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Telenor, Altimo press pause on Vimpelcom feud
OSLO/MOSCOW (Reuters) - Russian billionaire Mikhail Fridman's Alfa Group and Norway's Telenor (TEL.OL) brought some respite to their fight for control of Vimpelcom (VIP.N) by taking near-equal stakes in deals which have buoyed shares in the mobile operator.
The co-investors have repeatedly feuded over strategy during the past decade, during which New York-listed Vimpelcom - with an equity value of $15 billion (9 billion pounds) - has expanded out of its Russian base to earn the bulk of its revenues abroad.
Analysts said the two main shareholders could still have different visions for Russia's no. 3 mobile operator but said moves to create ownership parity were a positive step towards resolving hostilities which have flared anew recently.
"This seems to be a step in the right direction and may settle the dispute before it reaches the legal system," said Markus Bjerke, an analyst at Arctic Securities.
Telenor said on Thursday it expected a court case initiated by Russia's anti-monopoly regulator FAS to be dropped following a deal a day earlier that secured Alfa a near-equal Vimpelcom stake. The court case was in response to Telenor raising its stake in Vimpelcom in February.
Telenor slightly increased its stake to 43 percent of votes on Thursday from 39.5 percent, as Egyptian tycoon Naguib Sawiris' Weather holding company exercised its option to sell Telenor a 3.5 percent voting stake, as agreed in February.
Alfa's stake increase was also made possible by Sawiris' decision to exit. Alfa said on Wednesday it bought a 14.8 percent voting stake from Weather for $3.6 billion, raising its holding to 40.5 percent from 25 percent.
Sawiris had become a Vimpelcom shareholder as a result of a more than $6 billion cash and share deal for his telecoms assets - a 51 percent stake in Egypt-based Orascom Telecom (ORTE.CA) and 100 percent of Italy's Wind.
Telenor opposed the transaction that diluted its stake in Vimpelcom because it saddled Vimpelcom with billions of dollars of debt and distracted it from the Russian market where it ceded the No.2 spot to MegaFon, then also co-owned by Alfa-Group.
Analysts at Uralsib said: "Yesterday's deal does not guarantee that the shareholder conflict will be fully settled. However, it is quite likely that the case initiated by the FAS will be dropped and the ban on dividend payments lifted.
"This will certainly support the stock."
The anti-monopoly regulator FAS filed a lawsuit in April challenging Telenor's dominant position in Vimpelcom and obtained a court injunction preventing Vimpelcom from paying dividends.
Newspaper reports suggest FAS wants Russian shareholders to have at least the same weight in Vimpelcom as major foreign co-investors and Alfa has called on the Norwegian group to sell it a part of its stake to maintain parity.
Amsterdam-based Vimpelcom's Russian unit OJSC Vimpelcom, which generates some 40 percent of Vimpelcom's total revenues, is considered a strategic asset by the Russian government.
While an initial hearing on the FAS lawsuit is scheduled for October 17, the watchdog is seeking an out-of court settlement.
Telenor on Thursday declined to comment on Alfa's suggestion that Telenor should sell it some of its own Vimpelcom shares and said it needed to settle the anti-monopoly dispute first.
FAS also declined to comment when asked if it was satisfied with the new ownership structure and would drop the legal case that has prompted Vimpelcom to postpone a listing on a European stock exchange.
"It is not yet clear whether FAS will still have any complaints (regarding Telenor's ownership) but the fact that the situation has begun to unfold is good news," said Konstantin Belov, an analyst at Moscow-based Uralsib.
Vimpelcom's shares closed almost 9 percent higher on Wednesday on hopes the regulator will now drop its lawsuit, paving the way for Vimpelcom to resume dividend payments. The stock was off 2.35 percent in early trade on Thursday.
Alfa also has an option to increase its stake further by buying 6 percent from Ukrainian tycoon Viktor Pinchuk. Evgeny Dumalkin, Vice-President of Alfa's unit Altimo, which holds its Vimpelcom stake, said on Wednesday it was reviewing all options.
The dispute between Telenor and Alfa has typified the challenges many overseas investors face in Russia's oligarch-dominated business world.
Analysts at Jefferies warned against interpreting the recent developments 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," Jefferies analysts wrote in a note.
(Additional reporting by Ole Petter Skonnord and Vegard Botterli in Oslo and Anastasia Teterevleva in Moscow; Editing by Megan Davies and David Cowell)
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