TELENOR AND ALFA AGREE TO MERGE VIMPELCOM AND KYIVSTAR

TeleGeography
Monday, 5 October 2009

Norwegian telecoms group Telenor has announced that it has reached
an agreement with Russia’s Alfa Group to combine common assets to
create a new US-listed mobile operator, potentially ending years of
legal disputes. The agreement will see Russia’s second largest cellco
by subscribers, OJSC Vimpelcom, merge with Ukraine’s leading mobile
operator Kyivstar to create Vimpelcom Ltd. The united company will
provide integrated mobile services to consumers in Russia, Ukraine
and other CIS countries, as well as Georgia, Vietnam, Cambodia and
Laos. Vimpelcom Ltd will seek to expand its operations in other
developing markets in Europe, Asia and Africa, aiming to become one
of the leading players in the industry.

In April 2008 Farimex, a minority shareholder in Vimpelcom, initiated
a lawsuit against Telenor accusing the company of having caused losses
to Vimpelcom shareholders by delaying its entry into Ukraine’s mobile
market, and on 20 February 2009 a court in Omsk held Telenor liable
for USD1.7 billion, which the Norwegian group refused to pay, leading
to the seizure of its stake in the Russian cellco. Subsequent appeals
by Telenor had been adjourned until March 2010 while Telenor pursued
a case against Farimex, alleging that the British Virgin Island-based
firm was acting on behalf of Alfa Group. Under the new agreement,
both parties have agreed to suspend all ongoing legal proceedings
and will take action to withdraw or settle lawsuits prior to the
transaction being completed. The governance structure agreed for
Vimpelcom Ltd is reportedly designed to significantly reduce the
potential for new disputes between the shareholders.