Russian court throws out Telenor’s objections to Vimpelcom’s takeover of URS

16 May 2006

A Moscow arbitration court has dismissed a lawsuit filed by Norwegian telco Telenor to cancel its Russian affiliate Vimpelcom’s purchase of Ukrainian mobile operator Ukrainian Radio Systems (URS), daily newspaper Dagens Naeringsliv reported on its website. According to the report Telenor intends to appeal against the court’s decision. Jan Edvard Thygesen, head of Telenor’s East and Central Europe division, said that: ‘The URS acquisition was promoted by [Telenor’s Russian investment partner] Alfa Group… It has now been shown that the acquisition was a waste of the company’s resources and that the agreement was completely outside the company’s financial control and the control of the board.’

Telenor holds a 29.9% stake in Vimpelcom as well as 56.5% of Ukraine’s leading cellco Kyivstar while Alfa subsidiary Altimo owns 32.9% of Vimpelcom and 43.5% of Kyivstar. Telenor has filed three lawsuits against Vimpelcom over the way the company bought URS. Telenor claims that Alfa Group, along with Vimpelcom’s management, bypassed Vimpelcom’s board, circumvented minority shareholder protections in the company charter, and violated Russian law. Telenor claims the lawsuits seek to minimise the economic damage to Vimpelcom shareholders from the acquisition, to obtain information about the transaction and its real beneficiaries, and to restore basic standards of corporate governance and financial control in the company.

According to TeleGeography’s GlobalComms database, URS has signed up over 100,000 new mobile users since re-launching under Vimpelcom’s BeeLine brand on 11 April. URS had around 275,000 subscribers at the end of March, up from 256,849 at the end of 2005. It accounts for around 1% of the Ukrainian mobile market.