Billionaire Fridman Says Telenor Exit Makes VimpelCom Fitter

  • Having competitor as investor made board meetings ‘abnormal’
  • ‘Like PepsiCo managers sitting on the Coca-Cola board’

Mikhail Fridman, the billionaire co-owner of VimpelCom Ltd, said he’s happy Telenor ASA has begun selling its stake in the wireless carrier, because competition between the two companies in some markets created an “abnormal” situation on the board.

Telenor, which began selling its 33 percent stake of VimpelCom this month, is a direct competitor in Pakistan and Bangladesh -- markets that have a combined population of about 380 million, Fridman said in an interview in Kiev. VimpelCom, based in Amsterdam, operates in Russia and dozens of emerging markets, including those two.

At VimpelCom board meetings, “half of the members would usually leave the room because they had a conflict of interest,” said Fridman, whose LetterOne Holdings SA is the largest owner in VimpelCom. "This is abnormal, it’s like PepsiCo managers would’ve been sitting on the Coca-Cola board."

Telenor, the Norwegian carrier, sold part of its VimpelCom shares for $499 million earlier this month and issued bonds convertible into VimpelCom shares to facilitate further disposals in the future. VimpelCom has declined 17 percent in September as Telenor’s partial sellout pressured the stock. The shares closed 0.8 percent down on Friday at $3.54.

VimpelCom has more than 200 million users in 14 countries and isn’t currently interested in 
geographic expansion, according to Fridman, who is Russia’s fifth-richest man with a $12.9 billion fortune, according to the Bloomberg Billionaires Index.

The company’s priority is to change its business model from being a low-margin communications infrastructure to offering services via integration with content providers like Uber Technologies Inc., he said. LetterOne invested $200 million in Uber this year.

“We have an alliance with Uber regarding certain markets -- such as Russia and the Ukraine, where we have strong competitive position -- while Uber doesn’t because they don’t know these markets,” Fridman said.

LetterOne is also preparing to solve a decade-long dispute in Turkey by year-end. It has offered to either sell its 13.2 percent stake in local carrier Turkcell Iletisim Hizmetleri AS, or buy another 13.8 percent from Turkish counterpart, Cukurova Holding AS.

“Both options work fine for us,” Fridman said. “As far as we understand, Cukurova and it shareholders are suspended from taking decisions there. Ultimately it’s up for the Turkish government what to do with Turkcell.”

As of last week, Telenor had about a 24 percent stake in VimpelCom, according to Bloomberg data.

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