PRESS: VimpelCom OKs 2005 Financial Report Amid Telenor Opposition

MOSCOW, April 10 (Prime-Tass) -- The board of directors of Russia?s second largest mobile operator VimpelCom approved the company's financial report for 2005 on April 7 despite opposition from one of the shareholders, VimpelCom's Press Secretary Yulia Ostroukhova said, business daily Vedomosti and Kommersant reported Monday.

The financial report was approved by a simple majority, a spokesperson with VimpelCom said, Kommersant reported.

The three directors representing Norwegian telecommunication company Telenor voted against.

Before the vote, Henrik Torgersen, Fridtjof Rusten and Arve Johansen said in a letter to the board?s chairman last week that they would not approve the report until they get clarification on VimpelCom's purchase of minor mobile operator Ukrainian Radiosystems (URS) for U.S. $231 million made in November 2005.

The three directors claimed in the letter that VimpelCom concealed from investors that "some of (Alfa Group's) representatives and URS' sellers had business relations."

Russia's Alfa Group, which also has three directors on VimpelCom's board, has a 32.9% stake. Telenor has a 26.6% stake in VimpelCom. The remaining three seats on the board are occupied by independent directors.

VimpelCom and Alfa Group denied the accusations.

"When acquiring URS, we followed all the laws and rules of the U.S.' Securities and Exchange Commission," Ostroukhova said, Vedomosti reported.

Alexei Reznikovich, general director of Altimo, a telecommunications subsidiary of Alfa Group, also denied the accusation, saying that neither he, nor Altimo's other top managers had any personal interest in URS' sale, the daily reported.

Telenor and Alfa Group have been in a conflict over VimpelCom's expansion in Ukraine for about a year. The conflict escalated after VimpelCom purchased URS prompting Telenor to file three lawsuits against VimpelCom and block approval of VimpelCom's financial budget for 2006.

Telenor also claimed that URS was overvalued and that some of the money went directly to URS' former shareholders linked to Alfa Group. URS' subscriber base amounted to 275,000 users as of April 1, or about 1% of the market.

The two shareholders have not reached a solution on the issue yet, but Reznikovich and Telenor?s Executive Vice President and Head of Eastern/Central Europe Jan Edvard Thygesen held a meeting last week at which they discussed VimpelCom's opportunities in Ukraine. The two parties agreed to hold detailed talks later.

As a way out of the conflict, Telenor has proposed that VimpelCom pay U.S. $5 billion in cash to acquire 100% in Ukrainian mobile operator Kyivstar, while the deal would also include the signing of a market-based separation agreement in VimpelCom.

Telenor holds 56.5% in Kyivstar, while Alfa Group holds the remaining 43.5%.

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Posted to the site on 10th April 2006