Billionaire Rotenberg Buys Marshall’s 10.7% Stake in Rostelecom

Marshall Capital sold its 10.7 percent stake in state-run fixed-line operator OAO Rostelecom to billionaire Arkady Rotenberg, a judo partner of President Vladimir Putin, according to an e-mailed statement today.

Konstantin Malofeev’s Marshall Capital sold shares to Rotenberg’s Bellared Holdings Ltd for an “undisclosed amount,” the company said in the statement. The stake has a market value of 38.7 billion rubles ($1.3 billion), according to Bloomberg calculations.

Rotenberg, whose business includes road construction and building pipelines for OAO Gazprom (OGZD), has an estimated worth of $1 billion, according to Forbes Russia. The acquisition marks a “long-term investment in the Russian telecommunications market” for him, the company said. His representatives will be nominated to the board of directors in June.

Rostelecom’s chief executive officer, Alexander Provotorov, previously worked for Marshall Capital. Prime Minister Dmitry Medvedev’s government had sought to replace Provotorov, criticizing the company for spending on an expansion into the mobile business.

“It doesn’t matter if Provotorov runs Rostelecom or another professional manager picked by the government,” Malofeev said in a Dec. 18 interview. “What is important to us is the shares’ appreciation and Rostelecom’s expansion into wireless business, which has proven to be the key growth driver for fixed-line operators globally.”

Mobile Expansion

Rostelecom’s expansion into the mobile business may threaten mobile phone operators including OAO Mobile TeleSystems (MBT), OAO MegaFon (MFON) and VimpelCom Ltd (VIP), whose profitability could decline as a result, Malofeev said at the time.

“Rotenberg is more acceptable for Kremlin as a shareholder as he is known to be very close to the president,” Alexander Kazbegi, an analyst at Moscow-based Renaissance Capital, said in a telephone interview.

Still, Rotenberg is new to telecommunications industry, and it’s unclear if he will keep Marshall-backed Provotorov as the company CEO, Kazbegi said.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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