OJSC Megafon MFON Pricing for Initial Public Offering

  OJSC Megafon (MFON) - Pricing for Initial Public Offering

RNS Number : 1778S
OJSC Megafon
28 November 2012



                MegaFon IPO priced at US$ 20 per share and GDR

MOSCOW,  Russia  (November  28,  2012)  -Open  Joint  Stock  Company   MegaFon 
("MegaFon" or  the "Company")  today  announces the  pricing of  its  ordinary 
shares ("Shares") and global depositary receipts ("GDRs" and together with the
Shares, the  "Securities")  sold in  its  initial public  offering  ("IPO"  or 
"Offering")  by  Sonera   Holding  B.V.,  a   subsidiary  of  TeliaSonera   AB 
("TeliaSonera"), and MegaFon Investments  (Cyprus) Limited ("MICL"), a  wholly 
owned subsidiary of MegaFon(together the "Selling Shareholders").


· The Offer  price is set  at US$20 per  Share and per  GDR, with each  GDR 
representing an interest in one Share.

·  The  total  size  of  the  Offering  is  US$1.7  billion  excluding  the 
over-allotment option.

· The Offer  price implies a  market capitalisation of  MegaFon of  US$11.1 
billion at listing.

· The Offering  consists of  84,526,819 Shares in  the form  of Shares  and 
GDRs, excluding Shares and GDRs subject to the over-allotment option.

·  Following  completion  of  the  Offering,  prior  to  exercise  of   the 
over-allotment option, the free float will account for approximately 15.2%  of 
the Company's share capital  (excluding shares owned  by MICL post  offering), 
while AF  Telecom and  TeliaSonera will  hold approximately  55.8% and  29.0%, 
respectively (in each case, excluding shares owned by MICL post offering).

· MegaFon expects  to use approximately  50% of the  net proceeds from  the 
Offering received through its subsidiary  MICL to repay or refinance  existing 
debt and the remainder will be  used for general corporate purposes  including 
the continuing development and expansion of its network.

· The Selling Shareholders will, pro rata to the number of Shares and  GDRs 
being sold by  each of  them, grant  the Joint  Bookrunners an  Over-Allotment 
Option to acquire up to an additional 10% of Shares and GDRs allocated in  the 
Offering, at the Offer price

· Conditional dealings in the GDRs on the London Stock Exchange and trading
in the  Shares on  the MICEX  Stock Exchange  commence today,  both under  the 
symbol MFON. Admission of the GDRs  to the Official List and to  unconditional 
trading through the International Order Book  of the London Stock Exchange  is 
expected to take place on 3 December 2012.

· Morgan Stanley and Sberbank CIB are Joint Global Co-ordinators and  Joint 
Bookrunners and Citi, Credit Suisse and VTB Capital are Joint Bookrunners.

Commenting on today's announcement, Sergey Soldatenkov, Chairman of the  Board 
of Directors of MegaFon, said:

"On behalf of the Board I welcome  all our new shareholders. We are  committed 
to a strategy of delivering attractive  returns to all investors. Through  the 
implementation of this strategy  we believe our  new shareholders can  benefit 
from further growth in the Russian mobile sector."

Ivan Tavrin, CEO of MegaFon, said:

"We received high quality institutional demand  from all regions in which  the 
Securities were offered. The  successful pricing of our  IPO today is a  clear 
endorsement of MegaFon's  investment case and  reflects investor appetite  for 
the Russian mobile data growth story.  We look forward to delivering  further 
profitable growth and value creation as we continue to leverage our leadership
in mobile data to exploit the significant opportunities we see ahead."


OJSC MegaFon

Peter Lidov Tel: + 7 926
200 6699 plidov@megafon.ru

Elena Alexandrova Tel: + 7 926442
5383 ealexandrova@megafon.ru

Citigate Dewe Rogerson (London) Tel: +44(0)20 7638

David Westover

Andrew Hey

Chris Barrie

Marina Zakharova

Notes to editors

About MegaFon:

· Operating market:Russia's telecommunications  market was worth  RUB1,607 
bn  in  2011  (according   to  AC&M  Consulting,  Direct-INFO).   Itswireless 
telecommunications industry is the largest in Europe with c. 230m  subscribers 
as at  30th September  2012 (according  to AC&M),  underpinned by  strong  GDP 
growth and  governed by  what is  at present  a relatively  benign  regulatory 

· Market position:the Company is Russia's 2nd largest mobile operator  in 
terms of subscribers  with c.63m  subscribers representing a  market share  of 
over 27% as of 30 September 2012, (according to AC&M) and the largest operator
in the mobile data segment since 2008, a  market which has grown at a CAGR  of 
over 44% from 2009 to 2011 (according to AC&M).

· Strong position  in promising data  and VAS market:  The Russian  mobile 
data market is forecast to grow at a CAGR of 21% from 2011-2015 (according  to 
AC&M) with potential for low existing  smartphone and 3G penetration to  catch 
up with Western European levels. The Company believes it is well positioned to
exploit the potential further growth of  the Russian mobile data market as  it 
operates the most extensive  3G network in  Russia, offering high  performance 
and service  quality. It  was the  first of  the Big  Three to  offer  LTE/4G 
high-speed mobile broadband data services to its clients and expects to be  in 
a position to offer  its LTE/4G services in  over 40 cities, including  Moscow 
and St Petersburg, by the end of 2012. Similar room for growth exists in value
added services,  where the  Company aims  to develop  innovative services  and 

· Strong  growth  record:the  Company's  consolidated  total  revenue  and 
operating income before  depreciation and  amortisation (OIBDA)  for the  year 
2011 amounted to RUB 242.6bn and  RUB 100.8bn, respectively, representing a  3 
year CAGR since 2009 of  15.5% and 6.9%, respectively. Furthermore,  MegaFon's 
Q3 2012 results demonstrate strong continuing momentum with consolidated total
revenue and OIBDA  growing by 12.3%  and 21.1%, respectively,  compared to  Q3 
2011, with an OIBDA margin of 45.1%, up 2.8 percentage points compared to  the 
previous quarter.

· Strong  focus on  productivity  and efficiency:  MegaFon is  focused  on 
driving higher value data  and services revenue  growth, while continuing  to 
benefit from  lower expected  capital intensity  going forward,  ongoing  cost 
saving and capital efficiency initiatives to optimise potential for cash  flow 

· Attractive shareholder remuneration policy:  the Company has approved  a 
dividend policy which sets annual  dividends at the higher  of (x) 50% of  Net 
Profit or (y) 70% of free cash flow (as set out in its dividend policy),  plus 
a value (which may be negative) corresponding to the net debt capacity of  the 
company within the  bounds of  its optimal capital  structure. This  is a  net 
debt-to-adjusted OIBDA ratio  (where adjusted  OIBDA means the  amount of  net 
profit (exclusive of the effect of non-cash items) for the relevant  financial 
period, plus depreciation and amortisation) between 1.2 and 1.5 times.

·  Highly  experienced  management  team  and  strong  sponsorship  from 
incumbent shareholders:  MegaFon's management  is  highly experienced  with  a 
strong industry track record. The Company further benefits from the expertise
and insight of our strategic shareholders AF Telecom and TeliaSonera. As  part 
of the Offering, Mr Nyberg,  a member of the  MegaFon Board of Directors,  has 
communicated to the Company his intention  to subscribe for Securities in  the 
Offering at the Offer  price in the  amount of U.S.$2 million.  As part of  a 
long-term incentive  plan, Mr  Tavrin has  agreed to  purchase from  MegaFon's 
subsidiary, MICL, a 1.25% interest (7,750,000 shares as at the date hereof) in
the Company at the Offer Price within 30 days of Admission.


These materials are not an offer for sale of securities.

Copies of this announcement are not being made and may not be distributed or
sent into the United States, Australia, Canada, Japan or any other
jurisdiction in which such distribution would be unlawful or would require
registration or other measures.

These materials are not an offer for sale of securities in the United States.
Securities may not be offered or sold in the United States absent registration
or an exemption from  registration under the U.S.  Securities Act of 1933,  as 
amended. The issuer  of the shares  and the GDRs  (the "Securities") has  not 
registered, and does not  intend to register, any  portion of the offering  in 
the United  States,  and does  not  intend to  conduct  a public  offering  of 
Securities in the United States.

This document is only being distributed to and is only directed at:

(A) persons located outside the European  Economic Area or, if located  within 
the European Economic Area, that are qualified investors within the meaning of
the Prospectus Directive as  implemented in the relevant  Member State of  the 
European Economic Area; and

(B) persons  located outside  the United  Kingdom or,  if located  within  the 
United Kingdom, persons that are:

(i) investment professionals  falling within  Article 19(5)  of the  Financial 
Services and Markets Act 2000 (Financial Promotion) Order 2005 (the  "Order"); 

(ii) high net worth  entities, and other  persons to whom  it may lawfully  be 
communicated, falling within Article 49(2)(a) to (d) of the Order,

(all such persons in (A) and (B) above together being referred to as "relevant
persons"). The Securities are only available to, and any invitation, offer  or 
agreement to subscribe, purchase or otherwise acquire such securities will  be 
engaged in only  with, relevant  persons. Any person  who is  not a  relevant 
person should not act or rely on this document or any of its contents.


This document is an advertisement and is not a prospectus for the purposes  of 
the "Prospectus Directive". A prospectus  prepared pursuant to the  Prospectus 
Directive will be published, which, when published, will be made available  in 
accordance with the Prospectus Directive.  Investors should not subscribe  for 
any securities referred to in this document except on the basis of information
contained in the prospectus.

The  expression  "Prospectus  Directive"   means  Directive  2003/71/EC   (and 
amendments thereto, including Directive 2010/73/EU, to the extent  implemented 
in any relevant Member State)  and includes any relevant implementing  measure 
in the relevant Member State.

This document  and information  contained herein  are not  a public  offer  or 
advertisement of securities in the Russian Federation and are not an offer, or
an invitation to  make offers,  to purchase,  sell, exchange  or transfer  any 
securities in the Russian Federation or to  or for the benefit of any  Russian 
person or entity, unless and to  the extent otherwise permitted under  Russian 
law, and must not be made publicly available in Russia. Information contained
in this document is  intended only for persons  who are "qualified  investors" 
within the  meaning of  Article 51.2  of the  Federal Law  No. 39-FZ  "On  the 
Securities Market" dated  22 April 1996,  as amended (the  "Russian QIs")  and 
must not be made available to any persons who are not Russian QIs or otherwise
permitted under Russian  law to access  such information. The  GDRs have  not 
been  and  will  not  be  registered  in  Russia  and  are  not  intended  for 
"placement", "public  circulation"  ,  "offering" or  "advertising"  (each  as 
defined in  Russian law)  in the  Russian Federation  except as  permitted  by 
Russian law.  The ordinary  shares of  Open Joint  Stock Company  MegaFon  are 
listed on quotation list "V" of CJSC MICEX Stock Exchange.

This document doesn't constitute investment advice or a recommendation under
Cyprus law, nor does it constitute an offer or advertisement of securities in
Cyprus, it is not intended to be and must not be distributed via information
distribution channels or to the public in Cyprus, nor (when distributed by a
duly licensed investment firm established or operating through a branch in
Cyprus) to any person in Cyprus other than a 'professional client' as defined
in the law on Investment Services and Activities and Regulated Markets (Law
No.144 (I)2007).

This document may not be used for any invitation or solicitation purposes for
or in connection with the sale, marketing, offering or acquisition of the
securities in circumstances under which it is unlawful under Cyprus laws to
make such an invitation or solicitation.


This  release  includes  statements  that  are,  or  may  be  deemed  to   be, 
"forward-looking  statements".   These  forward-looking   statements  can   be 
identified by  the use  of forward-looking  terminology, including  the  words 
"targets",  "believes",   "expects",   "aims",   "intends",   "will",   "may", 
"anticipates", "would", "could" or "should" or similar expressions or, in each
case their negative or other variations or by discussion of strategies, plans,
objectives,  goals,  future  events   or  intentions.  These   forward-looking 
statements all include matters that are not historical facts. By their nature,
such forward-looking statements involve known and unknown risks, uncertainties
and other important factors beyond the Company's control that could cause  the 
actual results, performance or  achievements of the  Company to be  materially 
different from  future  results,  performance  or  achievements  expressed  or 
implied by such  forward-looking statements.  Such forward-looking  statements 
are based on numerous assumptions  regarding the Company's present and  future 
business strategies and the environment in  which the Company will operate  in 
the  future.  Forward-looking   statements  are  not   guarantees  of   future 
performance. Many  factors  that could  cause  the Company's  actual  results, 
performance or achievements to differ materially from those expressed in  such 
forward-looking statements. These forward-looking statements speak only as  at 
the date of this  release. The Company expressly  disclaims any obligation  or 
undertaking to disseminate  any updates  or revisions  to any  forward-looking 
statements  contained  herein   to  reflect  any   change  in  the   Company's 
expectations with  regard  thereto or  any  change in  events,  conditions  or 
circumstances on which any such statements are based.


                     This information is provided by RNS
           The company news service from the London Stock Exchange


MSCDMMZMVRNGZZG -0- Nov/28/2012 07:01 GMT
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