Telenor Mulls Selling Stake in VimpelCom

OSLO -- Norway's Telenor said Tuesday that it could envision selling its stake in VimpelCom to resolve a long-running conflict with estranged Russian partner Alfa Group, lifting its shares.

Telenor repeated that it would like a "divorce" from Alfa Group, a co-owner of VimpelCom, although it said it was not in the process of selling its VimpelCom holding now, and analysts said the potential timing of any deal remained as hazy as ever.

A deal between Telenor and Alfa, controlled by billionaire Mikhail Fridman, would probably need to resolve long-running conflicts over VimpelCom as well as their other venture Kyivstar, Ukraine's biggest mobile operator.

"We have said that to solve the conflict we will not sell Kyivstar ... but we might be flexible regarding our VimpelCom stake. That is one of the many possible outcomes of this conflict," said Dag Melgaard, Telenor vice president for communications.

"We have long-term ambitions for Russia ... [and] are not in any such process [to sell VimpelCom] now," he added.

Norwegian daily Aftenposten earlier reported that Telenor might be looking to sell its stake of just under 30 percent in VimpelCom, for 45 billion crowns ($8.33 billion).

Alfa, which owns 44 percent of VimpelCom's voting stock, was not immediately available for comment.

The report pushed up Telenor shares as much as 2 percent on a poor day for European stocks, rekindling investor hopes of a solution to a dispute that has prevented Telenor from consolidating the results of its 56 percent stake in Kyivstar.

"It's bullish for the shares if Telenor could find a solution to their Alfa situation," said one trader in Oslo.

Shares in Telenor slipped off highs after Telenor made clear that it was not presently engaged in selling VimpelCom, traders said.

Telenor's long-standing strategy has been to gain control of mobile ventures in developing countries or to exit them.

But analysts say the political climate in Russia, where foreign firms have been muscled out of a number of energy ventures, erode prospects for Telenor to take a majority in VimpelCom, a move which analysts say would also be expensive.

The dispute with Alfa escalated further last week, when a Siberian court held Telenor liable for $2.8 billion in damages, alleging that it delayed VimpelCom's purchase of a Ukrainian firm. Telenor said it would fight to overturn the decision.

In Ukraine, Kyivstar directly competes with a VimpelCom unit, highlighting the dilemma the Norwegian group faces as a VimpelCom co-owner.

Last month VimpelCom also finalized a joint venture with Vietnamese state companies, entering a market where Telenor has itself been keen to invest. "Telenor, and to some degree the markets, have learned to live with its situation in Russia and Ukraine -- and operationally the ventures are doing very well," said Fondsfinans analyst Arild Nysaether. "Some day the solution could come, but the message is: Don't hold your breath, it could come tomorrow or be years away."