Rostelecom outlines RUB23.2bn share buyback procedure

20 Feb 2014

Russian national operator Rostelecom has announced the results of its share buyback as part of the company’s ongoing reorganisation, which will see it spin off its mobile assets into a new subsidiary ahead of a merger with Tele2 Russia. During the 45-day period following the most recent extraordinary general meeting, the company received redemption requests equal to 22.0% of ordinary shares and 49.2% of preferred shares by Rostelecom shareholders who voted against the reorganisation, or who abstained from voting. In accordance with Russian legislation that restricts share buybacks to 10% of the value of a company’s net assets, the shares will be bought back from shareholders on a pro rata basis at a rate of 27.8%. Rostelecom will invest a total of RUB23.161 billion (USD649.6 million) in the share buyback, acquiring 6.1% of its own ordinary shares and 13.7% of its preferred shares.

As previously reported by TeleGeography’s CommsUpdate, Rostelecom’s mobile assets will be contributed to a joint venture with Tele2 Russia. The first phase of the merger will see Rostelecom contribute its standalone mobile subsidiaries and assets, including SkyLink, into a holding company called T2 RTK Holding. At the end of this process, Rostelecom will receive a 45% voting interest and a 26% economic interest in T2 RTK Holding. During the second stage, Rostelecom will spin off its integrated mobile businesses into its new wholly owned subsidiary, CJSC RT-Mobile, which will have Rostelecom’s mobile licences – including Long Term Evolution (LTE) concessions – re-issued to it. Upon completion of the spin-off, Rostelecom will contribute its whole stake in CJSC RT-Mobile into T2 RTK Holding, and increase its economic interest in T2 RTK Holding to 45%.

Russia, Rostelecom, Tele2 Russia