Tele2 aims for 53 LTE regions this year; Rostelecom discusses takeover potential

5 May 2017

Tele2 Russia, partly-owned by Rostelecom, has expanded its 4G LTE network footprint to three additional regions – Belgorod, Lipetsk and Omsk – so far in 2017, taking its total LTE coverage to 28 of Russia’s 83 regions (excluding the Crimean peninsula), company representative Konstantin Prokshin told Vedomosti. The official added that a previous target of reaching 13 additional LTE regions in full-year 2017 has been upped to 25, which would take the total footprint to 53 (of Tele2’s 65 2G/3G/4G network regions). The company added that it will raise CAPEX in FY17, whilst it expects to enter positive cash flow by the end of the year, as annual revenue growth is targeted at around 5.5% to reach approximately RUB112.0 billion (over USD1.9 billion). According to one of Tele2’s shareholders, VTB Bank, the operator’s free cash flow remained negative (at minus RUB10.5 billion) in 2016 as annual EBITDA decreased by 29% to RUB16.5 billion.

Another report from Vedomosti quotes Rostelecom’s new president Mikhail Oseevsky as saying that the national fixed network operator – which currently owns 45% of Tele2 Russia – is consulting with government officials about ‘directives’ on the possibility of taking majority ownership of the cellco. According to Oseevsky, Rostelecom also continues to discuss with shareholding partners of Tele2 the ‘possible approaches’ to obtaining a controlling stake, a move which is seen as creating synergies in the mobile and fixed line business, bolstering competitive strengths against rivals and reducing operating costs.

Russia, Rostelecom, Tele2 Russia