Alfa-Group and Norway's Telenor had an unexpected obstacle thrown in the path of their asset merger when Ukraine's anti-monopoly regulator said Thursday that it would review its March approval of the deal.
Analysts said the merger — which will end one of Russia's longest corporate wars — was very unlikely to be reversed and, at most, the newly created telecoms company Vimpelcom Ltd. might have to surrender some of its bandwidth in Ukraine.
Under the peace deal, Telenor and Alfa agreed last year to merge their holdings in Russia's Vimpelcom and Ukraine's Kyivstar into Vimpelcom Ltd.
They had secured all of the necessary regulatory approvals and completed a share exchange. On Thursday, however, the Anti-Monopoly Committee of Ukraine suspended its March decision to approve the deal, saying it had to review a petition submitted by Kyivstar rival Astelit.
"We have started the revision of this decision based on Astelit's petition and have suspended it for the period," the AMCU said in a statement.
Astelit, which operates under the life:) brand, is controlled by Turkey's largest mobile phone operator, Turkcell, and by SCM Holdings, which represents the interests of Ukrainian billionaire Rinat Akhmetov.
Astelit is claiming that the March approval was based on calculations of shares of telecoms operators in the market and frequency bandwidth that were incorrect.
AMCU head Alexei Kostusev said during a meeting of the regulator that the review could take "between one and several months" and in the meantime the participants should not take any steps toward the merger.
Telenor and Alfa's unit Altimo said they would proceed with the deal based on AMCU's earlier decision, confident that it was legal.
"We do not see any legal consequences of AMCU's decision today, as all the main necessary conditions for the deal to close had been fulfilled by the time the deal closed on April 21. The deal is closed and Vimpelcom Ltd. will act with no changes to its plans," Altimo said.
Telenor spokeswoman Anna Ivanova-Galitsina said the deal had been completed in line with the initial decision by the AMCU.
Vimpelcom said Wednesday that 97.87 percent of its shareholders had tendered their shares in an exchange offer, which effectively completes the merger.
Analysts said the merger was unlikely to be reversed.
"We tend to think that Vimpelcom Ukraine and/or Kyivstar might be pushed into giving up some of the frequency band — Kyivstar and Vimpelcom Ukraine combined now have the widest band in the country — so as to keep the deal," VTB analysts wrote in a note.
But they said the deal was "extremely unlikely" to be reversed.
Under Ukrainian law, AMCU can reverse a decision or make changes to it.
"This [review] could be an attempt to stir up noise fr om one of the competitors, some bureaucrat, etc.," said Fondsfinans analyst Arild Nysaether.
"I believe the best argument is that the combined political lobbying power of Kyivstar and Altimo in the Ukraine is very strong and probably outweighs any others, and that this noise, wh erever it came from, will be settled."