Russian federal telecoms group Rostelecom has closed a transaction to acquire the 55% it did not already own in mobile network operator Tele2 Russia (T2 RTK Holding). The deal – signed on 12 February 2020 – was completed on 17 March, resulting in Rostelecom holding 100% of Tele2 Russia’s shares while a consortium of investors led by former Tele2 stakeholder VTB bank took 29.4% of Rostelecom’s ordinary shares (including a 13.1% stake directly bought by VTB and 16.3% held by other investors). The Russian Federation – via the Federal Agency for State Property Management – remains the largest stakeholder in Rostelecom.
The deal involved a RUB108 billion (USD1.375 billion) sale purchase agreement for a 45% Tele2 Russia stake, alongside a barter agreement to acquire the remaining 10% of the cellco via the exchange of 10% of ordinary Rostelecom shares held by Rostelecom subsidiary Mobitel with a transaction value of RUB24 billion.
The deal was partly financed through an RUB66 billion equity raise, resourced from the additional share issue and private subscription of Rostelecom ordinary shares awarded to VTB bank. As a result of this additional share issue, the number of ordinary shares in Rostelecom’s charter capital has increased by 708 million to 3.283 billion shares (including shares acquired in-line with pre-emptive rights).
Anna Shumeiko, senior VP of Rostelecom, said: ‘Tele2 Russia consolidation is a historic moment for the Russian telecommunications market and pivotal for Rostelecom. The largest transaction of the recent years will enhance Rostelecom’s leading position in the digital service market, adding to the company’s financial and business resilience and long-term sustainability. In the near future, we will be updating our key strategic priorities with an ultimate goal to increase Rostelecom’s fundamental value through providing cutting edge digital services to Russian households, business and state. We are also excited to see VTB and its partners become our long-term strategic shareholders whose motivation matches our aim to increase capitalisation.’