The long running dispute between Alfa Telecom (known as Altimo) and Telenor over their investments in Vimpelcom and Kyivstar was ratcheted up with Telenor’s proposal that Vimpelcom could buy Kyivstar for cash, along with a condition that either Telenor or Alpha Telecom buy the other’s shares in Vimpelcom.
At the moment Telenor owns 29.9% of Vimpelcom, and Altimo 24.5%, although Altimo, part of the Alpha Group private equity vehicle of billionaire Mickail Fridman, has more voting shares. Kyivstar’s current ownership is split 56.5/ 43.5% between Telenor and Altimo respectively.
Telenor also made its presence known by refusing to agree to Vimpelcom’s 2005 accounts, which included the purchase of fourth Ukraine operator URS.
Altimo proposed that Vimpelcom pay $5 billion cash for Kyivstar. It made this deal conditional on one or other of the parties buying the other’s shares in Vimpelcom.
Telenor Executive Vice President and Head of Eastern/Central Europe, Jan Edvard Thygesen, said, “We are not prepared to sell Kyivstar to VimpelCom unless there is a structure in place that will ensure that Alfa’s attacks will end.”
Alexey Reznikovich the CEO of Altimo responded by appearing to welcome the suggestion,
“We have always backed the merger of VimpelCom and Kyivstar. That’s why we welcome that Telenor demonstrates a constructive approach and agrees the benefits of such an acquisition.”
However, he disagreed that the deal should be all-cash, if that meant harming Vimpelcom’s position. He also rejected the notion that the deal should be tied to overall ownership of Vimpelcom.
Following that outbreak, Telenor’s representative on the Vimpelcom board withheld their approval of the 2005 accounts. They also questioned Vimpelcom’s investment in rolling out the Beeline brand in Ukraine through its URS subsidiary.
“We are surprised that Vimpelcom is spending so much money and effort on this launch,” Thygesen said, “when there are serious discussions going on… regarding this proposal.”
However this ends, it does appear as if both parties are approaching the end game in this battle. Telenor wants to continue to invest in Russia, as it has done since 1992, but does not like minority stakes. Likewise, Alpha is unwilling to cede control.