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Telenor says to fight $1.7 bln Russian court award

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OSLO, Feb 20 (Reuters) - Norwegian telecoms group Telenor said on Friday it would appeal a Siberian court ruling that it must pay $1.7 billion in damages in a case brought by a fellow shareholder in operator Vimpelcom. 
The Omsk court ruling is the latest twist in a long struggle by Telenor to protect its nearly 30 percent holding in Russia's No.2 mobile operator, Vimpelcom, from what it has called a groundless encroachment into its ownership from tiny shareholder Farimex, which filed the suit.
Court documents showed that British Virgin Islands-based Farimex owned 0.002 percent of Vimpelcom shares when it filed the suit against Telenor in April 2008.
Foreign companies' recently have been concerned about investing in Russia and there has been an outflow of foreign capital from the country as the global financial crisis has deepened. Kremlin-backed companies have in recent years strong-armed "strategic" energy projects away from foreign firms. 
"With this process, one should never be surprised when things take an unexpected turn for the worse, which is undoubtedly the case," Carnegie analyst Espen Torgersen said.
Farimex claimed that Telenor delayed the Vimpelcom's entry into Ukraine, which it said has cost billions in lost revenues.
Telenor has said it believes Farimex is linked to Vimpelcom's biggest investor, billionaire Mikhail Fridman's Alfa Group, with which the Norwegian firm has fought numerous courtroom and boardroom battles over Vimpelcom and a Ukrainian joint venture, Kyivstar. 
Alfa Group has denied any connection to Farimex.
Neither Farimex nor Vimpelcom could be reached immediately for comment.
The court ruled against Farimex's motion to seize Telenor's Vimpelcom shares, but said that either Farimex or Vimpelcom could enforce the damages payment before it launches its appeal of the decision, Telenor said.
"Today's court decision is a serious violation of Telenor's lawful rights and interests as a strategic investor in Russia," Telenor Vice President Jan Edvard Thygesen said in a statement.

SHARES TAKE TUMBLE

Telenor shares were down 6.09 percent at 37.80 crowns at 1454 GMT, extending earlier losses on the court ruling. The Dow Jones Stoxx Telecom Index was down 1.6 percent.
Carnegie's Torgersen said the case would probably end up in a Moscow court, where Telenor would have a good chance of winning its appeal.
Analysts said Alfa Group may be using the Farimex case to pressure Telenor into concessions before expected talks on a "divorce" between Telenor and billionaire Fridman's companies.
Telenor Chief Executive Jon Frederik Baksaas told Reuters this month that he favoured a separation with Alfa Group, which analysts interpreted as meaning a share swap to give Fridman a majority in Vimpelcom in exchange for his stake in Kyivstar.
Farimex filed a claim for $3.8 billion against Telenor last April in the Khanty-Mansiysk district, alleging that Telenor's representatives on the Vimpelcom board delayed Vimpelcom's acquisition of Ukrainian Radio Systems (URS). 
The Khanty-Mansiysk court ruled that Telenor should pay damages of about $2.8 billion. Telenor then appealed to the Eighth Arbitrazh Appellate Court, which ruled that the case should be heard again in Omsk.

Wojciech Moskwa

This e-mail address is being protected from spambots. You need JavaScript enabled to view it ; +47 22 93 69 62;

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