Russian VimpelCom and Ukrainian Kyivstar announce merger
Telenor and Russia's Altimo have found a route out of their persistent battles over their Russian and Ukrainian assets and have announced plans to common assets in VimpelCom (which operates under the Beeline trademark) and Kyivstar to create a single company.
Altimo is the telecoms investment arm of Russia's Alfa Group, controlled by Russian oligarch Mikhail Fridman. Telenor holds 56.5 per cent of the shares in Kyivstar. The remaining 43.5 per cent is held by Alfa affiliate Storm. Altimo also owns 6.6% of Turkcell, though which it has a secondary investment in Ukrainian mobile operator Astelit.
The new company, still to be called VimpelCom will continue to be incorporated in Bermuda, and hence subject to New York business laws, will be headquartered in the Netherlands and will be listed on the NYSE. For 2008, the combined revenues amounted to approximately US$12.6bn and the combined EBITDA to US$6.3bn, with approximately 85 million subscribers at year-end 2008.
The agreement includes the resolution of all outstanding disputes between Telenor and Altimo. The parties have agreed to suspend all their ongoing legal proceedings and take action to withdraw or settle them prior to the transaction being completed.
To prevent flare ups of the sort that have beset the two companies over the past few years, the new company will have a nine-member board of directors, three of whom will be nominated by Telenor, three of whom will be nominated by Altimo, and three of whom will be independent and unaffiliated with either Telenor or Altimo. The Chairman of the Board will be one of the independent directors, unless otherwise agreed. Independent board members will act as a swing vote, with neither Telenor nor Altimo having a veto on any matter.
The company has however yet to name the new CEO of the enlarged company.
Jon Fredrik Baksaas, President and CEO of Telenor Group, said: "We have turned a five-year struggle into an exciting venture for the future, and are pleased to announce an agreement that will enable us to focus completely on the long term value creation opportunity of the new company and put all previous disagreements behind us."
Alexei Reznikovich, CEO of Altimo, said: "Today is a truly historic day for our companies. We witness the appearance of a new star in the global telecom space. Altimo and Telenor have joined together to create a true leader in the telecoms market in the interests of all shareholders and subscribers. The new company will have unparalleled experience in providing modern telecoms solutions in strongly competitive environments. Moreover, the new company will be strong financially and therefore much more attractive to investors all around the globe who are looking for stable investment opportunities."
