The board of Russian-state owned Rostelecom has approved the transferral of its mobile assets into a joint venture with Tele2 Russia.
Tele2 Russia, equally owned by Russian bank VTB and a consortium of local investors, will own 55% of the joint venture,…
The board of Russian-state owned Rostelecom has approved the transferral of its mobile assets into a joint venture with Tele2 Russia.
Tele2 Russia, equally owned by Russian bank VTB and a consortium of local investors, will own 55% of the joint venture, T2 RTK Holding, while Rostelecom will own 45%.
Rostelecom said it will contribute “substantially all” of its mobile assets and licences to T2 RTK. Tele2Russia will contribute all of its mobile assets.
As previously reported, the transaction will be implemented in two stages. Firstly, Rostelecom will transfer its standalone mobile subsidiaries and assets, including SkyLink, and get a 45% voting interest and 26% economic interest in T2 RTK.
The second stage will see Rostelecom spin off its integrated mobile businesses into a new, wholly-owned subsidiary, RT Mobile. Rostelecom’s mobile licences are expected to be re-issued to the unit. Upon completion of the spinoff, Rostelecom will transfer its entire stake in RT Mobile to the JV. At this time, Rostelecom will increase its economic interest in T2 RTK to 45%.
The first stage of the process is expected to close in Q1 2014 and the second by the end of Q2 2014. The mobile spinoff requires the approval of Rostelecom shareholders, who are set to vote on it on 30 December.
The deal better places Rostelecom and Tele2 Russia to compete with the nation’s big three operators: MTS, MegaFon and VimpelCom. T2 RTK will have a pro forma subscriber base of about 38 million and pro forma revenues of about Rbs101bn (US$3.08bn), according to Rostelecom. The telco expects the JV to generate significant synergies over the medium-term, particularly in terms of network rollout and operation, distribution and customer service.
Rostelecom noted that the deal marks a key milestone in the development of its mobile strategy. “The mobile assets of Rostelecom and Tele2 Russia offer a great strategic fit, complementing each other in terms of footprint and allowing T2 RTK Holding to capitalise on Tele2 Russia’s know-how across the segments, proven track record of innovation and Rostelecom’s next-generation spectrum holdings,” the company said.
T2 RTK, which will have a nationwide reach, plans to undertake “significant investments” in developing its LTE network and mobile services, Rostelecom said.
Rostelecom’s financial advisers on the transaction were Credit Suisse and JP Morgan. Barclays issued a fairness opinion and Linklaters provided legal counsel.
Tele2 Russia shareholders received financial advice from VTB Capital and UBS and legal advice from Skadden.
