Volga | Finance, business

Megafon’s budget approval and Sinterra takeover blocked

8 Feb '10
Source: http://www.cnews.ru/news/top/index.shtml?2010/01/28/377609

A conflict among Megafon shareholders is obviously impeding company operations. In a most recent development, in an attempt to take vengeance on Megafon’s third largest shareholder, Alisher Usmanov, Alfa and TeliaSonera have reportedly blocked the approving of the mobile operator’s operation budget and its planned takeover of provider Sinterra.

A source in Megafon told Cnews that holding Telecominvest owned by Mr. Usmanov’s AF Telecom had been pushing for the purchase of Sinterra (the cost of the deal is roughly estimated to be around $300m plus Sinterra’s unspecified debt), while Alfa-Group’s telecom subsidiary, Altimo, and Finnish-Swedish TeliaSonera were keeping back.

When discussing Megafon’s 2010 budget both Telecominvest and TeliaSonera reportedly voted for approval, but Altimo abstained again, which ultimately flunked the draft that failed to secure support of two-thirds of directors. AF Telecom controls 39.3% of Megafon shares and has two seats on the board; TeliaSonera has 35.6% of Megafon and 26.1% of Telecominvest having three seats; and Altimo owns 25.1% and enjoys two seats on the board.

The Megafon board first attempted to take the above issues through on December 31, 2009 but failed as AF Telecom supported the decisions and Altimo and TeliaSonera abstained from voting. Both Telecominvest and Altimo have declined to comment on the situation. A source knowledgeable in Altimo deals says it’s Pankko Teijo Ensio and Dmitry Vozianov that represent the company on the Megafon BoD and reportedly act exclusively in Megafon’s best interests (although they are said to be Altimo’s former top managers).

In late 2009 Altimo and TeliaSonera agreed to pool assets and set up a JV to ultimately become Megafon’s largest shareholder and gain control over Turkish mobile operator Turkcell. However, AF Telecom was up against the plan as Mr. Usmanov is now reportedly in talks with the RF over a swap of its stake in Megafon for shares in national Rostelecom. The RF government doesn’t like the planned Altimo and TeliaSonera merger, either. The Ministry of Communications is afraid the strategic Russian asset to be absorbed by foreign investors; the Federal Anti-monopoly Service doesn’t feel like letting Alfa strengthen its market domination (the latter is also separately pooling its stakes in Vimpelcom and Kievstar with Norway’s Telenor).

Analysts now say that following a calm that came after a four-year ‘warfare’ between Altimo and a “St. Pete group of telecoms” (that later sold its stakes in Megafon to Usmanov) the company is once again awaiting a ‘corporate explosion.’ “For now, it’s just sort of ‘cold war’ without allegations and lawsuits, but Altimo and TeliaSonera are obviously stepping up pressure on the Usmanov circle,” Finam’s Vladislav Kochetkov says. “The reason is AF Telecom’s disagreement regarding a prospective Turkcell-Megafon merger and Mr. Usmanov’s purported willingness to bring into the conflict the Russian state as a contender for assets. With all this considered, what Altimo and TeliaSonera are doing does the operator no direct harm as its 2010 budget is approximately in line with last year’s financials and the funding of key projects will therefore be smooth anyway.” According to Mr. Kochetkov, the pressure currently exerted on Mr. Usmanov might cause him to take a softer stance, but this businessman has a powerful lobbyist resource and an experience of corporate standoffs, and is unlikely to give in fast.

By Igor Korolyov

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