Kcell, the Kazakh wireless unit of Sweden’s largest telephone company TeliaSonera AB, is offering a dividend yield next year of about 10 percent to attract investors to its initial share sale, said people with knowledge of the process.
Kcell, which is meeting investors in London, Moscow, continental Europe and the U.S. over the next two weeks, will pay the dividend in the second quarter, the people said, asking not to be named as the process is private. The dividend yield will be determined once Kcell’s final share price is set.
TeliaSonera has sought $10.50 to $13 for each share in the Kcell unit, according to a statement yesterday from the Stockholm-based company. The IPO would value Kcell at $2.1 billion to $2.6 billion and cut TeliaSonera’s stake to 61.9 percent from 86.9 percent. At the range’s top end, the company could raise $650 million. Trading is set to start Dec. 12.
Kcell will pay the first-year dividend based on 100 percent of its net income for the second half of 2012, the company said in the statement. It plans to pay investors dividends based on at least 70 percent of full-year net income after that, meaning the dividend amount may increase depending on performance.
Spokesmen for Teliasonera and Kcell declined to comment.
Telefonica Deutschland Holding AG, which raised 1.45 billion euros ($1.9 billion) in Europe’s largest IPO this year, promised investors 500 million euros in cash dividends from 2012 earnings and has projected increasing pay outs in coming years.
Nordic operator TeliaSonera is selling stakes in emerging-markets ventures to gain funds, while retaining holdings in them to benefit from growth that’s faster than in more mature markets such as Sweden and Finland. OAO MegaFon, the carrier’s Russian affiliate, began trading this week after TeliaSonera reduced its stake to 29 percent through an IPO.
Kcell, which has operated in Kazakhstan since 1998, had approximately 12.7 million subscribers and a market share of 47.7 percent as of September, according to the company.
Credit Suisse AG, UBS AG and Visor Capital are managing the sale, according to yesterday’s statement.
Shares of TeliaSonera, which has cut jobs and trimmed expenses in Sweden and Finland, rose 2.3 percent to 45.04 kronor at 5:48 p.m. in Stockholm. The stock had dropped 5.9 percent this year through Nov. 28, valuing the company at 191 billion kronor ($29 billion).