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Tuesday, October 03, 2006

Georgian Handovers

Metromedia has sold its’ portfolio of assets in Georgia for US$480m. The majority of value is in Magticom the #2 cellular operator. The #1 operator, Geocell, is partially owned by TeliaSonera.

The interesting bit is the purchasers: Istithmar is owned by the Dubai ruling family the al-Maktoums, which is interesting in its’ own right with all their current telco investments. The gem is the other partner which is “Emergent Telecom Ventures” - a private equity company run by Mohamed Amersi and Juan Villalonga of ex-Telefonica fame.

When Villalonga was running round the world on a huge spending spree, Amersi was one of his trusted corporate finance advisers. In fact, Villalonga had so much faith in Amersi that he invested US$250m in a private equity fund, Gramercy Communications Partners, back in the bubble days. After Villalonga left, it all ended in tears with Telefonica losing around €75m and the fraud squad being called in. It appears given the lack of noise that everyone is in the clear.

Telefonica did have a lucky escape however, back in 1997 when Amersi advised it to bid on the privatisation of 25% of Syvazinvest of Russia, Telefonica finished in 2nd place in the auction losing out to George Soros who lost a billion dollars and called it “the worst investment in his life”

Villalonga and Amersi together founded another private equity company Emergent Telecom Ventures and began to look to Russia and the old CIS. Emergent back in 2004 got together with First National (Jeffrey Galmond of Megafon fame) to bid for the Metromedia assets in Russia/Georgia for US$300m, the deal was ultimately canned as the Metromedia shareholders thought US$300m was not enough.

Both Amersi and Villalonga ended up on the MegaFon board back in Jan 2005 , Villalonga resigned later that year because of the pressure Galmond was placing on him to vote against Alfa. Amersi has always been a representative of Alfa Bank.

In July 2005, they bought the Russian operations of Metromedia, 71% of an altnet called PeterStar, for US$215m, the other 29% is owned by Telecominvest. As far as I am aware Emergent still own a share of PeterStar.

Amersi is deeply involved in the Russian Telecom scene and seems to be on both the sides of Galmond and Alfa Bank dealings - the chief fighters for control of Megafon. I would not be in the least surprised if when the political troubles die down between Georgia and Russia, the ex-Metromedia assets end up in the hands of some yet to be determined Russians.

The recurrent themes in the Russian telco scene seem to be the expansion of the Big 3 cellular operators across the CIS, the consolidation of the fixed-line altnet business and the forthcoming privatisation of Svyazinvest.