MOSCOW, June 1 (RIA Novosti) - Vimpelcom (RTS: VIMP) said Thursday it had dropped its bid for Ukrainian telecoms company Kyivstar.
Commenting the deal, Russia's second largest mobile operator cited a proposal by Norwegian telecoms giant Telenor, one of its two majority shareholders, to approve an unconditional mechanism for VimpelCom's shareholders to exit the company should either party wish.
"Although the parties agreed on the timeframe for the deal, the acquisition of Kyivstar required that partnership end between Telenor and Altimo [Vimpelcom's other majority shareholder], and we have seen little progress on the issue in the last three months," Vimpelcom general director Alexander Izosimov said.
Izosimov said that the company, in which Telenor holds a 26.6% and 32.9% belongs to Altimo, the telecoms arm of financial major Alfa Group, was still open to further talks and proposals.
"In the meantime, we'll focus on our declared strategy to expand onto the Ukrainian market through Ukrainian Radio Systems," he said.
Telenor and Alfa Group filed applications with the Federal Antimonopoly Service last summer seeking to increase their stakes in Vimpelcom.
Telenor said it was prepared to sell its stake in Kyivstar to Vimpelcom and display flexibility in payment terms, if agreement was reached with Altimo on the mechanism of partnership termination and permission from the Russian antimonopoly watchdog was obtained.
Altimo said this term, advanced as a condition to close the deal, did not comply with Russian legislation and was deliberately unrealistic.
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 opposed 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.
