Photographer: Andrey Rudakov/Bloomberg

MegaFon Is in Talks With Mail.ru Holders About Buying Stake

  • Phone carrier, web company would keep operating independently
  • MegaFon says it isn’t certain that talks will lead to deal

MegaFon PJSC, the Russian wireless carrier controlled by billionaire Alisher Usmanov, said it is in talks with Mail.ru Group Ltd. shareholders about buying a stake in the internet company.

In a statement Wednesday, MegaFon said it would be “natural partners” with Mail.ru as the telecommunications and internet-service markets converge.

"There is no certainty that MegaFon will become a shareholder of Mail.ru," Moscow-based MegaFon said in a statement Wednesday. If an agreement is reached, the two companies would “continue operating as separate entities on an arms-length basis.”

The phone carrier didn’t say which Mail.ru owners it’s holding talks with. MegaFon owner Usmanov holds about 15 percent of the Russian social-networks and games operator, and controls its votes. Mail.ru is 28 percent-owned by South Africa’s Naspers Ltd., and 7.4 percent by China’s Tencent Holdings Ltd., according to its annual report.

"MegaFon may buy Usmanov’s stake in Mail.ru to create synergies between the communications and internet businesses," Alexander Vengranovich, an analyst at Otkritie Capital, said by phone. "This would also help Usmanov’s USM to cash out its investment in Mail.ru, which was difficult to do via dividends."

The current market speculation doesn’t refer to Naspers, the media company said Wednesday.

Shares of Mail.ru advanced 2.7 percent to $16.91 in London on Wednesday, giving the company a market capitalization of $3.7 billion. MegaFon declined 0.6 percent to $8.60 for a market value of $5.3 billion.

Russian online news service Rambler News reported earlier Wednesday that MegaFon studied buying shares in Mail.ru, while the carrier’s Swedish co-owner Telia AB opposed this idea. Telia representatives couldn’t be reached for comment outside of business hours.

MegaFon also said it has been discussing collaboration with Mail.ru to jointly develop products for mobile subscribers and internet users. "Market dynamics and advances in technology have created favorable conditions for greater cooperation between telecom providers and digital media companies," the company said in the statement.

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