UPDATE 1-Russia clears VTB deal to buy Tele2 Russia

Wed Apr 3, 2013 6:26am EDT

MOSCOW, April 3 (Reuters) - Nordic telecoms group Tele2's sale of its Russian unit to state-controlled bank VTB has been approved by Russian regulators, despite complaints by rival contenders that their higher bids have been ignored.

Tele2 struck a $3.5 billion deal last week to sell the assets to VTB. A spokeswoman for the state anti-monopoly service FAS said the deal would be approved on Wednesday and the decision would be posted on its website within two days.

The VTB bid was accepted even though it was later topped by two alternative bids, both associated with one of the country's richest tycoons, Mikhail Fridman.

The rejection of the higher bids in favour of VTB has led to speculation that the Kremlin favoured the sale to VTB.

Russia's top mobile phone operator MTS had teamed up with No.3 player Vimpelcom - part owned by Fridman - to bid $4.0-4.25 billion for the asset. Fridman's investment arm A1 made a bid of $3.6-$4 billion and threatened legal action against Tele2 and its advisor Morgan Stanley.

The contenders have complained about the lack of transparency of the sale process and said they were denied contact with Tele2. Tele2 on Tuesday defended the deal saying it had been aware of all options for the business.

Igor Artemyev, head of FAS, was quoted by Interfax news agency as saying he had received no requests from any other contenders to approve a possible acquisition of the asset.

MTS and Vimpelcom declined to comment. A1 was not immediately available for comment.