Telenor and Altimo will combine their common assets to create a new mobile operator
By Anna Smolchenko (AFP)
(Post by CAAI News Media)
MOSCOW — Norwegian telecom firm Telenor and Russia's Altimo announced on Monday the creation of new a mobile operator, ending a protracted feud over control of a leading Russian mobile operator.
Telenor and Altimo, a unit of a conglomerate controlled by billionaire Mikhail Fridman, will combine their common assets in Vimpelcom and Kyivstar to create a new mobile operator, in a deal that means "resolution of all outstanding disputes" between the two firms, the companies said.
"We have turned a five-year struggle into an exciting venture for the future," Jon Fredrik Baksaas, president and chief executive of Telenor Group, said in the statement.
The merger puts an end to a bitter corporate feud that had for a half a decade festered between Telenor and Alfa Group over control of Vimpelcom, Russia's second-biggest mobile operator.
Altimo and Telenor have now agreed to suspend all their ongoing legal proceedings and will move to withdraw or settle them before the deal is completed by mid-2010, the companies said.
Baksaas was one of a handful of executives who met with Prime Minister Vladimir Putin over lunch last week, the same day the powerful premier called on foreign investors to commit to Russia.
Analysts welcomed the deal, saying its main motive has been an attempt by the Russian firm and the Nordic company to put their differences behind them.
"Thank God the two companies have found the strength to come to a compromise," said Konstantin Belov, a telecoms analyst with UralSib, saying the merger would be a positive signal for investors.
"The conflict is over. This is a fact," added Yevgeny Golosnoi, a telecoms analyst at Troika Dialog.
He estimated a market value of the new company at about 21 billion dollars (14.4 billion euros), compared to Vimpelcom's current market value of about 18 billion dollars. The new company accounted for 85 million subscribers last year, the company said.
Under the deal, Telenor would receive 35.42 percent of voting shares in the new firm, while Altimo would get 43.89 percent. The new company will be called VimpelCom Ltd, listed on the New York Stock Exchange and incorporated in Bermuda.
Altimo is the telecoms arm of Alfa Group, one of Russia's largest financial-industrial conglomerates, whose main shareholder is billionaire Mikhail Fridman. Alfa owns 44 percent of Vimpelcom.
"The governance structure agreed for Vimpelcom Ltd is designed to significantly reduce the potential for new disputes between the shareholders," the companies said.
The five-year battle saw numerous proceedings in the Russian court system which raised concerns about the business climate for foreign firms working in Russia.
Telenor could have lost its stake in Vimpelcom, after judges in February ordered that the Norwegian firm should pay compensation of 1.7 billion dollars to Farimex, an obscure minority Vimpelcom shareholder.
In June, Russian authorities ordered the sale of almost all of the 30 percent stake owned by Telenor in Vimpelcom, after seizing the Norwegian firm's stake in a legal row.
Kyivstar is the biggest mobile operator in Ukraine, in which Telenor has 56.52 percent and Altimo 43.5 percent.
Shares in Telenor jumped 13.70 percent in initial trading earlier on Monday after an announcement that it had reached the deal.
Fridman's Alfa Group had been involved in a similar row with BP over control their Russian oil venture TNK-BP which ended last year with a shake-up of the ownership structure.
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