VimpelCom has sent an offer to Norway's Telenor and Altimo, the telecoms arm of Alfa-Group, to buy a 100% stake in Kyivstar GSM with ordinary shares for $5 billion, and assume the company's liabilities, the VimpelCom press office said Monday.
The Norwegian telecom giant holds a 56.5% controlling stake in Kyivstar, whereas Alfa-Group owns 43.5% of the shares in the Ukrainian cell phone operator. Kyivstar is Ukraine's leading cell phone operator. As of January 31, 2006, its subscriber base included about 14.4 million clients.
VimpelCom is best known for the Beeline trademark, one of Russia's most popular mobile operators. Telenor holds 26.6% of shares in VimpelCom, whereas Russia's leading private equity group Altimo (previously named Alfa Telecom), the telecoms arm of financial and industrial holding Alfa Group, holds a 32.9% stake.
VimpelCom said it was convinced that the acquisition will boost its shareholders' equity.
"The VimpelCom management is convinced that the merger option with Kyivstar is extremely attractive from the strategic and financial viewpoints. This option also meets Telenor's stated interests that VimpelCom should look for new opportunities to enter the Ukrainian market," VimpelCom said in a statement.
The conflict between Telenor and Alfa-Group erupted over VimpelCom's plans to enter the Ukrainian cell phone market. In particular, Alfa-Group deems it a priority for VimpelCom to merge with Kyivstar. However, Telenor is against the deal, saying the potential merger will reduce its stake below a controlling interest in the company.
As an alternative for VimpelCom's operations on the Ukrainian market, Alfa-Group proposed purchasing the Ukrainian Radio Systems, another cell phone operator. But this deal also does not meet the interests of Telenor, which does not want to see a rival on the Ukrainian market.
At an extraordinary meeting on September 14, 2005, VimpelCom shareholders possessing 79.83% of the company's stock approved a deal to purchase Ukrainian Radio Systems. But Telenor representatives sent a letter to the company's management saying that more than 80% of the votes were required to approve the decision.
VimpelCom group of companies includes cell phone operators in Russia, Kazakhstan and, following the recent acquisitions, in Ukraine, Tajikistan and Uzbekistan. VimpelCom is licensed to provide mobile phone operations to a region home to 232 million people. The company covers 78 regions of Russia (136.5 million people or 94% of Russia's population) and the entire territory of Kazakhstan, Ukraine, Tajikistan and Uzbekistan.