Sawiris’ Weather plots bid for Wind

ONE OF EGYPT’S wealthiest businessmen and a consortium of private equity investors is set to table a formal bid for the Italian telecoms group Wind. The offer is believed to be in the region of US$16.5 billion.

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By  Rhys Jones Published  March 27, 2005

ONE OF EGYPT’S wealthiest businessmen and a consortium of private equity investors is set to table a formal bid for the Italian telecoms group Wind. The offer is believed to be in the region of US$16.5 billion. Naguib Sawiris, chief executive of Egypt-listed Orascom Telecom and a member of one of the country’s richest families, is in a consortium interested in Wind, which has been earmarked for sale by its owner, the energy giant Enel. The consortium, named Weather, also includes Wilbur Ross, a leading private equity investor, and French venture capitalist Philippe Nguyen. Private equity firm Blackstone is also expected to put in a formal bid before Enel’s deadline at the end of the month. However, Wind, which is Italy’s second-biggest fixed-line telecoms operator and third-largest mobile phone operator, is ravaged by debt and is hardly a tempting proposition, according to one top telecoms analyst. “Wind has a significant share in the fixed-line Italian market,” said Mohsen Malaki, senior programme and consulting manager, Comms, IDC CEMA. “The problem is that Wind has huge debts and IDC ranked it the number one company in terms of debt in Western Europe so it’s a strange move to go for it,” he added. As well as a sale to either of the two bidders, there is also a third possibility that Enel decides to float the business. Some observers believe that Paulo Scaroni, the Enel chief executive, might favour this approach. However, this scenario seems unlikely according to Malaki. “Enel basically wants to revert to its energy business and focus on utilities again and get out of telecommunications,” he explained. Weather is being advised by Rothschild, UBS, ABN Amro and San Paolo Imi. Should Weather win the auction, Sawiris could eventually seek to combine Wind with Orascom to create a Mediterranean mobile giant. He has previously spoken of turning Orascom into one of the world’s largest mobile-phone groups, and hopes to have 100 million subscribers by 2010. “I’m not sure what his [Sawiris’] strategy is,” said Malaki. “It could be an opportunity to invest in Europe and expand beyond the MENA and Asian markets. If that is the purpose, then I don’t imagine that Wind is the ultimate goal — it would probably act as a foothold into Europe,” he added. A takeover of Wind would be the biggest European telecommunications deal since 2001. Telecommunications companies in Europe have spent years paying off debt and reorganising their businesses after expansion on a grand scale in 2000. France Télécom and Deutsche Telekom created Wind with Enel in 1997. Deutsche Telekom sold its stake in 2000, and France Télécom sold its holding in 2003.

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