OAO MegaFon, Russia’s second-largest mobile-phone company by customers, plans to resume one of the country’s biggest initial public offerings as early as this week, according to people with knowledge of the matter.
The company may decide as early as today on a schedule for an investor roadshow, after receiving approval from the U.K. Listing Authority for the stock sale, said the people, who asked not to be identified because the plan is confidential. The preliminary schedule includes Moscow, London, New York, Frankfurt and a Nordic capital, one of the people said.
MegaFon, which plans to complete the IPO before the end of the year in a dual listing in London and Moscow, last month postponed a marketing campaign to include details of an acquisition and third-quarter earnings. Investors value the company controlled by billionaire Alisher Usmanov at $10 billion to $11 billion, people familiar with the matter said last month, meaning a sale of a 20 percent stake could raise $2 billion.
“The timing of the IPO depends on how quickly the prospectus can be updated and finalized,” the Moscow-based company said yesterday in an e-mail to Bloomberg. “We intend to hold the IPO this year.”
MegaFon’s IPO is a part of shareholder agreement reached in April when billionaire Mikhail Fridman’s Altimo cashed out of the operator and Usmanov boosted his ownership, resolving years of governance disputes with co-owner TeliaSonera AB. As part of the IPO, Stockholm-based TeliaSonera plans to divest a stake of as much as 10.6 percent, keeping at least 25 percent ownership.
OAO Rosneft, Russia’s largest oil producer, raised $10.4 billion in an IPO in 2006. That was followed a year later by VTB Bank’s $8 billion stock sale. United Co. Rusal, the biggest aluminum producer, raised $2.2 billion in a Hong Kong listing in 2010.
Russian companies are returning to stock offerings after the central bank sold a $5.2 billion stake in OAO Sberbank in September. MD Medical Group Investments Plc , Russia’s largest chain of maternity centers, raised $289 million in a London IPO last month. UTair Aviation is considering selling shares on international markets next year.
MegaFon said last week its third-quarter profit rose 20 percent to a record 14.9 billion rubles ($473 million), as customer gains helped boost revenue 12 percent to 71.2 billion rubles.
Data revenue accounted for 13 percent of sales as customers browsed the Web and sent e-mail on mobile devices. Mobile broadband will remain the main driver for phone companies’ revenue, according to UralSib Capital. Usmanov also controls smaller operator Scartel, known under the brand Yota, which is working with MegaFon in developing a faster network.
The quarterly results support MegaFon’s planned IPO as revenue growth was solid and operating profit before depreciation and amortization reached 45 percent of sales, Alexander Kazbegi, an analyst at Renaissance Capital, said last week. Rivals OAO Mobile TeleSystems, or MTS, and VimpelCom Ltd. are set to report third-quarter earnings Nov. 14.
At the end of the third quarter, MTS had 70.7 million users in Russia, MegaFon had 62.8 million, and VimpelCom 56.2 million, according to Moscow-based researcher AC&M Consulting. Russia had 161 percent mobile penetration at the end of September, AC&M said.
MegaFon agreed last month to buy a 25 percent stake of handset retailer Euroset Holding NV, and secured an option to acquire another 25 percent from Usmanov. The 50 percent holding is valued at $1.33 billion, according to the company. VimpelCom will continue to own the remaining 50 percent stake.
Telefonica SA, Spain’s largest phone company, last month raised 1.45 billion euros ($1.8 billion) selling shares in its German division in Frankfurt.
Morgan Stanley and Sberbank CIB are managing MegaFon’s share sale with help from Credit Suisse Group AG, Citigroup Inc. and VTB Capital.