Telenor International had a legal standoff with ‘Altimo Holdings & Investments Limited’ (part of Russian conglomerate Alfa Group) which was recently resolved with Telenor’s purchase of greater preferred shares of Vimpelcom. The highest share-holder in Vimpelcom was ‘Weather Investments’ (29.63%) followed by Telenor (25.01%) and Altimo (25%).
Vimpelcom, which is also the parent company of Pakistan’s Mobilink, had last year made stock-and-cash acquisition of Wind Telecom that created differences between Telenor and Altimo. Wind Telecom is controlled by Egyptian Billionaire Naguib Sawiris that also controls Weather Investments, who had the highest shares in Vimpelcom.
The legal standoff was causing a lot of financial problems and affecting the reputation of the involved parties as rumors had started circulating about possible adverse future outcomes. The involved parties finally came to an understanding and resolved the issue mutually.
Telenor paid $374.4 Million to Weather Investments for preferred share stock in Vimpelcom, taking its share from 25.01% to 36.4%, making it the highest shareholder in Vimpelcom once again. Weather Investments share went down from 29.63% to 18.28%, making it now the third highest shareholder in the company. As a result of this deal, Telenor withdrew its claims against Altimo and now 5 out of 11 board members of Vimpelcom will be from Telenor.
The affects of this deal are yet to be seen in Pakistan because Telenor International is now the parent company to both Telenor Pakistan and Mobilink, effectively making it a cartel. Will it really behave as a cartel or both companies will remain as competitive against each other as ever is yet to be seen. Mobilink has 32% while Telenor has 25% of Pakistani market share, making it a combined share of 57% for Telenor International.