Russian operator MegaFon delisted from the Moscow stock exchange following a share buy-back, which it said had given investors an exit opportunity before it embarked on a new strategy with significant additional risk.
Moscow Exchange confirmed the company’s stock would be removed from six indices and one sub-index today (30 August) following a buy-back programme announced by MegaFon in July. This leaves just two per cent free float equity in the company remaining.
The delist is a result of MegaFon’s strategy, unveiled in 2017, to pursue new opportunities away from its core telecoms business with the aim of becoming a leader in Russia’s digital ecosystem.
When it announced the share buy-back, MegaFon stated its change in focus may require “broader partnerships with state-owned corporations, transactions with higher risks [and] investment in infrastructure with lower returns”.
The operator warned it would also need to use its free cash to make investments, likely eliminating the payment of dividends.
Discussing the scheme at the time, MegaFon executive director Gevork Vermishyan said that, given the additional risks associated with the company’s stock, the board thought it was “appropriate to offer our minority holders an exit opportunity at a premium to current trading prices if they wish to take it.”
By the launch of the buy-back the operator had already initiated moves to eye new opportunities away from its core business. In May it announced a digital financial services tie-up with its one of its largest backers, Gasprombank.Subscribe to our daily newsletter Back