- Telenor ASA today announced it would support cooperation - for example, a service provider agreement - between Russian mobile operator VimpelCom and Ukrainian mobile operators, including Kyivstar G.S.M. As a strong supporter of VimpelCom's expansion plans, Telenor also criticized Alfa-nominated Board members of VimpelCom for their failure to approve 2006 VimpelCom budgets for Russia, Kazakhstan, Tajikistan and Uzbekistan.
“Telenor believes a strategic alliance between VimpelCom and one of the established Ukrainian mobile operators could be one way for VimpelCom to enter the Ukrainian market,” said Executive Vice President and head of Telenor’s Central and Eastern Europe operations, Mr. Jan Edvard Thygesen. “Neither VimpelCom nor Alfa have come forward with credible proposals for VimpelCom’s entry into Ukraine – shareholders were only offered the over-priced URS acquisition and a proposed business plan which we believe will destroy value for shareholders. In today’s VimpelCom Board meeting, Telenor’s nominees repeated their invitation to management to explore lower risk alternatives for entering the Ukrainian market, including a service provider agreement with one of the established operators,” said Thygesen.
At the VimpelCom Board meeting, Alfa-nominated Board members refused to approve budgets that covered 98% of all VimpelCom’s operations, including Russia, Kazakhstan, Tajikistan and Uzbekistan. Alfa also refused to consider approving these budgets. Telenor has asked for a separate budget for Ukraine based on the present disagreement over the acquisition and further funding of the URS.
Telenor today holds a 29.9% economic (and 26.6% voting) interest in VimpelCom, and a 56.5% voting interest in Kyivstar.
“We have always supported VimpelCom’s expansion plans and are happy to support VimpelCom’s investments and capital expenditures in Russia, Kazakhstan, Tajikistan and Uzbekistan that would continue to create value for VimpelCom shareholders,” said Jan Edvard Thygesen. “Alfa’s failure to approve these regional budgets is blocking the development of VimpelCom in these key markets and stems from its inability to act in the interests of all shareholders. There is no industrial logic in the Board approving a budget and business plan for Ukraine, an already well-penetrated market, that involves VimpelCom wasting millions on development of a national network for a fourth operator such as URS. For some reason, Alfa would prefer to block all of VimpelCom’s development in pursuit of this indefensible approach.”
“Telenor will continue to insist on good corporate governance and compliance with law, and will, by providing solid industrial leadership, continue to create substantial shareholder value for all shareholders,” Thygesen said.