MegaFon Shareholders Show United Front Against Alfa

MOSCOW (Dow Jones)--Three of the main shareholders in OAO MegaFon (MGF.YY) Wednesday agreed a united front against Alfa Group (ALFAGP.YY) as they try to resolve a row over ownership of Russia's third-largest mobile operator.

Sweden's TeliaSonera AB (TLSN.SK), Russian holding company OAO Telecominvest (TCIV.YY) and the IPOC International Growth Fund, which jointly own about 75% of MegaFon, said in a statement they will support each other against Alfa and work towards a speedy initial public offering for Megafon.

As part of the shareholder agreement, IPOC and Telecominvest dropped claims against TeliaSonera and said it will appoint a MegaFon director.

MegaFon's owners have been at loggerheads ever since financial and industrial holding Alfa, which owns a stake in rival mobile operator OAO Vimpel Communications (VIP), bought 25% of MegaFon from businessman Leonid Rozhetskin in August 2003. IPOC subsequently said it had options to buy the stake, sparking a legal battle over ownership.

The statement from the three holders is "bad news for Alfa's position in MegaFon," said Vladimir Postolovsky, an analyst at Brunswick UBS. "Previously, Alfa could say that if Telecominvest and IPOC didn't accept Alfa's conditions it would sell the stake to TeliaSonera, which pretended to be impartial. Now Alfa can't use that tactic."

Alfa, which is owned by wealthy investor Mikhail Fridman, has holdings in a range of assets, including oil, telecoms and mining. Alfa couldn't be reached for comment.

While analysts agree that an IPO would benefit MegaFon, giving it easier access to funds, it is unlikely to happen short term. "MegaFon's possible IPO is still some years off, TeliaSonera spokesman Michael Kongstad told Dow Jones Newswires.

Rivals VimpelCom and OAO Mobile Telesystems (MBT) are both listed in New York.

"Our agreement on certain basic principles and the support for the shareholders' agreement is important for MegaFon's stability and its day-to-day operations," TeliaSonera Chief Executive Anders Igel said in a statement.

"The public listing of MegaFon is the right way forward for TeliaSonera shareholders to maximize the value of the holding," he said.

Telecominvest was founded by Russian Communications Minister Leonid Reiman, though he says he has never had a financial stake in the company.

Company Web site: http://www.megafon.ru

-By Anna Ivanova-Galitsina, Dow Jones Newswires; 007 095 974 8055; anna.galitsina@dowjones.com (Magnus Hansson in Stockholm contributed to this article.)

(END) Dow Jones Newswires"

Posted to the site on 9th March 2005