Russian court refuses to ban sale of Telenor's stake in Vimpelcom

A Moscow court refused Tuesday to block the sale of Telenor's stake in No. 2 Russian mobile phone company VimpelCom, paving the way for the Norwegian company to lose its Russian asset, Telenor said in a statement quoted by AP.

Bailiffs authorized the auction of the majority of Telenor's 29.9 percent stake in June in a bid to recover $1.7 billion in court-awarded damages. If the sale is allowed to go ahead, Telenor could lose its stake before the completion of its appeal against a Siberian court ruling earlier this year.

A Telenor spokesman said the decision was expected.

"There was some disappointment, but it wasn't much of a surprise," said Telenor spokesman Dag Melgaard.

He said that Telenor would decide whether to appeal the decision after reviewing the written verdict.

The case has rattled investor sentiment toward Russia and has emerged as a test of President Dmitry Medvedev's commitment to the rule of law in a country where the judiciary has drawn criticism for its lack of independence.

Earlier this year, the Siberian court ordered Telenor to pay VimpelCom damages after Farimex Products Inc., a tiny and obscure stakeholder in VimpelCom, sued Telenor for blocking the mobile phone company's expansion into Ukraine several years ago.

Telenor has refused to pay the damages, insisting that the suit is flawed and that Farimex is a front for billionaire Mikhail Fridman's Alfa Group — a claim that both Farimex and Alfa have denied.

Alfa, which has a 44 percent stake in VimpelCom, is pursuing a parallel suit against Telenor in Geneva.

Telenor's appeal against the original court decision is scheduled to be heard on September 30 in the Siberian town of Tyumen.