Ownership wrangles continue at Bitel

22 Jan 2007

The long-running saga of who owns Kyrgyz cellco Bitel has flared up again, with the announcement that Russian mobile operator MTS is to be taken to court in an attempt to force the latter to buy a 49% stake in the former. Nomihold, part of neighbouring Kazakhstan’s Alliance Capital, wants to execute a put option under which MTS would have to pay USD170 million for the remaining 49% stake in a holding company, Tarino Ltd, of which MTS bought 51% in December 2005 for USD150 million. Tarino had legal and operational control over Bitel at the time. The deal was disputed in the courts by fellow shareholder Rezervspetsmet, a company with links with Russia’s Altimo, and Rezervspetsmet was awarded control of the cellco. In July 2006 Bitel sold its network to Sky Mobile, a non-operational wireless licensee purchased by Altimo from Sky’s then parent company, Kazakh cellco Katel. Bitel claimed the sale was motivated by a threat by the local regulator to invalidate its licence for rule violations. The purchase by Altimo was seen by some as an attempt to stymie MTS’s claim on the Kyrgyz cellco. From then Sky Mobile took over the running of the Bitel network, with the brand name Bitel being retained by its new owners. Almost immediately the CEO of Russia’s second largest cellco, Vimpelcom (in which Altimo owns a 32.9% stake), announced his company may wish to purchase Sky from Altimo. MTS is currently appealing the December 2005 court ruling giving Rezervspetsmet control of Bitel, and is insisting that the terms of the put option that Alliance Capital is trying to force are changed.