Connections were found in Kyrgyzstan – Newspaper Kommersant No. 168 (7369) dated 09/13/2022

VimpelCom, judging by the data of information and analytical systems, received a stake in the Kyrgyz advertising CJSC Bimocom, one of the assets of the parent holding Veon. The operator itself, however, does not recognize itself as a co-owner of the company. According to experts, we can talk about the restructuring of Veon’s assets in the region, including in connection with sanctions risks. Lawyers admit that the transfer of an asset may be necessary to simplify financing schemes.

Kommersant discovered in the SPARK-Interfax database that VimpelCom (Beeline brand) has been holding a stake in the Kyrgyz CJSC Bimocom since August 13. The Investment and Credit Center under the local government of Bishkek was named as the second co-owner of the company, the shares were not disclosed.

The electronic database of legal entities of the Ministry of Justice of Kyrgyzstan says that Bimocom CJSC was registered in 1997. The main activity of the company is an advertising agency, in the field “parent company (co-owners)” is written Letterone Holdings SA. The last 25% through Letterone Investment Holdings belongs to the Dutch Veon Ltd, which controls VimpelCom. However, in response to a question about Bimocom, the operator’s press service assured that the company “does not have such an asset.” Letterone, Veon and the Bishkek Investment and Lending Center did not respond to inquiries.

In Veon Group, 47.9% of the shares are owned by Mikhail Fridman’s LetterOne, which fell under European sanctions on February 28. On the same day, Mr. Friedman left the Board of Directors of Veon. Now Veon operates in the markets of Russia, Ukraine, Pakistan, Kazakhstan, Bangladesh, Uzbekistan and Kyrgyzstan. In August, the group said it was exploring the possibility of optimizing assets in “unsuitable” markets. In June, Veon sold a structure in Georgia to a local businessman; it is planned to sell tower assets in Bangladesh, Pakistan and Ukraine until 2023.

In Kyrgyzstan, Veon owns Sky Mobile (Beeline brand). In 2020, the mobile operator became involved in a corruption scandal in the country related to the sale of frequency permits, and Veon wrote off the value of assets in Kyrgyzstan by $64 million. The holding does not disclose indicators in the country.

According to a Kommersant source in the telecommunications market, the transfer of Bimocom to VimpelCom may mean the beginning of a restructuring of assets in the region: “It will be followed by the transfer of Sky Mobile, since Veon no longer considers the market promising.” In addition, the interlocutor of Kommersant believes that additional assets will increase the value of VimpelCom itself, the sale of which looks quite likely: “They have been looking for a buyer for the asset for a long time, and against the backdrop of sanctions risks, its sale has become even more urgent.” Veon’s annual report stated that the holding’s reputation had suffered “as a result of the association of sanctioned persons with the largest shareholder.” In August, the company also admitted that it would have to stop the development of networks in Russia due to sanctions.

In 2021, the Russian VimpelCom has already received a controlling stake in the fixed-line operator Buzton, which is part of Veon’s assets in Uzbekistan (see Kommersant dated June 24, 2021). Then experts also said that Veon needed restructuring to improve performance and the possible sale of the asset. In Uzbekistan, Veon, MTS and Sweden’s Telia have also faced corruption allegations.

The reasons for the transfer of an asset in Kyrgyzstan from a Dutch company to a Russian company may be different, says Ekaterina Makeeva, partner, head of the sanctions practice at JSB A-PRO: holding with Russian beneficiaries to a European company is too risky.” The transfer of an asset can be associated with both the sale and the simpler issue of arranging financing from a Russian company to a Kyrgyz company, the lawyer believes.

The disposal of assets may be due to sanctions risks and related political factors, Kira Vinokurova, special adviser to KA Pen & Paper, notes, but “the root causes are still economic.” The lawyer clarifies that among the possible reasons for the restructuring is the need to organize the supply of equipment. Elena Mende, lawyer for the Anatoly Sobchak Baltic Bar Association, agrees that “Kyrgyzstan can be chosen as a neutral zone for such operations.”

Anastasia Gavrilyuk, Ekaterina Volkova