VimpelCom Moves to Ukraine Cutting Norwegian Corners

MOSCOW, Russia -- Having masterminded another scenario to approach Ukraine and upstage Norwegian Telenor, VimpelCom bosses announced Friday the company will get Ukrainian Radiosystems (URS) via a certain private investment fund and authorize URS to use BeeLine brand in Ukraine. The experts expect such move to exacerbate the conflict between Alfa Group and Telenor to such extent that the withdrawal of one of them from VimpelCom will be the only way out.

Ukrainian Radiosystems (or URS; Wellcom, Mobi brands) that has been operating since October 1998 is licensed to render GSM 900/GSM 1800 cellular services in the whole territory of Ukraine. URS had 51,200 subscribers, 0.31 percent of the cellular market, as of May 1, 2005, Ukrainian Communication Department said.

VimpelCom’s scenario to approach Ukraine despite Telenor’s ban was unveiled Friday. According to VimpelCom GD Alexander Izosimov the company is looking for a private investment fund to buy out URS especially for VimpelCom, granting a long-term option to the cellular operator. The money to construct and develop URS network will be raised with equipment makers via commercial loans, Izosimov specified. The experts estimate the required investments at between $300 million and $400 million. VimpelCom top managers point out URS may get the right to use BeeLine brand in Ukraine.

This scenario is expected to take effect already this year, meaning although not final but still a sizable victory of Alfa in the joint stock contest of the latter and other VimpelCom major – Norwegian Telenor. Alfa that holds 32.9 percent in VimpelCom has been long advocating its foray into Ukraine but always rebuffed by Telenor (29 percent). Telenor has a Ukrainian subsidiary and blocks URS acquisition in the VimpelCom BOD. As to the decision to make an agreement with an investment fund and assign the brand, it could be taken by the company’s top managers with no Telenor authorization required. But Telenor still may block the future purchase of URS by VimpelCom and it doesn’t ease the talks with a potential buyer, Izosimov pointed out.

Telenor shrugged off Izosimov’s statement and made no comments concerning the new scenario Sunday. In Alfa Telecom that is in charge of the telecom assets of Alfa Group, they embrace any ways empowering VimpelCom to enter Ukraine.

The experts speculate Bee Line’s appearance in Ukraine will lead the conflict between Alfa Group and Telenor into a deadlock that could be broken only if one of the holders decides to dispose of its share in VimpelCom.

Source: Kommersant