Alfa Moves to Secure Ukraine Expansion

MOSCOW, Russia -- Alfa Group said on Thursday that it had decided to call an extraordinary shareholders' meeting of the country's second largest mobile firm, VimpelCom, in mid-August to discuss expansion in Ukraine.

Alfa Telecom, Alfa's telecoms arm, said in a statement that the exact date would be announced in the next few days.

Alfa Chairman Mikhail Fridman

VimpelCom is torn by a conflict between two key shareholders, Alfa and Norway's Telenor, over whether the company should expand in Ukraine, where Telenor controls the country's second-biggest mobile phone company.

Telenor opposes the purchase of a small firm, Ukrainian RadioSystems, saying the financial arguments in favor of it are weak.

Alfa wants VimpelCom to expand in Ukraine, as the Russian mobile phone market is close to saturation. The management has warned that time is running out for expansion.

"Alfa Telecom still thinks that the expansion of VimpelCom in the Ukrainian mobile services market is in line with the company's long-term interests and its strategy approved by the shareholders," the statement said.

The Ukrainian issue turned into a heated battle over how many independent directors proposed by Alfa and Telenor should be on VimpelCom's board, with Alfa managing to push through two and Telenor one.

With the two key shareholders at odds over the issue, minorities have become more important.

"Alfa Telecom thinks that minority shareholders have demonstrated their support for the company's management initiative to expand in Ukraine by supporting two candidates nominated by Alfa Telecom," the statement said.

Even if the shareholders' meeting backs the Ukrainian RadioSystems purchase, the decision would still not be binding under VimpelCom's charter, which requires board approval by a supermajority, or eight votes out of nine.

There are three representatives of Alfa, three representatives of Telenor and three independent directors on VimpelCom's board. However, analysts have said that Alfa could use the meeting to try to change the charter.

Telenor has opposed what it calls "illegal" efforts by Alfa to change the company's charter to allow decisions by simple board majority.

Alfa Group wants to hold a stake in a global mobile phone operator, the Financial Times quoted Alfa chairman Mikhail Fridman as saying on Thursday.

"The past few years have shown that the future belongs to global companies such as Vodafone and Orange, and we are much more interested in being a minority investor in a larger multinational company than remain investors in several national companies," Fridman said.

Alfa owns stakes in Russia's second-largest mobile phone company, VimpelCom; in Russia's third-biggest mobile operator, MegaFon; and in Golden Telecom, the country's top independent fixed-line operator.

Source: The Moscow Times

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