Something like a tectonic shift is happening in the Russian telecom industry: Telenor, the oldest and largest foreign investor in the industry, is leaving Vimpelcom Ltd., where it was a shareholder for almost 17 years. In recent Russian history, there are probably not even ten examples of such long-term relationships. Total, BP – how many more?

Telenor became the first major investor in VimpelCom, which was then only thinking about expanding abroad, and not in Russia, but in Moscow. It was December 1998, the height of the economic crisis and the hottest time for building a GSM network – racing with MTS. And the $160 million offered by the Norwegians for 25% plus 1 share of VimpelCom were not just very opportune, but literally kept the business afloat.

Telenor actively supported VimpelCom's entry into the Moscow mass market (in 1999, it began selling the so-called "Bi Plus" boxes - sets of a SIM card with a phone for $49), then its entry into the regions, and then into the CIS countries. Only in Ukraine did they run into trouble - the Norwegians already controlled Kyivstar and were not ready to merge it with VimpelCom, losing control (this is what their new partner, Alfa Group, proposed, having bought a stake in VimpelCom in 2001). This conflict marked the beginning of a protracted shareholder war, which lasted intermittently until almost 2013, and after which it became clear that the Norwegians would never see control over VimpelCom: de facto control was concentrated in the hands of the former Alfa - LetterOne.

The Norwegians cite the lack of control as one of the reasons for leaving Vimpelcom, and the other is the decline in capitalization. Both of these things did not happen yesterday; never before have these factors prevented Telenor from considering itself a strategic investor, ready to support Vimpelcom in word and deed (several Telenor alumni worked as top managers in Vimpelcom). What has changed?

Here's what I think. Previously, there was hope that the situation would turn for the better, that Vimpelcom's business would start growing and bringing in good dividends. And now this hope is being pushed into the indefinite future. The largest of the Vimpelcom group operators, Russia's VimpelCom, has been losing market positions and continues to do so, while the economic and political situation in Russia is only getting worse. VimpelCom itself, although it agreed on a deal in Italy that would remove its gigantic debt burden, seems to have forgotten about the promise to return to the original level of dividends. It is time for Telenor to decide: either to exchange the package of Vimpelcom preferred shares that will expire in April 2016 for a similar package of ordinary shares (which would increase the Norwegians’ share in future dividend payments, but even at the current low quotes would cost $1.23 billion), or to accept the final transfer of Vimpelcom under the control of LetterOne.

So the choice has been made. Interestingly, Telenor hasn't even lost anything - having invested 15 billion Norwegian crowns (at the exchange rate on Wednesday - $1.79 billion) in Vimpelcom , it received 20 billion Norwegian crowns ($2.39 billion) in dividends. Maybe it will get the same amount more from selling the stake.

Why Telenor Is Leaving Vimpelcom