Altimo sues Telenor for USD1 billion; Telenor dismissive

26 Mar 2008

Altimo, the telecommunications arm of Russian investment outfit Alfa Group, said yesterday that its Eco Telecom subsidiary is suing Telenor for USD1 billion, claiming the Norwegian company is in breach of a shareholder agreement, reports the Financial Times. Altimo says that Telenor blocked Vimpelcom’s expansion into Ukraine for more than a year in 2006 and 2007. Telenor holds 30% of Vimpelcom’s voting stock, while Altimo holds 44%.

The move is the latest twist in a bitter and long running battle, with lawsuits issued in the US, Geneva, Russia and Ukraine. The central dispute centres on both companies’ interests in Kyivstar, Ukraine’s number one cellco by subscribers, which is 56.5%-owned by Telenor with Altimo holding the remainder. Altimo funded Vimpelcom to purchase a rival cellco Ukrainian Radio Systems (URS) in 2006 for USD200 million. Telenor blocked the purchase, filing a series of lawsuits in Russian courts, but the Norwegian telco eventually lost out in January 2008. Altimo’s Vice-President for Communications, Kirill Babayev, said that Telenor’s action had lost Vimpelcom vital market share in Ukraine. ‘We believe that all shareholders of the company have lost profit,’ he claimed.

Telenor has responded saying that the new lawsuit has no legal merit. ‘Alfa recently lost both the VimpelCom and Kyivstar-related arbitration proceedings brought by Telenor,’ said Telenor Chief Press Spokesman Dag Melgaard. ‘It is hard to see this claim as anything but an attempt by Alfa to pressure Telenor and attract media attention with its frivolous USD1 billion damage claim. VimpelCom’s purchase of URS was an overpriced, non-transparent transaction. URS’s weak performance since it was acquired by VimpelCom has confirmed that this was a bad deal for VimpelCom shareholders.’