Russia Considers $5 Billion Rostelecom Stake Sale, Shuvalov Says

Russia may sell a controlling stake in telecommunications operator OAO Rostelecom for at least $5 billion as early as this year, said First Deputy Prime Minister Igor Shuvalov.

“I think it would be right for the government to sell its entire stake this year, to sell it as a whole,” Shuvalov, who oversees Russia’s privatization program, said in an interview in Moscow this week. “The company has a lot of accumulated problems, but we think a controlling stake could be sold for a minimum of $5 billion.”

A decision will be made “by or during autumn,” he said.

The government plans to raise 427 billion rubles ($13.6 billion) through state asset sales this year to reduce its role in the economy. Most of the proceeds will go to the companies for investment. Stakes in diamond miner OAO Alrosa, airline OAO Aeroflot and VTB Group, Russia’s second-biggest bank, may be among the year’s biggest sales.

Rostelecom’s addition to the 2013 privatization plan was proposed by the Federal Property Management Agency earlier this month, as state-run VTB acquired Russian wireless assets from Tele2 AB. (TEL2B)

VTB may resell Tele2 Russia to Rostelecom in six to eight months once the state-run operator completes a merger with its parent, OAO Svyazinvest, according to a note from Renaissance Capital, a Moscow-based investment bank, at the time of the deal. Their networks combined would form Russia’s fourth-biggest nationwide mobile operator.

The antitrust watchdog would welcome Rostelecom’s acquisition of Tele2 Russia to create a new national mobile operator, Interfax reported yesterday, citing Igor Artemyev, the head of the Federal Anti-Monopoly Service. The government holds about 55 percent of Rostelecom and will hold about the same amount after the Svyazinvest merger.

Rostelecom gained 0.7 percent to 112.19 rubles as of 3:39 p.m. in Moscow, giving it a market value of $10.5 billion.

To contact the reporters on this story: Irina Reznik in Moscow at ireznik@bloomberg.net; 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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