VimpelCom Ltd. fell from the highest level in almost two weeks in the U.S. as Telenor ASA moved to boost its stake, escalating its conflict with the Russian regulator and investors for control of the mobile phone company.
VimpelCom slipped 0.3 percent to $11.86 in New York yesterday, retreating from the highest since Sept. 18. The Bloomberg Russia-US Equity Index of the most-traded Russian stocks listed in the U.S. jumped 1.8 percent to 99.57, led by OAO Rostelecom and OAO Gazprom Neft as crude oil climbed to a one-week high. Futures expiring in December on Russia’s RTS Index dropped 1.2 percent to 149,010.
Telenor, the Oslo-based company that is VimpelCom’s biggest shareholder, said yesterday that it raised its stake in the mobile provider to 42.95 percent. The move “contradicts” Russian law, according to the anti-monopoly service, which has been trying to prevent Telenor from boosting its stake above about 30 percent since February. Altimo, which holds 40.5 percent, brought the case as it seeks parity with Telenor.
“The stock is under pressure from the conflict and there is no potential for growth until the dispute is solved,” Alexander Vengranovich, an analyst at Otkritie Financial Corp. in Moscow who has a hold rating on VimpelCom, said by phone yesterday. “There is very little to no clarity on what is going to happen next.”
The Market Vectors Russia ETF, the biggest U.S.-traded exchange-traded fund that holds Russian shares, gained 1.8 percent to $29.31, the highest level since Sept. 24. The RTS Volatility Index advanced 3.7 percent to 31.42.
Russia’s benchmark Micex Index will incorporate 20 new stocks starting Dec. 18, making the composition of the ruble-denominated Micex identical to that of the 50-stock RTS Index, which is priced in dollars.
“It will help boost liquidity in the market,” Andrei Bogdanov, who helps manage $8 billion in Russian equities and bonds at OAO Gazprombank, said by phone from Moscow yesterday. “One of the problems of the Russian market is its relatively low liquidity level.”
Telenor wants to negotiate with Altimo to jointly buy Ukrainian billionaire Viktor Pinchuk’s 6 percent stake in VimpelCom so that both investors will have equal stakes in the company, Dag Melgaard, an Oslo-based spokesman for Telenor, said by e-mail yesterday.
VimpelCom said in a statement yesterday that it will delay registration of the increase in Telenor’s stake until a Moscow court allows it to do so. The statement was released after New York markets closed.
‘Dash for Control’
“There is a chance of an outright dash for control if negotiations fail,” said Mattias Westman, who oversees about $4 billion in Russian assets as chief executive officer of Prosperity Capital in London.
Altimo and Pinchuk’s EastOne Group declined to comment when contacted yesterday. Bertofan Investments Ltd., which holds Pinchuk’s stake in VimpelCom, operates under the EastOne Group’s mandate.
“We are eager to see Altimo’s response” to the proposal to achieve parity by purchasing shares from Pinchuk’s Bertofan, Telenor’s Melgaard said by e-mail. “We hope for a quick solution.”
Altimo will probably buy Pinchuk’s 6 percent stake in VimpelCom, Otkritie’s Vengranovich said by phone from Moscow yesterday. That would increase Altimo’s stake to 46.5 percent of VimpelCom’s voting rights.
A Moscow court banned Amsterdam-based VimpelCom’s Russian unit from paying dividends on 2011 profits because the anti-monopoly service, knows as FAS, opposed Telenor’s moves to increase its stake earlier this year. Telenor’s appeal was rejected by a Moscow court last week. The first hearing on the merits of the regulator’s claim is scheduled for Oct. 17.
VimpelCom, Russia’s third-biggest mobile phone company after OAO Mobile TeleSystems and OAO MegaFon, was formed in 2011 when its Moscow-based unit merged with Italy’s Wind Telecom SpA, forming the world’s sixth-biggest mobile phone company by subscribers. About 42 percent of Vimpelcom’s global revenue came from Russia in 2011, data compiled by Bloomberg show.
American depositary receipts of Gazprom Neft, Russia’s fifth biggest oil producer, surged 4.6 percent to $24.79 yesterday, the most since Aug. 3. The ADRs settled at a 0.3 percent discount to the company’s Moscow-listed stock. Shares of Gazprom Neft climbed 1.2 percent to 154.49 rubles, or $4.97 yesterday. One ADR is equal to five ordinary shares.
ADRs for OAO Rostelecom, Russia’s biggest fixed-line telephone company, rose 4.6 percent to $26.68, the highest since Sept. 24. The company’s Moscow-listed stock gained 3.2 percent to 138.61 rubles, or $4.46, yesterday. Six ordinary shares equal one ADR.
Crude oil for November delivery rose 0.3 percent to $92.48 a barrel on the New York Mercantile Exchange yesterday, the highest settlement price since Sept. 21. Crude in New York, which is down 6.4 percent this year, increased 8.5 percent in the third quarter.
Brent for November settlement was little changed at $112.19 a barrel on the London-based ICE Futures Europe exchange yesterday. Urals crude, Russia’s chief export blend, fell 0.4 percent to $110.24 per barrel yesterday.