Russia’s VTB Bank has agreed to sell 50% of Tele2 Russia to a trio of local investors, according to the deputy chairman of the bank’s investment arm.
Yuri Solovyev told the Wall Street Journal that the buying group is led by a subsidiary of Bank…
Russia’s VTB Bank has agreed to sell 50% of Tele2 Russia to a trio of local investors, according to the deputy chairman of the bank’s investment arm.
Yuri Solovyev told the Wall Street Journal that the buying group is led by a subsidiary of Bank Rossiya, partly-owned and chaired by Yuri Kovalchuk, a long-term acquaintance of Russian president Vladimir Putin. A spokesperson for Bank Rossiya confirmed the group intends to take part in the deal.
The group also includes a company owned by steel magnate Alexei Mordashov, the major shareholder in Severstal, Solovyev said. He declined to name the third buyer.
A spokesperson for Mordashov was not immediately available for comment.
Although Solovyev declined to reveal the agreed price for the stake sale, the report valued the deal at more than US$1.8bn. However a spokesperson for VTB Bank said that figure is incorrect but declined to provide any further details.
The deal is likely to be signed today in Moscow, according to the report.
VTB acquired Tele2 Russia, the nation’s fourth-largest mobile operator, from its Swedish parent in March for US$3.55bn. The bank has always been clear that it intends to sell at least a stake in the mobile operator. Last week, the bank announced that it planned to sell a stake to a group of investors before taking the company public within three years.
Last Friday, Russian antitrust authority FAS received an application from two Netherlands-based Bank Rossiya affiliates for clearance to acquire up to 50% of Tele2 Russia.
There has been considerable speculation that the Tele2 Russia stake sale could mark a step toward an eventual merger with state-controlled Rostelecom’s mobile assets. Recent Russian media reports have said the companies are in talks about creating a mobile joint venture.
Solovyev told the WSJ that the bank plans to expand Tele2 Russia’s presence in Russia and acquire new licences and spectrum. He reportedly added the bank intends to keep its 50% stake “for the medium term”.
Russia’s three largest mobile operators are MTS, MegaFon and VimpelCom. These ‘big three’, together with Rostelecom, all won 4G licences at Russia’s last spectrum auction, while Tele2 Russia missed out.
Tele2 adds year to downsized revolver
Meanwhile, Swedish mobile operator Tele2 has downsized its revolving credit facility by a third to €800m (US$1.1bn) to be a “more suitable size” following the sale of Tele2 Russia.
The company has also extended the revolver by a year to May 2018.
Its original €1.2bn deal was secured in 2012 with a syndicate of 12 banks, coordinated by RBS and SEB with Nordea as facility agent.
The other participating banks were Commerzbank, Credit Agricole, Danske, ING, Intesa Sanpaolo, Raiffeisen, Svenska Handelsbanken and Swedbank.
According to the company, one of the banks joined the syndicate mainly to increase its exposure to Russia, and following the sale of Tele2 Russia it did not take part in the new facility.
It said the new revolver was unutilised as of 11 October 2013.
