Telenor ASA — M&A Activity 2011

Jan 17, 2011

Telenor Says VimpelCom Acquisition of Wind Telecom Makes No Sense, Will Harm VimpelCom Minority Shareholders

Following the VimpelCom Ltd. Board's decision on 16

January 2011 to approve VimpelCom's acquisition of

Wind Telecom S.p.A., Telenor ASA has stated that it

will try to stop the acquisition from being

completed.

VimpelCom has called a shareholders meeting for 17th

March to consider the approval of the VimpelCom

Board approved issuance of up to 325,639,827 new

VimpelCom common shares and an additional

305,000,000 new VimpelCom preferred shares to the

owners of Wind Telecom. Together, the new shares

will give the owners of Wind Telecom a 30.6 % voting

stake in VimpelCom, representing 1.53 times the 20 %

economic stake the owners of Wind Telecom stand to

receive. Telenor's three nominees on the VimpelCom

Board voted against the approval of the acquisition

because they do not believe it makes strategic or

financial sense for VimpelCom and will harm

VimpelCom's shareholders. The other six members of

the VimpelCom Board voted to approve the transaction.

"We did not support the original proposal because it

did not make strategic or financial sense. The

revised proposal makes even less sense as the

consideration now being offered is even more

generous to the owners of Wind Telecom. Existing

VimpelCom shareholders face considerable additional

dilution if this acquisition is completed on the

terms approved by the Board," said Telenor spokesman

Dag Melgaard. "As a result of this transaction,

VimpelCom minority shareholders' existing 18.6 %

voting stake will be diluted to 12.9 %, despite

their having an economic stake of 16.3 %. In our

view, the disconnect between economic and voting

stakes negatively affects the attractiveness of

VimpelCom as an investment case for public

investors. "

Telenor issued a stock exchange announcement on 20

December 2010, stating that it would not support the

proposed transaction. At the same time, Telenor

informed VimpelCom's management that, in order to

avoid dilution, it would not waive its pre-emptive

rights under the VimpelCom shareholders agreement.

Until this point, the transaction was an unrelated

M&A transaction, granting Telenor and Altimo full

pre-emption rights under the terms of the VimpelCom

shareholders agreement. However, on 10th January

2011, Altimo informed VimpelCom for the first time

that entities controlled by Gleb Fetisov, an

indirect minority shareholder of Altimo, had

acquired 0.7% of Wind Telecom's 51.7% subsidiary

Orascom Telecom Holding S.A.E. Altimo claims that

this changes the transaction into a related party

M&A transaction, as a result of which Telenor would

be deprived from its pre-emptive rights. On this

basis, the proposed transaction was approved by the

VimpelCom Board against the Telenor-nominated

directors' vote.

"We see this as an obvious deception that violates

the VimpelCom shareholders agreement. It is an

artificial construct aimed at depriving Telenor of

its pre-emptive rights and we will defend our rights

in order to protect Telenor's and the VimpelCom

minority shareholders' investment in VimpelCom. At

the upcoming VimpelCom shareholders meeting, we will

vote against the approval of the issuance of the new

shares to Wind Telecom's owners, and we urge

VimpelCom minority shareholders to do the same."

Telenor ASA currently holds a 36% voting and 39.6%

economic interest in VimpelCom Ltd.