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Telenor, Altimo to combine holdings in OJSC VimpelCom and Kyivstar, plan Russia-Ukraine merger- VimpelCom Ltd.

By Amarendra Bhushan for CEOWORLD Magazine Updated:October 5, 2009

Norway’s Telenor Group (TEL.OL) and its key partner in Russia, the Alfa Group, will pool their Russian and Ukrainian holdings into a New-York listed mobile operator, ending one of the longest corporate wars Russia has ever seen.

Telenor Group (TELN.Y) (NO:TEL) and Altimo said that they agreed to combine their holdings in OJSC VimpelCom (VIP) and Kyivstar into a new emerging-markets-focused mobile-services operator, VimpelCom Ltd.

The new company will provide mobile services in Russia, Ukraine and other members of the Commonwealth of Independent States as well as in Georgia, Vietnam, Cambodia and Laos.

And the new VimpelCom plans to expand in Europe, Asia and Africa, Telenor and Altimo said in the statement. “The companies have agreed to suspend all their ongoing legal proceedings and take action to withdraw or settle them prior to the transaction being completed,” the statement said. Terms of the deal call for holders of current VimpelCom shares and American depositary receipts to swap them for depositary receipts in VimpelCom Ltd. After the swap, Telenor and Altimo will contribute their respective shareholdings in Kyivstar in return for shares in VimpelCom Ltd.

The new company’s 2008 earnings before interest, taxes, depreciation and amortization would have been $6.3 billion on revenue of $12.6 billion.

At year end 2008, the combined company would have had 85 million subscribers.

Description of the Transactions

Assuming successful completion of the Exchange Offer, OJSC VimpelCom will become a wholly-owned subsidiary of VimpelCom Ltd. In addition, subject to receiving the required regulatory and other approvals, immediately upon completion of the Exchange Offer, Telenor and Altimo will contribute their respective Kyivstar shares to an entity that will become a subsidiary of VimpelCom Ltd. in exchange for shares in VimpelCom Ltd. (the “Kyivstar Share Exchange”).

Upon completion of both the Exchange Offer and the Kyivstar Share Exchange, the ownership in VimpelCom will be distributed like this:

Shareholders of VimpelCom Ltd:

Telenor
ownership- 38.84%
Voting ownership- 35.42%

Altimo
ownership- 38.46%
Voting ownership- 43.89%

Free float
ownership- 22.70%
Voting ownership- 20.69%

The parties expect to complete the proposed Exchange Offer, the Kyivstar Share Exchange and the related transactions by mid-2010.

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