The Federal Court Marshals Service on Friday ordered the state to auction off Telenor's 26.6 percent stake in VimpelCom, a move that the Norwegian telecoms company said made the possibility of losing the shares "quite realistic."

The auction was organized to cover a $1.7 billion fine that Telenor faces in Russia for blocking VimpelCom's expansion into Ukraine after a little-known minority filed a lawsuit seeking damages. The news sent Telenor's shares down 4 percent in Oslo on Friday, while VimpelCom's New York-traded shares closed down 0.2 percent.

Analysts said Friday's decision appeared to be another attempt to make Telenor bow to the wishes of Mikhail Fridman's Alfa Group, which owns 44 percent of VimpelCom. It remains to be seen, however, whether political leaders are willing to let the dispute harm investor sentiment, they said.

"We see the threat of the sale of our stake as quite realistic," Telenor spokesman Dag Melgaard said. "But we will continue to fight, as there is an appeal from our company in the Moscow Arbitration Court, and the date of the hearing will be set soon. We are appealing to stay the bailiff's actions."

Melgaard declined to comment on whether there were any negotiations being held between his company and Alfa, saying only that "there could be no solutions between Telenor and Alfa as long as Farimex is alive."

In February, a court in Omsk ruled in favor of Farimex Products, which owns 0.002 percent of VimpelCom, saying Telenor had to pay $1.7 billion in damages to Russia's second-largest mobile operator for blocking its expansion in Ukraine back in 2005.

Telenor has claimed that Farimex is acting on behalf of Alfa Group. Altimo, the telecoms unit through which Alfa holds its VimpelCom stake, has denied any connection to Farimex.

In March, nearly all of Telenor's 29.9 percent stake in VimpelCom was arrested, and the Norwegian telecom operator has been trying to appeal the move since then. Telenor's latest appeals hearing in a Tyumen court was adjourned on June 10 until Sept. 30.

Telenor said on its web site Friday that it had not received any other information from the bailiff's office. A spokeswoman at the Federal Court Marshals Service declined to comment on the case. Calls to the Federal Property Management Agency, the body ordered to sell the stake, were not answered Friday.

Altimo senior vice president Kirill Babayev said Friday that his company was not interested in buying Telenor's stake, "at least so far."

There are currently no talks between Altimo and Telenor, he said.

Finam Management telecoms analyst Anna Zaitseva said Alfa Group was one of the likeliest buyers of the stake. "The other major players of the market, MTS and MegaFon, don't have money for that now," Zaitseva said.

Farimex's lawyer Dmitry Chyorny said the Federal Property Management Agency had two months, by law, to organize the auction. "It's just another level of the court proceedings, which are dragging on because Telenor refuses to pay the fine," he said.

"Everything is happening in strict compliance with the law."

Norwegian Prime Minister Jens Stoltenberg told President Dmitry Medvedev and Prime Minister Vladimir Putin on May 19 that his government, a major Telenor shareholder, strongly wanted the trial to go through all the possible appeals before Telenor's stake is sold.

After the talks, Putin said his government had an interest in making sure that foreign investors felt "comfortable" in Russia.

"I would very much like partners in telecommunications companies to come to terms about effective joint work in third countries' markets rather than putting sticks in one another's wheels," Putin said.

If Russian private companies enter into disputes with their foreign partners, the government's task is to ensure the rule of law, he said.

"We believe Telenor's stake in VimpelCom is unlikely to be sold," VTB Capital wrote in a research note Friday. "The bailiffs are technically obliged to proceed, but this does not imply that there has been a 'political decision' to execute what is likely to be perceived as a large-scale expropriation of the property of the Norwegian state."

VTB Capital telecoms analyst Viktor Klimovich said by telephone that the consequences would be catastrophic should the stake be sold. "Should it happen, the consequences for the Russian investment climate might be similar to the arrest of [former Yukos chief Mikhail] Khodorkovsky, as a foreign investor is directly involved in the case, and we hope the government understands it," Klimovich said.

Before his arrest in 2003, Khodorkovsky was widely believed to be preparing to sell a major stake in his company, then Russia's largest oil producer, to a foreign major.

"As we understand the process … Alfa Group has been suggesting a number of options for Telenor involving the changes of its ownership structure in VimpelCom and Kyivstar," said Klimovich.

Telenor owns 53.5 percent in Kyivstar, while Alfa controls the rest of the company.

"Telenor is trying to save its positions, as it considers its stake in VimpelCom a strategic investment, and wants to hold its shares in Kyivstar because Telenor consolidates financial results of the Ukrainian telecom operator," Klimovich said. "So it is hard to work out any decision here, but it will have to be done to protect the investment climate in Russia. And $1.7 billion is not the cost of Russia's image in the eyes of the foreign investors, in our view.

"The way out is quite easy — Farimex can just withdraw its lawsuit, or the cassation court in Tyumen may take the Telenor's side," he said.