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. Last Updated: 07/27/2016

Vimpelcom Finds Way To End Licensing Row

Vimpelcom said Tuesday that it was preparing to merge with subsidiary KB Impuls, the holder of its Moscow license, after the regulator said doing so could end a dispute over Vimpelcom's Moscow business.

Regulators told Vimpelcom in January that a long-standing agency agreement between the operator and its subsidiary KB Impuls did not specifically give Vimpelcom the right to sell services on behalf of Impuls.

The country's senior telecoms regulator, Leonid Reiman, raised the stakes in the spat Tuesday by saying that Vimpelcom could solve the matter by undertaking the legally tricky transfer of the Moscow license to the parent company.

"There are complaints against their license arrangements," Reiman, the long-standing regulator who is serving as acting communications minister following President Vladimir Putin's sacking of the Cabinet last week, told a news conference.

"The license is held in one company's name, and another one sells services. This is a contradictory situation that violates consumers' rights," he said.

Asked if transferring the license from KB Impuls to Vimpelcom would solve the problem, Reiman said: "Yes. They just have to take some legal and organizational steps."

Vimpelcom spokesman Mikhail Umarov said in a statement after Reiman's remarks that Vimpelcom still believed its license arrangements were correct but the company believed the internal merger would be "justified" if it ended the conflict.

"The existing regulations, including the law on communications, do not fully define how licenses, frequency permissions and other permissions are transferred from one legal entity to another in the process of reorganization," Umarov said.

Vimpelcom has long said it would like to transfer the license to Vimpelcom itself, but that could require it to hand over the Moscow license and frequencies, then re-apply for them in its own name, with unclear prospects of getting them back.

The merger is a less risky but more time-consuming option because Vimpelcom would have to call an extraordinary general meeting to approve the merger.

Vimpelcom, part-owned by Norwegian phone company Telenor, has filed a suit against the regulator to overturn an order to rectify a breach, and won an injunction, buying the company some time ahead of a March 18 court hearing.

The regulatory challenge is seen as spill-over from a commercial conflict over Vimpelcom competitor MegaFon, which is partly owned by TeliaSonera.

Alfa Group, which owns about a quarter of Vimpelcom, is attempting to take a stake in MegaFon and possibly merge the two operators. Other MegaFon shareholders, including TeliaSonera and Russian holding Telekominvest, have protested the acquisition.