Russia’s VTB banking group is likely to want to retain control of mobile operator Tele2 Russia in any joint venture with Rostelecom, according to the bank’s chairman Andrey Kostin.
Speaking on the sidelines of the Apec summit in Bali, Kostin told…
Russia’s VTB banking group is likely to want to retain control of mobile operator Tele2 Russia in any joint venture with Rostelecom, according to the bank’s chairman Andrey Kostin.
Speaking on the sidelines of the Apec summit in Bali, Kostin told Bloomberg that, as far as he recalls, Tele2 Russia’s assets are valued higher than state-controlled Rostelecom’s mobile assets.
“I can’t tell whether Rostelecom will get 40% or 49%,” he reportedly said, adding that an independent valuation is needed.
Russian newspaper Vedomosti recently reported that VTB, which acquired Tele2 Russia from its Swedish parent for US$3.55bn earlier this year, is in talks with Rostelecom about creating a mobile joint venture.
A Rostelecom-Tele2 tie up would create the fourth-largest player in the Russian mobile market and the leader in the overall telecoms sector.
Rostelecom plans to shift its strategic focus to broadband internet and may seek partners to help develop its mobile business, according to the paper. Russia’s fifth-largest player has reportedly hired JP Morgan, Credit Suisse and PwC to advise it on a possible deal with Tele2 Russia.
VTB and Rostelecom declined to comment on the matter.
Meanwhile, two Netherlands-based affiliates of St Petersburg-based Bank Rossiya – Invinite and ABR Investments – have filed an application with the Russian antitrust regulator seeking clearance to acquire up to 50% of Tele2 Russia. Local reports have suggested Bank Rossiya may eventually sell its interest in Tele2 Russia to Rostelecom.
Earlier this week, Russian paper Kommersant reported that Rostelecom is targeting Bank Rossiya’s Sobinbank unit, saying the parties are in talks about a potential deal. A Rostelecom spokesperson confirmed the telco may be interested in entering the financial services market but declined to comment on potential M&A targets.
Analysts have speculated that VTB may not sell Tele2 Russia shares before April 2014, when a clause entitling Sweden’s Tele2 to half the proceeds expires.
Gazprombank TMT analyst Sergey Vasin recently told TelecomFinance that Rostelecom and Tele2 will likely need to reach some sort of deal to stand up to stiff competition from the ‘big three’ mobile operators: MTS, MegaFon and VimpelCom.
“Tele2 Russia is short on frequencies and prospective standards in the country, while Rostelecom has far too small a market share,” he said.
