Wind Hellas launches strategic review

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Wind Hellas, the Greek mobile phone operator controlled by Egyptian entrepreneur Naguib Sawiris, is embarking on a strategic review after its performance was badly hurt by the country’s financial crisis and fierce competition.

Wind Hellas has begun talks with shareholders and creditors after admitting the Greek government’s austerity measures were putting “significant additional pressure” on the telecoms company’s capital structure.

It is one of the first companies to reveal how it has been hit by the Greek financial crisis, and underlines how parts of Mr Sawiris’ telecoms empire are shrouded in uncertainty.

Last week, MTN of South Africa terminated talks with Weather Investments, Mr Sawiris’ private investment vehicle, about a possible deal to buy some of his African telecoms assets.

The talks foundered after the Algiers government objected to the sale of the Algerian mobile phone business owned by Orascom Telecom, the telecoms company controlled by Weather Investments.

Wind Hellas, which is also controlled by Weather Investments, is contending with fierce competition from its larger rivals.

OTE, Greece’s former fixed-line phone monopoly that is controlled by Deutsche Telekom, is the country’s largest mobile operator, followed by Vodafone’s Greek business.

For the first three months of 2010, Weather Finance III, Wind Hellas’ holding company, had revenue of €216.9m ($265.5m), down 19 per cent on the same period last year. Adjusted earnings before interest, tax, depreciation and amortisation fell 31 per cent to €52.3m.

The net loss rose from €43.8m in the first quarter of last year to €51.3m in the three months to March 31.

Weather Finance III had net debt of €1.8bn at March 31, and the company burnt through €14m of cash in the first quarter.

Wind Hellas said: “The launch of the Greek government’s austerity measures in April has further impacted performance and is putting significant additional pressure on Wind Hellas’ capital structure including its liquidity and covenants.”

Weather Finance III said in its first-quarter results report that its ability to continue as a going concern was dependent on the conclusions of the strategic review. Wind Hellas has hired advisers that assisted on a previous restructuring completed last November, including Morgan Stanley and White and Case.

Mr Sawiris kept control of Wind Hellas after senior creditors backed the restructuring, under which Weather Investments put €124.6m of fresh funds into the mobile operator.

It is unclear whether Weather Investments will put additional funds into Wind Hellas, but it is unlikely to do so with the existing capital structure, said one person familiar with the investment vehicle.

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