Norway’s Telenor plans to sell its 33 per cent stake in VimpelCom, describing its experience of holding a minority stake in the Netherlands-based group as “challenging”.
The lack of a future option to fully control VimpelCom made Telenor reconsider its position. Following a strategic review, it decided to sell off the shares, and concentrate on its core operations.
The Norwegian company has been feuding with VimpelCom’s other major shareholder, Russian billionaire Mikhail Fridman. Fridman’s LetterOne group holds a 48 per cent stake in VimpelCom.
“As the new chief executive I was asked to hold a review of our strategic positions. We concluded that we’re no longer served by holding a minority position in Vimpelcom,” Telenor CEO Sigve Brekke (pictured) commented to Reuters.
As a consequence of the divestment decision, Telenor will take a non-cash impairment of about NOK7.5 billion ($900 million) in the third quarter.
However, it is unclear how the Norwegian company will offload its stake, which it values at $2.4 billion. The group said it would explore “all options” but has set no timetable. It admitted the process may take “some time”.
Following the announcement, the Norwegian company will not convert its VimpelCom preferred shares into common shares.
The value of VimpelCom stock fell in the third quarter and finished at $4.11 per share against a book value of $5.64 per share.
Telenor has invested a total of NOK15 billion in VimpelCom and received NOK20 billion in dividends from the business.
The Netherlands-based group has “gradually contributed less to the value of Telenor Group, and the value of Telenor’s core operations have increased rapidly”, the Norwegian company said. The market value of the VimpelCom shares represents about eight per cent of Telenor’s market capitalisation.