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Published in Stocks and Investing on Monday, May 18th 2009 at 1:33 GMT, Last Modified on 2009-05-18 01:34:52 by Market Wire
OSLO, NORWAY--(Marketwire - May 18, 2009) - (Fornebu, Norway, Kyiv, Ukraine, - 18 May 2009) Farimex, reputed from attacking Telenor's investments in the Russian mobile operator VimpelCom, is also behind an investigation launched by the Anti-Monopoly Committee of Ukraine (AMC) against Telenor and Kyivstar. Telenor was officially notified of the commenced investigation on 7 May this year. Farimex Products is registered on the British Virgin Islands and claims to hold ADRs representing a 0.002 per cent stake in VimpelCom.
"Telenor is a strong defender of competition and believes the AMC has been sadly misled by Farimex," said Jan Edvard Thygesen, EVP and Head of Telenor's operations in Central and Eastern Europe. Farimex claims that Telenor, Kyivstar and Storm are in breach of Ukrainian Competition legislation by including a non-participation clause in the Shareholders agreement and that Telenor hindered competition in Ukraine through delaying VimpelCom's acquisition of Ukrainian Radio Systems (URS).
Promoting competition
"Non-participation clauses are normally included in agreements between partners world-wide, so too between the Kyivstar shareholders in the agreement signed in 2004. This was done in order to promote fair competition and avoid monopolisation of the market. The agreement restricts each party from holding more than five per cent in competing businesses in Ukraine without the other party's consent. It regulates affairs between two shareholders, and in fact opens up for more actors in the market, rather than restricts competition," said Trond Moe, Country Manager of Telenor Group Ukraine.
The URS transaction
"Telenor has always supported VimpelCom's international expansion, also to Ukraine, on terms favourable to VimpelCom and its shareholders" said Trond Moe. "Our major reason to go against the acquisition of URS in 2005 was to prevent VimpelCom from losing money through an overpriced and non-transparent acquisition. Unfortunately we have been proven right in our assumptions that the company would require huge investments to cope with an already maturing Ukrainian market. At present Beeline continues to show little growth in Ukraine, having a market share of only 3.4 per cent and just over two million subscribers despite additional investments by VimpelCom of more than 600 million USD so far."
URS was acquired by VimpelCom in 2005 at a price of 231 million USD after having been unsuccessfully offered to Golden Telecom at a price of 100 million USD at an earlier stage. In the Board of Directors of VimpelCom, Telenor-appointed board members argued against the acquisition for three reasons; a too high price, unidentified sellers and non-credible business plans presented for URS development.
"Telenor, as one of the world's largest operators, is always guided by good business logics and high ethical standards. That is why Telenor did its best to prevent VimpelCom and its shareholders from loosing money in Ukraine. We are confident the AMC will consider this and discard the unfounded accusations set forth by Farimex," said Mr. Thygesen
Background
Last summer Farimex initiated a court proceeding against Telenor, VimpelCom and Altimo in a distant court of Khanty-Mansiysk in Western Siberia, Russian Federation. Farimex accused the three companies of having caused losses to VimpelCom by delaying VimpelCom's acquisition of URS. The Khanty-Mansiysk court held Telenor solely liable for VimpelCom's alleged late entry into the Ukrainian mobile market and ordered Telenor to pay VimpelCom USD 2.8 billion in damages.
This decision was cancelled by the Omsk court on 29 December 2008. However, on 20 February 2009 the court ruled to hold Telenor liable for USD1.7 billion. The court gave Farimex a writ of execution to claim the amount that resulted in arrest of all Telenor shares in VimpelCom on 11 March 2009. Telenor has appealed the decision of the Omsk court and the appeal will be heard in Tyumen in Western Siberia on 26 May 2009.
Contact persons: Dag Melgaard, Communication Manager, Telenor ASA tel: +47 901 92 000, e-mail: [ dag.melgaard@telenor.com ] Anastasiya Gogoleva, Communication Director, Telenor Group in Ukraine tel: +38 067 467 6666, e-mail: [ anastasiya.gogoleva@telenor.com ] Anna Ivanova-Galitsina, PR and Communications Director, Telenor Russia Tel: +7 495 937 9588 E-mail: [ anna.galitsina@telenor.com ] To editors: See also Telenor's special web-pages "Defending investments in Russia and Ukraine": [ http://telenor.com/en/news-and-media/in-focus/ownership-interests-in-russia/ ]
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