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Court upholds VimpelCom's Ukraine phone purchase deal

MOSCOW, June 26 (RIA Novosti) - A Moscow court upheld Monday a decision by Russian cell phone company VimpelCom (RTS: VIMPG) to acquire a Ukrainian mobile operator.

In a long-running dispute, the Moscow Arbitration court rejected a suit filed by Norwegian telecom company Telenor to invalidate a decision by VimpelCom Director General Alexander Izosimov to acquire Ukrainian Radio Systems, a leading cell phone operator in Ukraine.

VimpelCom, Russia's second largest mobile phone operator, is majority owned by Telenor and Altimo, the telecoms arm of financial major Alfa Group, and is best known for the Beeline trademark, one of the most popular mobile operators in the country.

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 the Federal Anti-Monopoly Service in the summer of 2005 seeking to increase their stakes in VimpelCom.

The conflict between Telenor and Alfa Group first erupted over VimpelCom's plans to enter the Ukrainian cell phone market. Alfa Group supported a VimpelCom deal to acquire Ukrainian Radio Systems for $231.3 million. 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 the Moscow Arbitration Court against VimpelCom to challenge the deal.

In its first lawsuit, Telenor demanded the annulment of a decision by a VimpelCom shareholder meeting on September 14, 2005, to approve a deal to buy Ukrainian Radio Systems. The court rejected this suit on May 15 and Telenor said on June 21 it would appeal its ruling.

The second lawsuit was filed against VimpelCom, Russia's first company listed on the New York Stock Exchange, five other companies registered in the British Virgin Islands and Cyprus, and an individual who Telenor claimed had sold the Ukrainian company. The Norwegian giant said the deal breached Russian legislation.

The third suit, which was rejected today, sought the annulment of a decision made by VimpelCom Director General Alexander Izosimov to close the deal without permission from the board of directors.

Telenor said in a statement Monday it was considering its options.

"We are waiting for the court's written decision and intend to consider all our legal options," said Telenor Vice President and Chief Spokesperson Dag Melgaard. "By failing to obtain the requisite Board approval to complete the acquisition of URS, Mr. Izosimov violated VimpelCom's charter and Russian law, and exceeded the scope of his authority."

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