Rostelecom Declines as Unit Overpays for Stake: Moscow Mover

OAO Rostelecom fell for a fourth day as a unit of Russia’s state-run telecommunications operator paid more than the market price for a stake in the parent company.

The stock declined as much as 1.2 percent before paring its loss to 0.6 percent at 116.36 rubles by 6:38 p.m. in Moscow. Rostelecom’s preferred shares dropped 0.3 percent to 78.28 rubles. Russia’s benchmark gauge climbed 1.1 percent to 1,510.77, the highest level on a closing basis since Nov. 1.

Rostelecom said after the market closed on Nov. 15 its subsidiary Mobitel bought a 7.45 percent stake in the parent company for 25.2 billion rubles ($775 million). That translates into a price tag of about 127 rubles a share, an 8.5 percent premium to the close on Nov. 15, according to Bloomberg calculations. On Oct. 11, Kremlin-backed Russian Direct Investment Fund and Deutsche Bank AG said they purchased about 72.2 million shares of Rostelecom for 106.6 rubles a share, according to Bloomberg calculations.

“The stock is falling because the company is losing money without a reason in this transaction,” Alexander Vengranovich, an analyst at Otkritie Financial Corp., said by phone from Moscow. “This isn’t a very transparent deal.”

RDIF and Deutsche Bank bought Rostelecom’s shares for 7.7 billion rubles, according to an Oct. 11 statement.

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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