Telenor said the proposal involved VimpelCom (RTS ticker: VIMPG) acquiring a 100% stake in its Ukrainian mobile operator Kyivstar for at least $5 bln in cash. VimpelCom proposed in February to acquire 100% of Kyivstar shares for $5 billion of its own shares. Telenor has set a deadline of March 31 for a response.
VimpelCom, Russia's second largest mobile phone operator, is majority owned by Norwegian Telenor and Altimo, the telecom arm of financial major Alfa Group. The conflict between Telenor and Alfa Group first erupted over VimpelCom's plans to enter the Ukrainian cell phone market.
VimpelCom is best known for the Beeline trademark, one of Russia's most popular mobile operators. Telenor holds 26.6% of shares in VimpelCom, while Altimo (previously Alfa Telecom) holds a 32.9% stake. Telenor and Alfa Group filed applications with Russia's Federal Antimonopoly Service (FAS) last summer seeking to increase their stakes in VimpelCom.
The Telenor statement said the company had filed an amendment to its existing application to the FAS seeking permission to acquire up to 100% of VimpelCom. Under amendments to the Russian law on joint-stock companies, which comes into force July 1, 2006, the acquiring party would be required to make a tender offer to all VimpelCom's shareholders.
The document cited Telenor Executive Vice President and Head of Eastern/Central Europe, Jan Edvard Thygesen, as saying: "Telenor has consistently supported a transaction involving VimpelCom and Kyivstar, but only if it makes business sense and the corporate governance of the combined entity is assured going forward."
"Our proposal is designed to ensure these requirements are met and, if implemented as proposed, would establish a basis for ending Alfa's attacks on Telenor's ownership interests in VimpelCom and Kyivstar," Thygesen said.
Telenor said one of its principal conditions for the deal was to clinch an agreement with Alfa providing for market-based separation, which would allow either Telenor or Alfa to hold a controlling stake in VimpelCom.
The dispute first began when Alfa Group supported a VimpelCom deal to acquire Ukrainian Radio Systems, a leading cell phone operator in Ukraine. Telenor came out against the deal, saying it was overpriced.
The deal went through in the fall of 2005, and in January 2006 Telenor filed three lawsuits with a Moscow arbitration court against VimpelCom to challenge the deal.
VimpelCom recently sent an offer to Telenor and Altimo to buy a 100% stake in Kyivstar to end the dispute. Telenor and Alfa Group are the core shareholders of Kyivstar. If the deal is approved, VimpelCom intends to merge the two Ukrainian operators into one business.
