Investment company denies intent to sell share in Kyivstar
Norwegian telecoms firm Telenor, which announced last week that it had increased its stake in mobile phone provider Kyivstar GSM from 45.4 percent to 61.9 percent, has denied reports that it intends to sell its entire shareholding in the company to Vimpelcom, a publicly traded Russian mobile phone company.
“The report that Telenor plans to transfer its Kyivstar shares to Vimpelcom is probably just analysts’ speculations and has no basis in facts,” said Hallvard Austlid, Telenor’s representative in Ukraine.
Telenor last week announced that it had completed a $66.46 million buyout of a 16.5 percent share in Kyivstar, previously owned by Sputnik Funds, a Western‑financed private‑equity firm operating in the CIS. The acquisition was made in line with a pre‑existing option arrangement.
Soon after Telenor’s announcement, several Ukrainian and Russian news reports alleged that the Norwegian state‑controlled company intended to sell its Kyivstar shares to Vimpelcom. Many Ukrainian stockbrokers also predicted such a move.
In return, the reports said, Telenor would obtain an increased holding in Vimpelcom as part of an option. Telenor already owns 29 percent of Vimpelcom.
Kyivstar’s press service also challenged the validity of those reports, telling Interfax Ukraine that Telenor does not plan to sell Vimpelcom its shares in Kyivstar.
“I’m sure that Kyivstar’s ratios, which are growing very fast, could give a boost to Vimpelcom’s stock, but I’m not sure Vimpelcom, or its other shareholders, are interested in such a deal as the company right now is in a situation where it needs lots of cash for further development,” a broker in Moscow told the Post on condition of anonymity.
Telenor, which became a shareholder in Kyivstar in 1998 with a 35 percent shareholding and further increased its share in 2001 to 45.42 percent, is upbeat about its most recent investment.
“We believe in the great potential of the Ukrainian mobile market and we believe in the high level of ability and competence of Kyivstar’s management and staff,” Telenor’s Austlid said.
Recent figures show Telenor has reason to be excited about Kyivstar.
Since its controversial appearance on the market in 1997, Kyivstar has rapidly gained ground on long‑time market leader UMC. Kyivstar has close to 1.5 million subscribers and a market share of just over 50 percent. UMC, which is more oriented toward corporate clients, has about 1.3 million subscribers and remains the market leader in terms of revenues and profits.
Together, both companies control more than 90 percent of the mobile market in Ukraine.
With just 6 percent of the country’s 48 million people currently using mobile phones, there is plenty of room for growth at both companies.
“We consider Kyivstar GSM a well‑run company,” Telenor Mobile CEO Arve Johansen said. “Our acquisition is in line with the declared strategy of Telenor and our ambitions of further growth through majority positions in our main international operations.”
Telenor’s Austlid declined to comment on whether his company would seek to have one of its representatives appointed head of the company’s supervisory board. That post is presently held by Yury Tumanov, a representative of Ukraine‑registered Storm Ltd., a smaller shareholder.
Kyivstar was formally established in 1994, but was effectively dormant until 1997 when it surprised many by winning one of three GSM licenses handed out by the government in a tender.
Telenor has already invested more than $85 million into the development of Kyivstar. The company received more than $240 million in investments between 1997 and 2001.
Telenor also owns a 100 percent share in Pannon, the second largest mobile operator in Hungary.
