Vimpelcom's $6.6 billion bid for telecoms assets owned by Weather Investments was hanging by a thread after Norwegian shareholder Telenor said on Monday it would not back the deal.

Telenor's opposition to the deal -- which would see Vimpelcom taking a controlling stake in Egypt's Orascom Telecom and all of Italy's Wind -- means that all three independent Vimpelcom directors must back the long-running transaction.

The deal, which has been backed by the Kremlin, would make Russia's No.2 mobile phone operator the world's fifth largest.

Analysts said the move undermines the long-term stability of Vimpelcom by once again pitting Telenor against its other major shareholder Altimo -- the telecoms arm of Russia's Alfa Group run by billionaire Mikhail Fridman.

The two owners fought protracted board and courtroom battles over strategy for years before a 2009 resolution.

Telenor spokesman Dag Melgaard said the deal did not make strategic or financial sense for shareholders.

We are signaling our position, knowing there is no way that we can block the deal (without support), he told Reuters.

Telenor has 36 percent of voting rights in Vimpelcom and three of the nine Vimpelcom board members.

The deal needs six of nine votes, meaning that the three Altimo board members and the three independents must all back it for a deal to pass over Telenor's opposition.

DEAD DEAL?

The acquisition also requires amendment of a shareholder agreement between Telenor and Alfa.

I think the deal is dead, said First Securities analyst Ole Joergen Roed, adding that cooperation between Vimpelcom's two main owners now looked unlikely.

This is positive in the short term for Telenor by reducing the chances of the transaction going through but in the long term it could create a conflict among Vimpelcom shareholders, he said. If (Altimo) supports it and Telenor does not, it could create a very unhealthy situation going forward.

Vimpelcom in October announced the proposed acquisition of Weather from Egyptian tycoon Naguib Sawiris, in its first major attempt at international expansion since the 2009 deal which secured Alfa's and Telenor's reconciliation.

The acquisition has met a series of obstacles, most notably the Algerian government's plans to nationalize Orascom's most lucrative asset Djezzy despite a trip to Algiers by Russian President Dmitry Medvedev.

Altimo and Orascom declined to comment.

BOARD MEETING

Amsterdam-headquartered Vimpelcom is scheduled to hold a two-day meeting from Tuesday to vote on final approval of the deal.

Vimpelcom said in a statement its supervisory board will consider the interests of all of the company's shareholders in reaching its decision.

Telenor's shares were up 1.4 percent by 1058 GMT, while the overall Oslo bourse was up 0.8 percent and the STXE 600 telecom index <.SXKP> was up 0.6 percent. Shares in Orascom were off 1.9 percent while Vimpelcom has not yet start trading in New York.

VTB Capital analyst Viktor Klimovich said Telenor's move could be part of a plan to get better share swap terms from Weather's owner Sawiris.

Vimpelcom's major shareholders are interested in this deal in principle, so there could be more negotiation. In the short term, though, this is an obstacle to the deal, he said.

Telenor has in the past opposed Vimpelcom's expansion in Ukraine, which led to a prolonged shareholder dispute, and VTB Capital's Klimovich said the Norwegian group's Monday statement could lead to another damaging battle.

Both parties have an interest in not taking this situation to conflict -- they will be constructive, he added.

($1=31.10 Rouble)

(Additional reporting by John Bowker in Moscow, Alexander Dziadosz in Cairo and Wojciech Moskwa in Oslo; Editing by John Bowker and Jon Loades-Carter)

Egypt Russia Ukraine Dmitry Medvedev