VimpelCom shareholders boost stakes to forge an uneasy truce

The feud between VimpelCom's shareholders over the Russian mobile operator's strategy has been put on pause for now, after Russia's Alfa Group and Telenor of Norway acquired almost equal voting shares in the company.

However, analysts warn that the conflict may not yet be fully settled, and it is also unclear if latest developments will persuade Russia's anti-monopoly regulator, FAS, to drop a lawsuit it filed a lawsuit in April challenging Telenor's dominant position in VimpelCom. This also led to an injunction by a Moscow court banning the payment of dividends.

Altimo, the telecoms division of Russian billionaire Mikhail Fridman's Alfa Group, and Telenor have been at loggerheads for years over the strategy of VimpelCom, which has expanded beyond Russia's borders and now generates most of its revenue abroad.

The two shareholders now own almost equal stakes after Telenor slightly increased its stake to 43 per cent of votes and Alfa raised its stake to 40.5 per cent from 25 percent. Both moves were made possible by the decision of Egyptian tycoon Naguib Sawiris to exit VimpelCom. Altimo agreed to pay $3.6 billion (€2.92 billion) to buy 305 million shares from Sawiris while Telenor agreed to pay $113.6 million (€92.2 million) to Sawiris.

According to Reuters, analysts at Jefferies believe it would be premature to interpret the latest shareholder moves as an end to the war. "We fully expect the conflict to flare up again before long, and would therefore not take a fundamentally more positive stance on Telenor's exposure to VimpelCom at this time," Reuters reported Jefferies analysts as writing in a note.

It's believed that this increased parity could help to pour oil on troubled waters, but there are still some hurdles to overcome, such as the resolution of the FAS lawsuit and continued demands by Altimo that Telenor should sell yet more shares.

"After eight years of struggling, we will never say that we have seen the end of anything," said Telenor of the dispute, according to a report in the Financial Times. "But there are stages. It means we are back to the position before Mr. Sawiris was brought on to the scene. We are back to square one [but] without a shareholders' agreement."'

FAS said in a statement that it welcomed Altimo's decision to boost its stake in VimpelCom because it leads to the Russian shareholder restoring control in the strategic Russian company." However, FAS said "as for withdrawing the lawsuit, we believe it is too early to talk about it. Information about settling the differences is confidential and can't be disclosed."

For more:
- see this Reuters article
- see this separate Reuters article
- see this Financial Times article (sub. req.)
- see this separate FT article (sub. req.)
- see this Bloomberg article

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