Agreements signed to consolidate 100% of Tele2 Russia

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Moscow, Russia – February 12, 2020 Rostelecom PJSC (MOEX RTS: RTKM, RTKMP; OTCQX: ROSYY), Russia’s national telecommunications operator, announces that a number of legal agreements have been signed with VTB Bank and a consortium of investors as part of the process to acquire the remaining 55% stake in T2 RTK Holding LLC (Tele2 Russia).

The following agreements were signed by counterparties in line with deal structure approved by the Board of Directors to acquire 55% of Tele2 Russia*:

  • A barter agreement to acquire a 10% stake in Tele2 Russia through the exchange of 10% of ordinary Rostelecom shares held by MOBITEL (Rostelecom subsidiary). The transaction has a value of RUB 24 billion;
  • A share purchase agreement relating to the acquisition of a 45% stake in Tele2 Russia;
  • Other legal agreements and documents.

The deal will be financed as follows:

  • 17.5% of Tele2 Russia will be acquired for RUB 42 billion in cash;
  • 27.5% of Tele2 Russia will be acquired using RUB 66 billion in cash proceeds received from the additional share issue and private subscription of Rostelecom ordinary shares awarded to VTB bank at a price of RUB 93.21 per share.

As a result of additional share issue, the number of ordinary shares will increase by 708,082,975 shares to 3,282,997,929 shares (including shares acquired in-line with preemptive rights).

The transaction is expected to be completed within the coming month.

The further information on the deal is available in the IR section of the company web-site.

Mikhail Oseevskiy, President of Rostelecom
“We have entered the final phase of a complex deal to acquire 100% of Tele2 Russia, the most successful and rapidly growing mobile player in Russia. The largest transaction of the recent years will cement Rostelecoms leading position in the digital service market. We will be updating our strategy in the near future to account for adjustments in our key strategic goals, with focus also on new technology and product development including 5G. By combining the largest fibre backbone and subscriber base in Russia with Tele2s track record in mobile business we have formed an unrivalled integrated platform for rendering telecom, IT and other world-class digital solutions. The deal provides Rostelecom with a significant competitive edge, which has potential to enhance our financial profile, increase margins and attract new clients, whose faith and trust we expect to retain for years to come. Moreover, as a result of the deal, VTB and its partners will become our shareholders, which provides Rostelecom with supportive and long-term strategic investors whose motivation matches our aim to increase capitalization.”

Andrey Kostin, President and Chairman of VTB Bank Management Board:
VTB made a profitable investment by buying into Tele2s capital. Since the acquisition of the company's shares in 2013, Tele2 has evolved from a niche player into a federal mobile operator. Divesting Tele2s stake provided the bank with a unique opportunity to become a major shareholder of Rostelecom, which following the transaction turns into the country's largest integrated digital services operator with exceptional competitive advantages. The company's infrastructure, expertise and technology platform allow for the implementation of the most complex digital projects nationwide. In this area, we are counting on a major synergy effect from our cooperation with Rostelecom.

Further information is available at https://www.company.rt.ru/en/ir/news_calendar/.



* Rostelecom BoD approval as of 13 November 2019 Minutes #6