The agreement will see Russia’s second largest cellco by subscribers, OJSC Vimpelcom, merge with Ukraine’s leading mobile operator Kyivstar to create Vimpelcom Ltd. The united company will provide integrated mobile services to consumers in Russia, Ukraine and other CIS countries, as well as Georgia, Vietnam, Cambodia and Laos. Vimpelcom Ltd will seek to expand its operations in other developing markets in Europe, Asia and Africa, aiming to become one of the leading players in the industry.

In April 2008 Farimex, a minority shareholder in Vimpelcom, initiated a lawsuit against Telenor accusing the company of having caused losses to Vimpelcom shareholders by delaying its entry into Ukraine’s mobile market, and on 20 February 2009 a court in Omsk held Telenor liable for USD1.7 billion, which the Norwegian group refused to pay, leading to the seizure of its stake in the Russian cellco.

Subsequent appeals by Telenor had been adjourned until March 2010 while Telenor pursued a case against Farimex, alleging that the British Virgin Island-based firm was acting on behalf of Alfa Group. Under the new agreement, both parties have agreed to suspend all ongoing legal proceedings and will take action to withdraw or settle lawsuits prior to the transaction being completed. The governance structure agreed for Vimpelcom Ltd is reportedly designed to significantly reduce the potential for new disputes between the shareholders.

Upon completion of the deal, which - pending regulatory approval - will see Vimpelcom’s wholly-owned subsidiary Ukrainian Radio Systems (Beeline) merged with Kyivstar to create a new Ukrainian operator, Telenor will take a 38.84% equity share in Vimpelcom Ltd, while Altimo, the telecoms arm of Alfa Group, will hold a 38.46% stake in the entity, with the remainder in free float. Altimo will hold a majority of voting shares (43.89%), while Telenor will hold 35.42% of voting rights. The new Vimpelcom will be headquartered and tax resident in the Netherlands and incorporated in Bermuda.

TeleGeography’s GlobalComms database says that Vimpelcom has expanded its footprint over the last few years to cover Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Georgia, Armenia, Cambodia, Vietnam and Laos.