Russia’s VTB bank and businessman Yury Kovalchuk, chair and part owner of Bank Rossiya, will reportedly have a controlling stake in Tele2 Russia’s planned mobile joint venture with Rostelecom.
VTB and Kovalchuk will own between 51% and 60% of the…
Russia’s VTB bank and businessman Yury Kovalchuk, chair and part owner of Bank Rossiya, will reportedly have a controlling stake in Tele2 Russia’s planned mobile joint venture with Rostelecom.
VTB and Kovalchuk will own between 51% and 60% of the JV, while Rostelecom will own the remaining 40% to 49%, Russian newspaper Vedomosti reported, citing sources close to both operators.
Bank Rossiya was part of the local investment group which acquired a 50% stake in Tele2 Russia from VTB in October for an undisclosed sum. VTB, which bought 100% of Tele2 Russia from its Swedish parent for US$3.55bn in March, retains the remaining 50% stake.
According to the report, the deal will be conducted in two phases. The first, to take place this year, will see state-controlled Rostelecom transfer certain assets, including Sky Link, and debt of about US$1bn to the JV. The second phase, to take place in 2014, will see Rostelecom transfer additional mobile assets. Rostelecom is also required to transfer its 4G licence, however Russian law currently prohibits this.
Commenting on the report, Gazprombank TMT analyst Sergey Vasin said the deal is likely to benefit both operators, although there will be concessions.
“On the one hand, the merger of Rostelecom and Tele2 is the only way to survive the competition with the ‘Big Three’. The new entity will compete easily and successfully. But at the same time, Rostelecom is likely to deconsolidate its mobile assets, which were supposed to bring growth to the company’s revenues.”
Vasin questioned Rostelecom’s apparent decision to switch its focus from mobile to internet services and content, saying that, in his view, the telco’s investment case would be clearer with mobile assets. However, he added that, for Rostelecom, it is better to have a non-controlling stake in Tele2 Russia – the nation’s fourth largest operator – than none at all. Rostelecom is the nation’s fifth-largest mobile operator, while the Big Three are MTS, MegaFon and VimpelCom.