Rostelecom May Cancel 16.9 Billion Rubles of Treasury SharesIlya Khrennikov
OAO Rostelecom, Russia’s dominant fixed-line phone operator, plans to cancel 16.9 billion rubles ($284 million) in treasury shares to remove pressure on the stock price.
Rostelecom will eliminate about 164 million common shares and 33 million preferred shares, said Andrey Polyakov, a spokesman. The Moscow-based company bought the stock last year from investors who didn’t support the spinoff of Rostelecom’s wireless unit into a venture with billionaire Yury Kovalchuk- backed Tele2 Russia.
“Russian legislation prescribes canceling treasury shares if they’ve been held on the balance sheet for more than a year,” Polyakov said. “That’s what we’ll put on the agenda of the annual shareholder meeting. We hope this will remove an overhang risk and make shares more expensive.”
Rostelecom previously considered selling the excess treasury shares to a unit for a potential secondary offering in the future, which held back the freely traded stock’s price, Sergey Libin, an analyst at ZAO Raiffeisenbank, said by phone. Dividends per share may rise as the treasury stock is canceled, he said.
The company’s common shares rose as much as 2.7 percent and were trading up 2.4 percent at 90.60 rubles as of 11:55 a.m. in Moscow. The preferred stock was 1.9 percent higher after gaining as much as 2.9 percent.