Rumour Mill: Tele2 in merger talks with Rostelecom over Russian mobile assets

Sweden's Tele2 is reportedly in discussions with state-controlled Rostelecom over merging their Russian mobile operations. The talks could lead to a partnership that would see Rostelecom acquire a stake in Tele2's Russian business in exchange for its mobile operator Sky Link and a cash payment, according to Kommersant newspaper, quoting unnamed sources.

Another possibility being considered is the creation of a new entity combining all the mobile assets of Rostelecom and Tele2 Russia, including LTE licences, in which each company would get a 50 per cent stake, the Russian newspaper said.

While talks are said to be at an early stage, and Nomos Bank telecom analyst Eugene Golosnoy, said he believes that there are several factors that indicate a 50:50 ownership of the merged companies is the favoured route.

Golosnoy noted to Kommersant that Tele2 Russia is an attractive business and has, despite tough competition, improved its profitability, albeit that it doesn't hold 3G or LTE licences.

"If Tele2 Russia is not able to acquire either of these licences, their growth prospects will be limited," said the analyst. "If they find some way of merging with Rostelecom, which has 3G and LTE spectrum licences, then surely it would be in the interests of the [Swedish] company."

Tele2 is currently Russia's fourth-largest mobile operator with 21.6 million subscribers, while Rostelecom is the fifth biggest with 12.9 million customers, according to Reuters.

For more:
- see this Kommersant (translated via Google Translate)
- see this Reuters article

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