeline, VimpelCom broke a minimum pricing “agreement” between the operators in Laos (Unitel, LTC, ETL, and Beeline) by launching a free call promotion. As a consequence Unitel, LTC and ETL closed their network connection with VimpelCom, resulting in Beeline subscribers not being able to make, or receive any calls from subscribers on other networks in Laos and vice versa. The regulator stepped in to help with negotiations between the parties but with no luck. Seeing no progress for months, the regulator solved the issue by introducing its minimum pricing in the market.

Nevertheless, VimpelCom (Beeline) subscribers churned to the other operators, and they did not manage to regain the subscribers confidence. Beeline started focusing on FTTH instead, and minimizing operation cost on mobile operations.

It makes sense for the Government to step in, and acquire the shares and remaining assets. VimpelCom Laos has over the last couple of years been shutting down operations and base station sites to a point-of-no-return, and although a couple of potential buyers has shown an interest it hasn’t materialized.

VimpelCom Laos was part of VimpelCom’s plan to expand its operations in Indochina. Prior to 2011 the company also had telecom operations under the Beeline brand in Vietnam and Cambodia, however both were sold just a few years after entry, to local partners.

Transfer of ownership of VimpelCom Laos to the Government of Lao PDR is subject to the satisfaction of certain conditions, including receipt of necessary corporate and regulatory approvals.

Earlier this year China’s Comba Telecom System Holdings Limited acquired a 51% stake in Laos’ state-owned telecom operator Enterprise of Telecommunications Lao (ETL) for USD 91.8 million

Author: Allan Rasmussen
Managing director at Yozzo. Allan’s expertise includes the development and execution of growth strategies, market insights, trends and opportunities, new business models and strategies
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