Telenor and Altimo closer to agreement

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A solution to the bitter dispute between Telenor, the Norwegian telecoms operator, and Altimo of Russia over their shared ownerships in Russian and Ukrainian mobile phone assets could come as soon as this month, an Altimo executive said on Tuesday.

The two companies have confirmed that VimpelCom, Russia’s biggest mobile phone operator, could use a mixture of cash and equity to buy Kyivstar, the leading operator in Ukraine. Telenor owns 29.9 per cent of VimpelCom and 56.5 per cent of Kyivstar while Altimo owns 32.9 per cent of VimpelCom and 43.5 per cent of Kyivstar.

The agreement marked a change from the two groups’ initial proposals. Altimo in February proposed VimpelCom buy Kyivstar for $5bn of its own shares – a structure Telenor rejected.

The Norwegians then proposed an all-cash takeover worth at least $5bn. Telenor also wanted a mechanism to allow one of the two to buy out the other’s interest in VimpelCom. The winner would be decided in an auction and the process would provide a framework for ending what Telenor in March called “Alfa’s attacks” on its interests in VimpelCom and Kyivstar.

Following months of arguing, the two companies on Tuesday appeared to have moved closer to reaching a solution.

“Altimo welcomes Telenor’s acceptance of Altimo’s proposal of a cash plus equity structure in VimpelCom’s acquisition of Kyivstar,” the Russian group said. Discussions about the terms of the market separation mechanism continue.

Kirill Babaev, vice president at Altimo, said an agreement could be reached within two to three weeks. The separation process would not necessarily immediately follow a takeover by VimpelCom of Kyivstar.

“There seems to have been an understanding that this [takeover] would finalise the relationship between Telenor and Altimo. This is not necessarily the case. It is only an insurance policy, if anyone breaches the shareholder agreement.”

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