Telenor reportedly softening stance on Vimpelcom-Kyivstar merger

22 Apr 2005

The boardroom battle between Vimpelcom shareholders Telenor and the Alfa Group has taken an unexpected twist, with the Norwegian group reportedly softening its stance over a potential merger of the Russian cellco with another of the duo’s other joint ventures, Ukrainian operator Kyivstar. The Alfa Group is keen to expand its operations in Ukraine and suggested the integration of the two companies as early as last August, but Telenor vetoed the plan amid concerns that it would lose its majority share in the newly merged entity; Telenor currently holds 56.51% of Kyivstar, with the remainder in the hands of Alfa-controlled companies, although the Norwegian telco has the smaller of the pair’s stakes in Vimpelcom. Telenor’s refusal to consider the deal prompted Alfa to turn its attentions to Kyivstar’s smaller rival Ukrainian Radio Systems (which operates under the brand WellCOM), leading to a battle in the Vimpelcom boardroom between the two investors. The two have now reached something of an impasse, with Alfa unable to push through the acquisition of WellCOM without Telenor’s support and Russia’s Supreme Court investigating the stand-off between the pair. An end could yet be sight, however, following a report in the Moscow News claiming that Telenor is prepared to reconsider a Vimpelcom-Kyivstar merger, ‘given the right circumstances’. Whilst the Norwegians have declined to give details of just what those circumstances might be, it is likely to include the stipulation that Alfa ends its interest in WellCOM.