OSLO/MOSCOW: Norway’s Telenor faces losing its influence over Russian mobile operator Vimpelcom after fellow leading shareholder Altimo said it wants to scrap the company’s shareholder agreement.
The 2009 agreement, thrashed out after years of courtroom and boardroom battles between Telenor and Russian billionaire Mikhail Fridman’s Altimo, was designed to give Altimo and Telenor roughly equal say in Vimpelcom.
One of the key elements of the agreement was a balanced boardroom, with three independent directors balancing Altimo and Telenor’s three directors a piece.
Altimo said late on Friday it wanted to scrap the agreement after Vimpelcom brought in a third major shareholder, Egyptian tycoon Naguib Sawiris.
Sawiris is the owner of international telecoms assets bought by Vimpelcom in a $6 billion cash and shares deal, and Altimo wants Sawiris to have similar rights to other leading shareholders.
Telenor had opposed the deal, saying it did not make financial or strategic sense. It fought a protracted battle with Vimpelcom’s management and Altimo but was narrowly defeated in a March 17 shareholder vote.
Telenor is now pursuing arbitration to allow it to buy enough new shares to maintain its previous stake in the company, a move analysts estimate could cost $2.6 billion.
Whole new scenario
Analysts said Altimo’s move was designed to give Fridman and Sawiris control of Vimpelcom and push out Telenor.
"We see a high probability that Altimo … and Sawiris will be able to control the board. Even if they only have half the board members, they will be able to push through all the major decisions they need," said Victor Klimovich, an analyst at VTB Capital in Moscow.
"Hence, we expect that the current balance of votes in the board which, in theory, works in favour of the company itself, (and hence minority shareholders) in the new board will not be retained," he added.
If the shareholders’ agreement is annulled, Telenor spokesman Dag Melgaard said it would open up a "whole new scenario which we will need time to reconsider".
Shares in Telenor were down 1.8 percent in Oslo, roughly in line with the market, as some investors said that Telenor might be better off out of the long-running corporate battle.
"I cannot see anything other than that Telenor will benefit from seeing this (Vimpelcom) as a financial investment and not a strategic asset," said Tore Toenseth, an analyst at Argo Securities.
Telenor and Vimpelcom are broadly similar in size in terms of subscriber numbers and occupy the fifth and sixth positions on the list of world’s biggest mobile operators.
The deal with Wind saw Telenor’s stake in Vimpelcom fall to 25.1 percent, while Altimo has 31 percent. To trigger an annulment of the shareholder agreement, Altimo said it would sell just enough shares to make its stake drop below 25 percent.
If Telenor is successful in its arbitration case, Altimo would have to decide whether to accept a less powerful position as third-biggest shareholder or also spend the billions required to exercise its right for new shares.
