Alfa attacking Telenor on all fronts

24 Aug 2005

Relations between Alfa Group and Telenor have deteriorated further after the Russian group filed a law suit against Telenor over the pair’s Ukrainian joint venture Kievstar. Alfa alleges that a number of Kievstar’s company statutes violate Ukrainian law. Most recently it claimed that it was refused a say in the appointment of Kievstar’s new CEO. ‘Alfa Telecom, a major shareholder in the company, has been fully removed from the corporate governance and decision-making processes in Kievstar,’ Alfa said in a statement. ‘Kievstar’s bylaws grant all corporate governance rights to Telenor.’

The two companies are already engaged in a dispute concerning the overseas strategy of their co-owned Russian cellco Vimpelcom. ‘We will have to look into it,’ Telenor spokesman Dag Melgaard told Norwegian newspaper Aftenposten. ‘The truth is that they have not turned up for board meetings or general assemblies, despite being called in. If they had turned up for board meetings I am sure that we would have had a good dialog.’

Alfa and Telenor have been at loggerheads ever since the Russian group attempted to push Vimpelcom into a USD200 million purchase of Ukrainian cellco WellCOM since last year, claiming that the cellco possesses high growth potential in a rapidly expanding market. Telenor is fiercely opposed to the purchase and the pair have been embroiled in a vicious battle for control of Vimpelcom since the early part of this year. The Norwegian company says that its stake in Kievstar means that a potentially costly raid for the far smaller WellCOM has ‘no business merit’; at the end of March 2005 Kievstar had 7.662 million users compared with WellCOM’s estimated 50,000.

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