The conflict between the Russian Alfa Group (indirect holder of 32.9 percent of VimpelCom stock) and the Norwegian Telenor holding (holder of 26.6 percent of its stock) arose this February when the Temryuk District Court of Krasnodar Territory ruled in favor of a minority shareholder in VimpelCom in a suit to change the company's charter. Shareholder Viktor Makarenko demanded that the charter be changed so that decisions on obtaining other companies could be made by a simple majority on the board of directors, that is, five out of nine members, instead of a qualified majority of seven of the nine (as it is at the moment). That decision was to the advantage of Alfa, which was then able to attain approve for the purchase of the Ukrainian Radiosystems Co. (URC). That decision had been blocked by Telenor representatives, who have three seats on the board. In April, the Supreme Court of the Russian Federation halted the execution of the decision of the Krasnodar court on a suit by Telenor.

In spite of the fact that the war on the VimpelCom board has been going on for three months, Alfa Group representatives talked to journalists about it for the first time only on Tuesday. Alfa's official position is simple. The consortium remains a strategic investor in VimpelCom and has no intentions of its stock and is still in favor of the purchase of URC. Alfa Telekom announced yesterday that the option to buy 100 percent of that company has not run out yet. In order to speed up the purchase, Alfa has applied to the Moscow Arbitration Court with the same suit has Makarenko filed in Temryuk, that is, against the interests of Telenor.

Alfa representative on the VimpelCom board Alexey Reznikovich said of that suits perspectives yesterday that “By the time the board of directors of Telenor make any decision on entering the Ukrainian market, it will be too late. The Russian legal system can work much faster.” He added that “the sensible actions for the large shareholders and minority shareholders relative to VimpelCom's entry into Ukraine can coincide.”

Analysts do not see much hope for the suit. “The actions of the Supreme Court in overturning the decision of the Temryuk court indicate that Alfa will probably lose this case and its efforts will go for nothing,” said Olga Zhilinskaya of Renaissance Capital.

Nonetheless, they hold at Alfa that the deal with URC will go through. Alfa representatives state that, in the second half of June, they plan a stockholders meeting with a single issue on the agenda – the acquisition of URC. Alfa Telekom executive director Pavel Kulikov stated the volume of investment that VimpelCom plans to make in URC in the next ten years at $500 million. He added that that will allow VimpelCom to take about 20 percent of the Ukrainian market for mobile communications.

Analysts doubt that the dispute will be settled in court. “The worsening strain in the board of directors of VimpelCom is obvious and it will lead to the two sides beginning negotiations, but they will go on for a long time – six months to a year” thinks Uralsib senior analyst Konstantin Chernyshev. “However, sooner or later, Alfa will leave VimpelCom. Maybe Telenor will pay a big price for it, that is, allow Alfa to obtain some of the Norwegian holding itself.” Telenor refused to comment on Tuesday. A member of the Telenor press service told Kommersant that that it was a national holiday in Norway and official representatives of the company were unavailable.

© "Kommersant"