Cookie Consent by Free Privacy Policy Generator
15.1 C
Tuesday, May 28, 2024

Telenor faces 'real threat' in Russia

Norwegian telecoms firm Telenor was dealt another severe blow just before the weekend, when a Siberian court official said he’d been ordered to start selling off Telenor’s major stake in Russian mobile phone firm VimpelCom on Monday. The forced sale, which Telenor has been fighting, could mean huge losses for Telenor and the Norwegian state, which is Telenor’s major shareholder.

Telenor’s ongoing battle with its Russian partner in VimpelCom, the Alfa Group and its owner Mikhail Fridman, already has reached the highest levels of government power in both Norway and Russia. The conflict was a topic of conversation during a recent meeting between Norwegian Prime Minister Jens Stoltenberg and Russian Prime Minister Vladimir Putin.

Some think Putin, said to be a friend of Fridman, will ultimately intervene if he thinks Telenor’s treatment at the hands of Fridman and the Russian court system will hurt future foreign investment in Russian companies.

Telenor isn’t seeing any sign of hope yet, though. To the contrary, company officials said Friday they now see a “real threat” to their business interests in Russia. “We fear the worst,” Telenor spokesman Dag Melgaard told newspaper Dagsavisen .

Others contend Alfa is simply playing hardball with Telenor, which owns about 34 percent of VimpelCom while Alfa holds 42 percent. The conflict stems from Telenor’s move a few years ago to block VimpelCom’s acquisition of a Ukrainian telecoms firm, URS. Alfa wanted to take over URS, Telenor didn’t, and the two VimpelCom partners have been at odds ever since.

Alfa seemingly has the home turf advantage, although legal battles between the two have played out in courts in a variety of countries. This one, launched by a minority shareholder that Telenor suspects is controlled by Alfa, led to the prospect of a forced sale of Telenor’s VimpelCom shares, to compensate the minority shareholder for alleged losses on the blocked acquisition of URS.Now the situation appears critical for Telenor. News that a forced stock sale was about to commence drove down Telenor’s share price by more than 4 percent on Friday and trading was suspended. Losses on the forced sale could amount to billions of Norwegian kroner for Telenor.

Stoltenberg has said earlier that he and Putin agreed the companies themselves are responsible to “find a balanced solution.” There’s no doubt Norwegian government officials are concerned, though. “I’m in contact with Telenor on developments in the case,” said the government minister in charge of business and industry, Sylvia Brustad. “A forced sale of Telenor’s shares before its appeal is resolved by the (Russian) courts would go against all accepted legal precedent.”

She refused to comment on whether it would also prompt the state to think twice about allowing state oil company StatoilHydro to participate in development of Russia’s Stockman offshore field in the Barents Sea. There is little question, though, that StatoilHydro officials are themselves watching the Telenor case carefully, with an eye to what problems it might ultimately face in Russia itself.



For more news on Arctic developments.



If you like what we’re doing, please consider a donation. It’s easy using PayPal, or our Norway bank account. READ MORE