Telenor Declares Victory In US Kyivstar Case Against Alfa

OSLO, Norway -- Telenor, the Norwegian telecoms company, has claimed a victory in its long-running battle with Alfa, its Russian business partner, after a US court ruled in Telenor's favour in a dispute over their joint-ownership of Kyivstar, Ukraine's largest mobile phone company.

Telenor headquarters in Oslo, Norway

An arbitration tribunal in New York on Thursday gave Alfa 120 days to abide by an agreement that forces Alfa either to sell its stake in Kyivstar or reduce its holdings in two Ukrainian competitors to below 5 per cent.

Telenor owns 56.5 per cent of Kyivstar with Alfa owning 3.5 per cent, but this business relationship has degenerated into a public slanging match fuelled by lawsuits in the US and Ukraine over who controls the company.

There was little to indicate that this unhealthy situation would be resolved following Thursday's ruling; although further signs emerged that relations were set to deteriorate further.

Altimo, the telecoms investment arm of Alfa, immediately rejected the US ruling, saying it was unenforceable in Ukraine and vowing that it would never sell its stakes and that it would instead continue its fight over Kyivstar in Ukrainian courts.

"We are not going to sell – we won't do it," said Kirill Babaev, vice-president of Altimo.

He added that Telenor had been banned by a Ukrainian court from taking any legal action over Kyivstar outside of Ukraine and as such the New York ruling was irrelevant.

Lawyers representing Altimo in Ukraine said on Thursday: "Legal precedent in Ukraine definitely favours non-enforcement."

Telenor responded by pointing out that as Ukraine is a signatory to the United Nations Commission on International Trade Law, the ruling is applicable.

With the gulf between the two sides as wide as ever, people close to the situation indicated that the real benefit of the US ruling might be to speed up an eventual separation of the shared business interests of Telenor and Alfa, as both sides have said they want.

"This is not going to be resolved in court," said Mr Babaev. "We should sit down with each other."

Telenor shares were up 4.3 per cent at NKr109.

Source: MSNBC