Bermuda-based investment company IPOC said on Tuesday that it had started legal action to block the proposed sale of a 25.1% stake in Russia’s third largest mobile operator Megafon. IPOC claims that it has rights to the holding, which is due to be sold to rival investor Alfa Group, as it agreed to purchase it in 2001 from previous owner LV Finance and has already paid around USD74 million in transfers and loans under two option agreements. The investor has obtained injunctions in the Virgin Islands and the Bahamas, where many of Alfa’s subsidiaries are located, in a bid to prevent the transaction. MegaFon’s other major shareholders TeliaSonera and Telekominvest have also published a statement saying that the stake sale to Alfa violates their shareholder agreements. The dispute was triggered in August when Alfa, which already owns a 13% stake in MegaFon’s rival Vimpelcom, stated that it had purchased LV Finance for an undisclosed sum and had taken over the Megafon stake. This announcement led to rumours of a merger between MegaFon and Vimpelcom in the future, a move which would create the country’s largest cellco.
The Russian mobile market is booming: in the year to March 2003 the total number of mobile subscribers in Russia grew from around 8.8 million to 23.7 million, with the cellular penetration rate shooting up to 16.6% from 6.1%. Number one operator Mobile TeleSystems (MTS) managed to hold on to its dominant position, but only just, with a 40.6% share, down from 46% the previous year. Vimpelcom was hot on its heels, increasing its share from 30.3% to 36.97%, thanks to the expansion of its networks beyond Moscow, while MegaFon claimed a market share of 21.37% and the fourth operator MCC held 1.06%.