The Russian Direct Investment Fund and Deutsche Bank are to jointly invest a total of R7.7 billion (€176.3 million) in Rostelecom.
According to the Russian telco, the money will be directed towards both its future development and strengthening its market position. As a result of the deal, which has received all the necessary approvals from the three parties involved, investors will acquire 72,187,366 ordinary Rostelecom shares from its subsidiary LLC MOBITEL.
Commenting on the deal, Sergey Kalugin, president of Rostelecom, said: We are delighted that investors as prestigious and well-established as the Russian Direct Investment Fund and Deutsche Bank share our belief in Rostelecom’s potential for growth. 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.
“The sale of our treasury shares helps to improve Rostelecom’s investor base, and the proceeds generated will be used to reduce the company’s leverage, and further strengthen our market position. We have also ensured that Rostelecom will continue to benefit from any additional upside as the disposed treasury shares appreciate in value.”
Kirill Dmitriev, general director of the Russian Direct Investment Fund, added: “Against the backdrop of growth in the Russian economy, demand for reliable networks and ultrafast broadband infrastructure from individual customers and businesses 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.”
Rostelecom says that the structure of the deal will also involve it signing call and put options to entitle the company to a portion of an increase in share value if the share price rises, and investors will be protected if the share price falls.
In addition, the option contracts do not infer the delivery of shares if the option is exercised.
Rostelecom is a leading player in Russia’s TV industry, claiming a 49% share of the IPTV market in 2012, according to data produced by iKS-Consulting. It also had a 40% share of the fixed broadband market, according to data produced by AC&M Consulting.
The company currently lists Russian Federation via FASPM as its main owner, with a share capital of 43.07%.
