Russia's VimpelCom Withdraws Proposal to Buy Ukraine's Kyivstar

MOSCOW, June 1 (Prime-Tass) -- Russia?s second largest mobile operator VimpelCom has withdrawn its proposal to both Norwegian telecommunication company Telenor and Russia's Altimo, the telecommunications arm of Alfa Group, to acquire 100% in Ukraine's largest mobile operator Kyivstar for U.S. $5 million, VimpelCom said in a press release Thursday.

?Telenor has publicly stated that a market-based separation agreement between Telenor and Altimo and the associated Federal Antimonopoly Service (FAS) approvals are necessary conditions to the sale of Kyivstar to VimpelCom. However, VimpelCom sees little prospect that such an agreement will be reached in the foreseeable future,? VimpelCom said.

VimpelCom's CEO Alexander Izosimov said that VimpelCom would ?always be happy to return to the negotiating table and to consider further proposals from Telenor and Altimo in the future. In the meantime, we will focus all our efforts on pursuing our announced strategy of expansion into the Ukrainian market through Ukrainian Radiosystems, where the initial results following our launch of the Beeline brand have been encouraging.?

VimpelCom offered to buy Kyivstar in mid-February, however, Telenor and Altimo, which are shareholders in both VimpelCom and Kyivstar, could not reach an agreement.

Telenor holds 26.6% and 56.5% in VimpelCom and Kyivstar, respectively, while Altimo holds 32.9% and 43.5%.

As a clause to the sale, Telenor suggested that it sign a market-based separation agreement in VimpelCom with Altimo, a move that did not garner the support of Altimo.

On Monday, Telenor asked VimpelCom to move the deadline for completing negotiations on a Kyivstar deal to July 1.

Telenor has been in a conflict for about one year with Altimo and VimpelCom over VimpelCom?s expansion into Ukraine. In November 2005, VimpelCom purchased a minor mobile operator Ukrainian Radiosystems (URS), a move that was opposed by Telenor.

End"

Posted to the site on 1st June 2006