Tele2's Russian sale provokes bidding war

Tele2's sale of its Russian operations to the banking group VTB has been disrupted by another potential buyer offering 30 per cent above the $3.5 billion agreed-upon sale price.

While the deal was announced last week as having been agreed, two of the big three Russian telecom operators--MTS and Vimpelcom--have quickly come forward with a joint bid, according to RT News.

Vimpelcom, which is controlled by the Alfa Group, has joined with MTS claiming they are prepared to pay over $4.25 billion including debts for Tele2's Russian unit, or around 30 per cent above the VTB price.

The Nordic-based Tele2 is said to have been considering a sale of the Russian unit for some months as it does not have a 3G or 4G licence in Russia. Analysts have noted that without the ability to boost data services, Tele2 Russia's growth prospects were limited, according to Reuters.

VTB, Russia's second-largest banking group, is insisting that its deal with Tele2 is solid. 

"We believe that Tele2 Russia is a good financial investment which will be growing faster than the market," VTB President and Chairman Andrey Kostin told Reuters. "VTB plans to cooperate with financial and strategic partners in order to further develop its investment."

However, analysts said VTB could break up Tele2 Russia as none of the major operators could buy all of it for competition reasons.

"Looks like VTB will resell it by parts as none of the operators want it to buy [it] fully," Aleksandr Vengranovich at Moscow-based brokerage Otkritie told RT News.

Tele2 is attempting to quieten bid speculation claiming that its choice of buyer is final, with corporate comms manger for Tele2 Lars Torstensson stating that the two firms have already sealed the deal.

While VTB's bid for Tele2 Russia involves a cash transaction comprising $2.4 billion in equity and $1.15 billion in net debt, Vimpelcom and MTS claim their joint offer was payable in cash with no debt financing, according to Dow Jones Newswires.

For more:
- see this RT News article
- see this Reuters article
- see this Dow Jones Newswires article

Related articles:
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Russia's MTS boosted in Q4 by subscriber growth, higher data usage
Russia plans 4G tenders in 2011
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