CONFLICT OF SHAREHOLDERS AT RUSSIAN VIMPELCOM, NEW OWNER OF ARMENTEL,
FLARES UP
Yerevan, December 16. ArmInfo. The Board of Director of the Russian
operator VimpelCom has not approved the company’s budget for 2007 for
disagreements of the shareholders: Norwegian Telenor (26.6% of voting
shares) and Russian Altimo (32.9% of voting shares). Telenor
representatives voted against the budget. They explain that they are
concerned over the business development in the Ukraine. In response,
Altimo Vice President Kirill Babayev urged Telenor to refuse from
destructive methods of work at VimpelCom. Nevertheless, VimpelCom
management will have to act on the basis of the draft budget.
ComNews reports that on December 14, VimpelCom Board of Directors did
not approve the consolidated budget for 2007. The Board of Directors
comprises three representatives of Alfa-Group, three representatives
of Telenor and three independent directors. One of the independent
directors was proposed by Alfa, one by Telenor and one by minority
shareholders. Eight of nine votes of the directors are required for
adoption of a decision.
The conflict between the key shareholders of VimpelCom especially
flared up after the Russian operator entered the Ukrainian market
wherein Alfa and Telenor had already been present as shareholders of
Kyevstar operator. Telenor holds 56.5% shares of Kyevstar, Altimo
branch Storm – 43.5%. It is for the third time that Board fails to
approve the budget. Earlier the company failed to approve the budget
for 2006 twice. Then the company’s management was allowed to act in
accordance with the draft budget. The management saw no big problem in
the lack of an approved budget, but it was concerned over the lack of
a long-term strategic development plan.
Analysts see no threat to the activity of VimpelCom because of the
unapproved budget for 2007, on the whole. "Judging from the previous
experience, this situation will have no impact on the operating
activity of VimpelCom and its structures, including in the Ukraine,"
supposes an analyst of Aton investment group, Nadezhda
Golubeva. "Ukrainian Radio Systems (URS) does not need as many
investments as before. So Vimpelcom can redistribute the budget of
2005 directing more funds to the CIS countries than to Russia," an
Uralsib analyst, Konstantin Chernyshev says.
In the meantime, they in Telenor are concerned over the business in
the Ukraine. "Figures show that the business of Ukrainian Radio
Systems develops worse than VimpelCom management planned from the very
beginning. This proves that Telenor’s concerns are justified," Telenor
Russia Director for External Ties Anna Ivanova-Golitsina told ComNews.
Telenor press-service reports that the latest data on the number of
URS’s subscribers and the share of the market in the Ukraine do not
meet the promises of VimpelCom. While, they in VimpelCom insist that
the company develops in accordance with its plans. Thus, now URS has
almost 1.6 million subscribers.
According to URS data, in November, Beeline connected 323,730 new
subscribers, which is by 25% more than in October 2006. The financial
report of VimpelCom OJSC, incomes of Beeline in the Ukraine in the 3rd
quarter of 2006 grew by 98%, to $11.5 million.
Unlike their Russian colleagues, Ukrainian analysts are less
optimistic about the disapproval of the budget for 2007. They think it
was the revenge of Telenor to Russia Altimo for regular breaches of
the meetings of Kyevstar Board of Directors. "The situation at URS is
not good enough. Thus, the subscribers base indicators are not so
good. There is lack of a strategic development plan and incomes from
investments. VimpelCom covers the expenses of the Ukrainian branch.
Moreover, there are rumors in the telecommunications market of the
Ukraine that Altimo is also dissatisfied with the development of URS,"
says Dmitry Sholomko, an analyst of the Ukrainian company UBL. "If
Telenor manages to block the budget, it will be a severe blow upon
Altimo as the break-even of URS is still far enough," says Roman
Khimich, an expert of the Ukrainian Consulting company Netton CG.
In their turn, Armenian analysts refrain themselves from comments so
far. Nevertheless, they believe that the conflict between the key
shareholders will have a definite impact on the development plans of
ArmenTel from the point of view of expenses for modernization of the
telecommunications net in Armenia. To recap, Greek OTE announced the
closing of the transaction for acquisition of the 90pct stake in
ArmenTel by VimpelCom yet last month. The transaction cost $420
million according to OTE’s data.