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. Last Updated: 07/27/2016

Reports: Alfa Group To Buy Into Vimpelcom

The telecommunications industry was abuzz Thursday with speculation that the powerful Alfa Group holding company was negotiating to buy a stake in mobile phone giant Vimpelcom.

The talk was sparked by media reports that Alfa Eko, a subsidiary of Alfa Group, is considering acquiring a 25 percent stake in Vimpelcom from its CEO Dmitry Zimin and a 51 percent stake in the company's regional operator Vimpelcom-R.

The head of Alfa Eko's recently formed telecommunications department, Stanislav Shekshnya, said Thursday that his company did not have any immediate plans to acquire shares in Vimpelcom but did not rule out the possibility that it may be interested in purchasing a stake.

"We don't plan to buy any part of Vimpelcom," Shekshnya said in a telephone interview. "I can't really tell you much about [our] strategy, otherwise it's not going to be successful," he said. "It's like when you're going to the marketplace and you've got some money in your pocket and you start telling people about what you're going to buy. The prices will go up."

He declined to comment on whether negotiations had ever taken place, saying it was too early for Alfa Eko to publicize its strategy. The company's telecoms department was created late last year.

Vimpelcom spokesman Mikhail Umarov said the sale of a stake in Vimpelcom-R would be announced in the "very near future" but refused to say whether Alfa Eko was a potential buyer.

More than a year ago Vimpelcom began looking for an investor for its

regional projects.

Since then it has held talks with "a wide circle of companies," Umarov said.

Whether shares in Vimpelcom would be included in any deal has been a "subject in negotiations," he said.

It was unclear what a 25 percent stake in Vimpelcom might be sold for. Norway's Telenor paid $162 million for its 25 percent stake in Vimpelcom in 1999. Based on current ADR prices, the stake is worth about $217 million.

Before the opening of its telecommunications department, Alfa Eko was mainly known for its activities in the oil, sugar and wine sectors.

Some industry analysts took with a grain of salt the media reports about an imminent Alfa Eko and Vimpelcom deal, which were carried in both the Vedomosti newspaper and on the web site of St. Petersburg-based telecoms information agency

The Troika Dialog brokerage suggested that Alfa Eko could have its sights set on another leading telecommunications company, Golden Telecom.

"We think that Alfa is in talks over buying Golden Telecom, and that this rumor may be a smokescreen to suggest a lack of interest, which would reverse Golden Telecom's recent strong price performance," telecoms analyst Tom Adshead said.

Golden Telecom, the fast-growing Russian subsidiary of U.S.-based Global TeleSystems, saw its shares shoot up 28 percent Wednesday to $10.75 after a long-running slump.

Golden Telecom chief financial officer David Wisher declined to comment about the sudden rise, Reuters reported.

Officials at Golden Telecom's offices in Moscow could not be reached for comment.

Moscow analysts speculated that the increase is coming ahead of a buyout.