More trouble for Telenor

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UPDATED: A truce between Norwegian telecoms firm Telenor and its Russian partners in mobile phone operator VimpelCom seems to be evaporating, following disagreement over the purchase of an Egyptian mobile phone firm. Analysts predict Telenor will ultimately sell off its stake in VimpelCom.

Telenor and Russian billionaire Mikhail Fridman, who controls the Russian firm Alfa (now called Altimo), were co-owners of VimpelCom but ended up in a long list of trade and legal conflicts. After years of complicated court cases, they called a truce in late 2009, which involved formation of a new Bermuda-based firm called VimpelCom Ltd, which is based in Amsterdam and stocklisted in New York. Telenor and Alfa consolidated their stakes in VimpelCom of Russia and Kyivstar of Ukraine into the new company, where Telenor now has 39.6 percent of the shares and 36 percent of the voting rights, and Altimo has 39.2 percent of the shares and 44.7 percent of the voting rights, reports newspaper Dagens Næringsliv (DN).

Altimo and Telecom remain the two largest owners of VimpelCom Ltd, but disagree over a proposed purchase of Wind Telecom of Egypt. The purchase would give VimpelCom access to Wind’s markets in Algeria, Bangladesh, Italy, Pakistan and Canada, but Telenor already is involved in Pakistan and Bangladesh and doesn’t think a Wind acquisition is a good deal.

Telenor lost, however, at a VimpelCom board meeting on Sunday where the deal was approved. Telenor officials also believe they were duped into losing purchase rights to VimpelCom shares that could have hindered Wind from getting payment in the form of shares.

“We were robbed of our right to use our purchase options,” a Telenor spokesman told newspaper Aftenposten. He stopped short of confirming a full-blown conflict with Alfa/Altimo again, but said “there is a certain degree of disagreement, yes.” Norwegian analysts, however,  fear a new, bitter conflict is in the making and that Telenor will sell out of VimpelCom.

Officials at Altimo released a statement Tuesday saying they were disappointed over Telenor’s strong opposition to the acquisition of Wind Telecom, calling the deal both strategically and financially attractive for VimpelCom. Altimo believes it’s in line with VimpelCom’s international expansion strategy, and claimed Telenor’s objections were groundless.

“This can end up in a lawsuit from Telenor,” Frank Maaø of DnB NOR Markets told newspaper Dagens Næringsliv (DN). If the sale to Wind goes through, “I think Telenor will consider selling out over time.” Another analyst at SEB Enskilda agreed, but questions who would buy Telenor’s stake.

“Telenor has gone to bed with a company it can’t rely on,” said yet another analyst, Espen Torgersen of Carnegie. “There are limits to how much Telenor can forgive.” Telenor’s stake can become a pure financial investment, he said, if Telenor loses all influence in the company, “and then they may sell out.”

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