In a bid to gain controlling stakes in VimpelCom – the parent group of Mobilink – Telenor has purchased 3.5 percent preferred shares in Russian telecom group to acquire majority stakes in the group.
With this recent most transaction, Telenor bought 3.5% (voting) stake from Weather Investments II for US$113.6 million.
With this sell out of voting rights, Weather Investment II of Naguib Sawiris is left with 0.04 percent common shares in VimpelCom, who had gained controlling stakes in the group in 2010 against 51.7% of Orascom Telecom Holding and 100% of Wind Italy.
The transaction had been opposed by both Altimo (partner in VimpelCom) and the Federal Anti-Monopoly Service of Russia, and it is likely that Russian Anti-Trust body may block this transaction which would grant a non-Russian investment controlling stakes in a Russian firm.
VimpelCom Ltd. Ownership Structure:
As of October 2nd, 2012, ownership structure of VimpelCom is as following:
|Shareholder||% Economic Rights||% Voting Rights|
|Weather Investments II||0.04%||0%|
|Bertofan Investments Ltd.||0||6.0%|
Telenor is also looking to buy more voting rights from Bertofan Investments which are practically controlled by with Russia’s Altimo to form equal coting rights with Altimo.
Telenor said that it seeks no change to the corporate governance structure of VimpelCom Ltd., including the current board structure. Currently Telenor is represented by four board members out of nine in VompelCom.
With this latest transaction, Mobilink, the largest operator in Pakistan falls further into Telenor’s hands in terms of revenue gain and control over its management. To better understand this, majority stakes (51.7%) of Mobilink are owned by VimpelCom which is now majorly owned by Telenor.
Telenor International, according to current date ownership structure, holds 18.46 percent economic rights and 22.23% voting rights for Mobilink. It is anticipated that Telenor will further increase its investment and hence will gain more control over Mobilink.
Telenor Group also operates in Pakistan through fully owned Telenor Pakistan, which is second largest cellular operator of the country.
Neither Competition Commission of Pakistan nor the competition cellular operators have shown concerns over this increasing control of Telenor over Mobilink, which can potentially create anti-competitive scenario in Pakistani telecom market.