Tele2 completes Russian deal with VTB – Mobile World Live

Tele2 completes Russian deal with VTB

05 APR 2013

Despite a flurry of improved counter bids, Tele2 has completed the sale of its Russian business to VTB on the terms it agreed with the Russian state bank last week.

VTB will pay $2.4 billion in cash for Tele2 Russia equity, and then take on the operator’s $1.15 billion in net debt.

The deal went through after Russian regulators gave VTB approval to acquire the country’s fourth-largest mobile operator by subscribers.

Mike Parton, Tele2 chairman, hailed the transaction as “an excellent result” for Tele2 shareholders.

“Our cash investment in this business was SEK6 billion [$920 million],” he continued in a statement, “and this has generated a cash return of over SEK 27 billion, including the transaction, much of which has been returned to our shareholders.”

Tele2 shareholders may well feel, however, they have missed out on a better investment return.

MTS and VimpelCom, number one and three respectively in the Russian mobile market, mounted a rival bid after the VTB terms were revealed, slapping down a joint offer of up to $4.25 billion in cash.

A1, an investment arm of Russia’s Alfa Group, also made an offer of between $3.6 billion and $4 billion in cash.

The rival offers nonetheless appeared to be too late. Tele2 said it had already signed a ‘legally binding’ and ‘definitive agreement’ with VTB.

Tele2, however, has the right to a share of half the net cash profits obtained by VTB if it sold any Tele2 Russia’s shares or assets during the 12 months after the transaction is closed.

Author

Ken Wieland

Ken has been part of the MWC Mobile World Daily editorial team for the last three years, and is now contributing regularly to Mobile World Live. He has been a telecoms journalist for over 15 years, which includes eight...More

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