VTB to sell Tele2 stake to Rostelecom, says bank president; cellco posts first profit in five years

18 Feb 2019

Russian bank VTB will sell its entire stake in mobile operator Tele2 Russia to its investment partner in the company, national fixed line giant Rostelecom, with a final decision on the move potentially arriving within a month, the bank’s president Andrei Kostin told journalists at the Russian Investment Forum in Sochi, quoted by ComNews and TASS. Kostin stated: ‘I think that a decision will be made quickly. I hope that within a month a final decision will be made about the 100% sale of the Tele2 stake to Rostelecom. VTB will fully withdraw from Tele2.’

Currently, Rostelecom owns 45% of Tele2 Russia, with the other 55% shared between a consortium of VTB Group (27.5%), Invintel BV (22.0%) and ABR Investments (5.5%). The government of the Russian Federation has a significant influence in Tele2 Russia – the country’s fourth biggest cellco by subscribers – as the ultimate controlling party of both Rostelecom and VTB Group. A source close to Rostelecom, having reviewed Mr Kostin’s statement, highlighted to ComNews that: ‘State representatives on the board of directors vote on the directive of the government of the Russian Federation. There are currently no directives to members of the board of directors [on the proposed VTB stake deal]’.

At the same Investment Forum, head of Tele2 Russia Sergey Emdin announced that the operator has reached break-even point – recording an annual net profit for 2018 – for the first time since Rostelecom came onboard its ownership in a merger deal in 2014, TelecomDaily reported. Tele2’s annual revenues reached RUB143 billion (USD2.16 billion), an increase of 16% year-on-year, and Emdin declared: ‘We had a very good last year. We grew substantially in terms of revenue … [and] significantly increased in profitability … We have fulfilled the plan for entering the net profit. It can be stated that the company has become profitable.’ While not yet disclosing actual net income figures, Emdin said a fuller disclosure would be released on 5 March.

Russia, Rostelecom, Tele2 Russia