Tele2 stake sale raises hopes of more Russian competition

Russian bank VTB sold a 50 per cent stake in Tele2 Russia in a move that could pave the way toward the creation of a stronger fourth operator in Russia's mobile market, which is currently dominated by heavyweights MTS, MegaFon and VimpelCom.

VTB said several strategic investors including Bank Rossiya and entities of Alexey Mordashov, a billionaire tycoon who controls steelmaker Severstal, acquired the stake. Although the bank did not reveal the price, it said the sales price was in line with its expectations. Reuters estimated the price at $2 billion (€1.46 billion) based on the value of the stake on VTB books.

"I believe that the new strategic partnership will strengthen the market position of Tele2 Russia and will allow the company to become one of the leaders in the Russian telecommunications market," Yuriy Soloviev, first deputy president and chairman of VTB Bank's board, said in a statement.

VTB bought the Russian unit of Sweden's Tele2 in April for $3.55 billion including debt. "It has been a profitable investment for us and we will stay as equal partners," Soloviev told Reuters.

He added that the sale brings in "very experienced people in the TMT [technology, media and telecoms] sector."

Reuters noted that the retention of VTB as a partner could help Tele2's lobbying efforts to gain an LTE licence. Analysts also believe the company could eventually join with Rostelecom, which does have an LTE licence, to challenge the top three mobile players.

Deutsche Bank and Russia's $10 billion sovereign wealth fund recently bought a joint stake in Rostelecom for $240 million, the Financial Times reported.

Vedomosti, the Russian sister paper of the Financial Times, also reported that Andrei Kostin, the VTB chairman, had asked Russian President Vladimir Putin to allow Tele2 and other mobile operators to use existing 2G spectrum for LTE services.

For more:
- see this Reuters article
- see this FT article (sub. req.)

Related Articles:
Rostelecom targets mobile growth
Russia's MegaFon gains LTE edge with $1.2B Scartel/Yota purchase
Russia's move to LTE represents a multibillion-dollar opportunity for vendors
Russia's MTS targets quad-play, outlines LTE and data ambitions
Tele2 looks ahead to new markets after Russian deal, as MTS waits in wings

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