In a long-running dispute, the Moscow Arbitration Court rejected a Telenor suit Monday upholding a decision by VimpelCom's shareholders to approve the acquisition of Ukrainian Radio Systems, a leading cell phone operator in Ukraine.
Executive Vice President Jan Edvard Thygesen said Telenor intended to challenge the decision.
VimpelCom, Russia's second largest mobile phone operator, is majority owned by Norwegian Telenor and Altimo, the telecoms arm of financial major Alfa Group, and is best known for the Beeline trademark, one of the most popular mobile operators in the country.
Telenor holds 26.6% of shares in VimpelCom, while Altimo (previously Alfa Telecom) holds a 32.9% stake. Telenor and Alfa Group filed applications with the Federal Antimonopoly Service last summer seeking to increase their stakes in VimpelCom.
The conflict between Telenor and Alfa Group first erupted over VimpelCom's plans to enter the Ukrainian cell phone market. Alfa Group supported a VimpelCom deal to acquire Ukrainian Radio Systems for $231.3 million. Telenor came out against the deal, saying it was overpriced.
The deal went through in the fall of 2005, and in January 2006 Telenor filed three lawsuits with the Moscow arbitration court against VimpelCom to challenge the deal.
In its first lawsuit, Telenor demanded the annulment of a decision by a VimpelCom shareholder meeting on September 14, 2005, to approve a deal to buy Ukrainian Radio Systems.
The second lawsuit was filed against VimpelCom, Russia's first company listed on the New York Stock Exchange, five other companies registered in the British Virgin Islands and Cyprus, and an individual who Telenor claimed had sold the Ukrainian company.
The Norwegian giant, which also holds stock in Kyivstar Communications, another telecommunications company in Ukraine, said the deal breached Russian legislation.
The third suit is seeking the annulment of a decision made by VimpelCom Director General Alexander Izosimov to close the deal without permission from the board of directors.
Due to disagreements between its core shareholders, VympelCom has failed to approve its 2006 budget so far. Telenor insists on approving the company's budgets for Russia, Ukraine and CIS operations.
