European telecoms company Tele2 AB has reportedly submitted a $250m bid for Ukraine mobile operator Radio Systems, which operates in the Ukraine under the WellCom brand.
However, Radio Systems is said to have halted negotiations because it has an agreement with Russia’s second largest mobile operator VimpelCom BV giving it first refusal to buy the Ukrainian company.
It is true that in the past Radio Systems received offers from Swedish holding Tele2 and corresponding negotiations were conducted, Radio Systems said in a statement quoted by Reuters. However, after signing the option agreement with Vimpelcom, these negotiations were halted and are not now being conducted.
A deal between Tele2 and Ukrainian Radio Systems could have removed a source of conflict between Norwegian telecoms carrier Telenor ASA and the Russian conglomerate Alfa Group over Ukrainian expansion plans by Vimpelcom.
The Norwegian carrier owns 26.6% of the voting stock of VimpelCom, whereas Alfa Group has 32.9%. Telenor has been worried over the future direction of VimpelCom, and has clashed bitterly with Alfa over VimpelCom’s proposed acquisition of Ukrainian Radio Systems, a move Telenor disagreed with, saying it had no business merit and would destroy shareholder value.
Alfa on the other hand wants Vimpelcom shareholders to approve an offer of $200m to buy Radio Systems, but Telenor is worried the deal will have an impact on a separate Ukrainian mobile phone venture, Kyivstar.
Both Alfa and Telenor have a stake in Kyivstar, but Telenor has the majority stake and views Alfa’s attempts to steamroller VimpelCom’s acquisition of WellCom, which has some 50,000 subscribers, as a challenge to Kyivstar GSM, which is the second largest mobile operator in its domestic market, with a 9.8 million subscriber base and geographic coverage of 92% of Ukraine.
The dispute between Telenor and Alfa has been getting increasingly bitter recently. In late August it deteriorated after Alfa filed a lawsuit against Telenor over Kyivstar. Alfa alleged that a number of Kyivstar’s corporate statutes violate Ukrainian law. It also claimed that it was refused a say in the appointment of Kyivstar’s new CEO, despite it being a shareholder.
Telenor last week filed a lawsuit against Alfa in the US, seeking to deny the Russian company voting rights at a Vimpelcom extraordinary general meeting on September 14, which is set to decide on the purchase of Radio Systems.