Rostelecom May Spin Off Wireless Assets for Tele2 Russia Merger

OAO Rostelecom, Russia’s state-controlled telecommunications operator, plans to spin off mobile assets before their possible merger with VTB Group’s Tele2 Russia to form the fourth nationwide wireless operator.

Rostelecom is asking shareholders to vote on separating its mobile assets into a newly formed entity, called RT-Mobile, according to a regulatory filing today. The board will meet Nov. 19 to determine the price for buying out minorities who don’t support the move, the company said.

VTB, the state-controlled lender that acquired the Russian unit of Sweden’s Tele2 AB for $2.4 billion in April, sold half of the operator last month to investors led by billionaire Yury Kovalchuk, an ally of President Vladimir Putin.

Rostelecom’s wireless operations and Tele2 Russia complement each other geographically, and their combination would form a national competitor for billionaire Vladimir Evtushenkov’s OAO Mobile TeleSystems, billionaire Alisher Usmanov’s OAO MegaFon and billionaire Mikhail Fridman’s VimpelCom Ltd.

While Tele2 Russia has almost twice as many mobile users as Rostelecom, the state-run company holds licenses for radio frequencies needed for faster data services. Rostelecom may hold 40 percent to 49 percent in the combined mobile business, while Tele2 Russia shareholders should get control based on the value of its assets, VTB Chairman Andrey Kostin said last month.

Rostelecom has prepared a new strategy to focus on fixed-line broadband and may rely on partners to help develop its mobile business, according to Kira Kiryukhina, a company spokeswoman. The company’s board will discuss its strategy through 2018 on Nov. 19, Rostelecom said today.

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