Deutsche Bank (DB) and the Russian Direct Investment Fund (RDIF) are jointly investing Rbs7.7bn (US$237m) in Russian state-controlled Rostelecom.
The German bank and Russian state-backed fund will acquire about 72.2 million Rostelecom shares – equal…
Deutsche Bank (DB) and the Russian Direct Investment Fund (RDIF) are jointly investing Rbs7.7bn (US$237m) in Russian state-controlled Rostelecom.
The German bank and Russian state-backed fund will acquire about 72.2 million Rostelecom shares – equal to a 2.7% stake – from its subsidiary Mobitel, the Moscow-based telco said in a statement.
The deal, which has received all necessary approvals from the three parties, will include put-and-call options entitling Rostelecom to a portion of the proceeds of share price rises. Investors will be protected if the share price falls, the telco said.
Commenting on the deal, Rostelecom CEO Sergey Kalugin said: “Attracting long-term partners is a vital part of implementing Rostelecom’s ambitious plans and the deal serves as a positive signal for other top-tier investors who may also look to participate in our growth prospects.”
According to recent Russian media reports, Rostelecom is looking for partners to help develop its mobile business as it plans to shift its strategic focus to broadband internet. The telco is currently in talks with VTB Bank, owner of mobile operator Tele2 Russia, about creating a mobile joint venture, the reports stated.
Kalugin said the proceeds of DB and RDIF’s investments will be used to reduce Rostelecom’s leverage and improve its market position.
RDIF general director Kirill Dmitriev explained that the fund’s investment is based on its confidence that demand for reliable networks and ultrafast broadband infrastructure in Russia will increase.
“Now is therefore the time to invest in the telecommunications sector, and recent reforms to Rostelecom’s corporate governance practices and its development leave the company perfectly positioned to capture the growth in the sector, particularly as Russia looks to reach infrastructure capacity.”
Deutsche Bank was not immediately available for comment.
Rostelecom recently completed the second stage of its reorganisation with state telecoms holding Svyazinvest, ending cross-ownership between the two organisations.
Russia’s fifth-largest operator, which competes with larger mobile operators MTS, MegaFon, VimpelCom and Tele2 Russia, is among the assets the government has tabled for privatisation within the next three years.
