Vimpelcom bids USD5 billion for Kyivstar; Telenor ‘not ready to consider it’

14 Feb 2006

Russia’s second largest mobile operator Vimpelcom has made a USD5 billion offer to purchase 100% of Ukraine’s mobile market leader Kyivstar, and has proposed to assume Kyivstar’s debts of USD456 million. Vimpelcom presented its offer to the Ukrainian company’s shareholders, Norway’s Telenor and Altimo, the telecoms arm of Russia’s Alfa Group. Telenor holds a 56.5% controlling stake in Kyivstar, whereas Alfa Group owns 43.5%. The Norwegian telco also holds 26.6% of shares in VimpelCom, with Alfa holding a 32.9% stake. The offer could lead to a resolution of the ongoing argument between Alfa and Telenor, which have so far disagreed over Vimpelcom’s strategy in Ukraine. Telenor opposed Vimpelcom’s earlier purchase of minor Ukrainian mobile operator Ukrainian Radio Systems (URS) for USD231 million on the grounds that it was a waste of money that could be channeled into Kyivstar instead. If Telenor agrees to sell its stake in Kyivstar, Vimpelcom may consider selling URS, but if it doesn’t, Vimpelcom is determined to go ahead with full-scale investment in URS. However, Telenor would lose overall control of Kyivstar through any takeover by Vimpelcom. The Russian cellco’s CEO Alexander Izosimov said: ‘Alfa Group and our large minority shareholders were very positive about the offer,’ but added that ‘we got a comment from Telenor saying that they are not ready to consider the deal before they resolve their differences with Alfa.’ Kyivstar claimed around 14.4 million subscribers at the end of January.