Putin approves Rostelecom’s Tele2 Russia buyout plan

8 Oct 2019

Russian state-backed national telco Rostelecom’s plan to up its stake in mobile operator Tele2 Russia from 45% to 100% has been approved by a decree signed by President Vladimir Putin. As reported by TDaily, the decree accepts ‘the proposal of the Government of the Russian Federation to increase the participation share of Rostelecom and its subsidiary Mobitel in the authorised capital of T2 RTK Holding [Tele2] to 100%.’ The government approved a plan to raise Rostelecom’s Tele2 stake in June this year.

Russia’s VTB bank is currently the second largest shareholder in Tele2 Russia with 27.5%, while Invintel (backed by Alexei Mordashov) holds 22.0% and ABR Investments (part of Rossiya Bank) 5.5%. As previously reported, Rostelecom’s Tele2 equity increase will involve issuing Rostelecom shares to existing Tele2 owners, although only VTB has been mentioned in this context so far, with the bank expecting to claim a Rostelecom stake of up to 17%. The presidential decree confirms that VTB will redeem an additional issue of Rostelecom ordinary shares, although the total volume of additional shares to be issued is not yet specified. The decree also ensures that the Russian Federation together with VTB and Vnesheconombank (current owner of a 3.95% Rostelecom stake) must retain control of more than 50% of Rostelecom’s ordinary shares. Furthermore, VTB will be banned from selling Rostelecom shares for four years, while the government may still veto transactions on such shares after four years. Rostelecom will also be given pre-emptive rights to repurchase securities.

The decree says that Rostelecom’s Tele2 buyout and the issue of additional Rostelecom shares should be completed within six months.

Russia, Rostelecom, Tele2 Russia