Bloomberg News

TeliaSonera Says It’s Participating in Talks on MegaFon

April 11, 2012

TeliaSonera AB (TLSN), Sweden’s biggest phone company, said it’s negotiating with investment partners Altimo and AF Telecom on the future of OAO MegaFon (MFON), Russia’s second-largest mobile operator.

“The three main shareholders are in talks since about three months back regarding the ownership structure and future governance of MegaFon,” Cecilia Edstroem, a spokeswoman at Stockholm-based TeliaSonera, said in a phone interview, declining to elaborate further on a statement today that the discussions are taking place. Altimo Vice President Evgeny Dumalkin also verified the talks during a phone interview.

RBC Daily reported April 2 that Russian billionaire Alisher Usmanov’s AF Telecom is looking to buy out Altimo’s 25.1 percent stake in MegaFon for $5 billion, citing unidentified people at telephone operators. That would make AF Telecom a majority owner with the power to make new deals with other companies such as fixed-line phone company OAO Rostelecom and Scartel, which runs fourth-generation mobile service Yota.

“There’s been pressure for something to happen for some time, given the proximity of MegaFon and Rostelecom and given that AF Telecom is blocking any dividend distribution from MegaFon,” Barry Zeitoune, a London-based analyst at Berenberg Bank, said in a telephone interview. “MegaFon’s cash position is growing and it doesn’t have a particularly efficient capital structure.”

Stock Rises

TeliaSonera rose as much as 2.8 percent to 42.72 kronor as of 11:45 a.m. in Stockholm.

The reported figure of $5 billion doesn’t materially change the value of TeliaSonera’s stake, Zeitoune said.

Usmanov currently owns 31.13 percent of MegaFon and TeliaSonera holds 43.77 percent, according to the company’s website.

Altimo’s Dumalkin said he had no information about a possible initial public offering for MegaFon. The operator may stage an IPO after Usmanov boosts his stake, Vedomosti reported earlier today, citing unidentified people close to MegaFon and three investment banks.

TeliaSonera and Altimo, the telecommunications arm of Alfa Group, agreed in 2009 to combine their stakes in MegaFon and Turkcell Iletisim Hizmetleri AS (TCELL) into a new company to clarify ownership and increase dividends. The agreement hasn’t come into force because of a dispute over a stake sale in Turkcell.

“The agreement with Altimo is still valid, and obviously if we reach an agreement on MegaFon, the prior agreement will focus entirely on resolving the ownership disputes in Turkey,” Edstroem said.

Usmanov is seeking to create a new telecommunications company by gaining a controlling stake in MegaFon and swapping some of its shares for a majority in Scartel, Vedomosti reported yesterday, citing two people close to MegaFon shareholders and one person close to MegaFon.

To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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