The MegaFon Shareholders’ Agreement specifically prevents a direct or indirect competitor holding a stake in the company, which Alfa as a major shareholder in Vimplecom, one of MegaFon’s direct competitors, clearly breaches.

All the main MegaFon shareholders – TeliaSonera, Telecominvest, and IPOC – are lined up against Alfa in the arbitration. As recently as March 2005 the main shareholders signed a new co-operation agreement, reiterating their intention to work together to enforce the existing shareholder agreement.

After hearing the parties’ legal arguments in a two day trial held in June, the Stockholm Tribunal has communicated its view that Alfa’s presence as a shareholder of CT-Mobile constitutes a situation of indirect competition in violation of the MegaFon Shareholders Agreement. The Tribunal thus agreed with and accepted the legal arguments of IPOC, TeliaSonera and TCI in this respect.

The Tribunal is not yet in a position to issue a formal Award due to a confusion Alfa created by changing OOO CT-Mobile to OAO CT-Mobile, but has asked the parties to proceed towards the next hearing on the basis that CT-Mobile under Alfa control is in violation of the non-competition provisions of the Shareholders Agreement. Accordingly, this international tribunal shall proceed to consider the further issues in the case, including CT Mobile’s/Alfa’s defences that the Shareholders’ Agreement itself is invalid.

Commenting, an IPOC spokesperson said:

“This is a major setback for Alfa and its attempts to infiltrate MegaFon.
“We have said from the outset of our legal actions against Alfa that we believe the integrity of contracts with Russian companies is at stake. If Alfa Group wants to present itself as a suitable partner for western business it needs to prove it is willing to recognise the validity of agreements and the international arbitration tribunals convened to enforce them.
“Alfa’s attempt to purchase the 25.1% stake in MegaFon without regard to law or contract is unravelling. We believe time is now running out for Alfa Group as legal proceedings around the globe progress and we remain confident in IPOC’s rightful claims.”

For further information please contact Kirsten Smart or Enda Joyce at Media Strategy in London on +44 20 7400 4480 or +44 7855 489 616 (mobile).

1. IPOC International Growth Fund Ltd. is an investor operating worldwide and investing in high technologies, telecommunications, media- and bio- technologies on emerging markets. The investment manager of the Fund is IPOC Capital Partners Ltd.
2. IPOC International Growth Fund Ltd. is a longstanding investor in MegaFon and currently already holds an 8% stake in the company in addition to the disputed 25.1% stake.
3. LV Finance signed two option agreements in April and December 2001 with IPOC to sell to IPOC 100% of Transcontinental Mobile Investment Limited (TMI), itself the sole owner of CT Mobile (CTM), which holds 25.1% of MegaFon, the third largest Russian mobile operator.
4. For more information on IPOC, go to www.ipocfund.com

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