Russian federal fixed line provider Rostelecom yesterday (12 February 2020) signed legal agreements with VTB Bank and a consortium of investors to finalise the process of acquiring a 55% stake in T2 RTK Holding (Tele2 Russia) to increase its ownership in the cellco to 100% at the cost of RUB108 billion (USD1.7 billion) in cash plus 10% of shares in Rostelecom itself. The deal, expected to be completed within a month, involves:
• a barter agreement to acquire a 10% stake in Tele2 Russia through the exchange of 10% of ordinary Rostelecom shares held by Rostelecom subsidiary Mobitel; the transaction has a value of RUB24 billion
• purchase of 17.5% of Tele2 Russia for RUB42 billion in cash
• purchase of 27.5% of Tele2 Russia using RUB66 billion in cash proceeds from the additional share issue and private subscription of Rostelecom ordinary shares awarded to VTB bank at a price of RUB93.21 per share; as a result of additional share issuing, the number of Rostelecom ordinary shares will increase by 708 million to 3.283 billion, including shares acquired in line with pre-emptive rights.
Rostelecom president Mikhail Oseevskiy announced: ‘We have entered the final phase of a complex deal to acquire 100% of Tele2 Russia, the most successful and rapidly growing mobile player … We will be updating our strategy [focusing] on new technology and product development including 5G. By combining the largest fibre backbone and subscriber base in Russia with Tele2’s track record in mobile business we have formed an unrivalled integrated platform for rendering telecom, IT and other world-class digital solutions … VTB and its partners will become our shareholders, which provides Rostelecom with supportive and long-term strategic investors.’
VTB president Andrey Kostin said: ‘VTB made a profitable investment by buying into Tele2’s capital. Since the acquisition of the company’s shares in 2013, Tele2 has evolved from a niche player into a federal mobile operator. Divesting Tele2’s stake provided the bank with a unique opportunity to become a major shareholder of Rostelecom, which following the transaction turns into the country’s largest integrated digital services operator with exceptional competitive advantages.’