Sistema warns Vimpelcom and Telenor about SkyMobile

11 Oct 2007

Russian holding group Sistema has released a statement advising cellco Vimpelcom and Norwegian group Telenor, which holds a stake in Vimpelcom, to ‘carefully reanalyse’ their possible participation in the tender for Kyrgyz cellco Sky Mobile. Sistema has also called on Morgan Stanley to reconsider its role in brokering the planned sale of Sky, which owns assets whose ownership Sistema disputes. Sistema’s president Alexander Goncharuk said in the statement, ‘We find it highly surprising that a company whose assets were obtained in an illegitimate manner can be offered for sale by such a major and well-respected international investment bank as Morgan Stanley. Interestingly, this same investment bank offered [Sistema’s] MTS [Mobile TeleSystems] the opportunity to buy back the assets that have been misappropriated from it. We urge Vimpelcom, Telenor and others to consider carefully whether participating in a tender of this nature is proper.’

Sistema’s Russian rival Altimo (part of Alfa Group) announced a tender to sell Sky Mobile last month, and is reported to be hoping to raise USD600 million from the sale. Russian cellco Vimpelcom, which is 44%-owned by Altimo, is thought to be the main contender for Sky. Telenor, which holds a 29% stake in Vimpelcom, earlier came out against the deal, citing the legal risks associated with the Kyrgyz GSM operator. MTS was also invited to participate in the auction. Sky Mobile began operating In July 2006 having taken over the network and brand of existing cellco Bitel. The ownership of Bitel’s assets has been a bone of contention between MTS and Altimo since 2005, and the ongoing dispute is highly complex. Any sale of Sky and the disputed assets by Altimo is likely to muddy the waters even further.