VTB’s Tele2 Russia and Rostelecom merge mobile assets

The merged assets will be regrouped in holding company T2 RTK Holding. Together, the entities will command a 16% share of the Russian mobile market and will have a subscriber base totalling approximately 38 million.

Rostelecom is providing the newco with all of its mobile assets and licences, while Tele2 Russia will contribute the entirety of its mobile division.

VTB wholly acquired Tele2 Russia from Sweden-based Tele2 in March this year for $3.6bn, with VTB providing $2.4bn in equity for the deal and the balance supplied as debt. The sale price represented a multiple of 4.9x Tele2 Russia's 2012 EBITDA.

In October, VTB sold a 50% stake in the business to a consortium of investors including Rossiya Bank and several entities owned by oligarch Alexey Mordashov.

Also in October, the Russian Direct Investment Fund and Deutsche Bank jointly acquired a 2.7% stake in listed Rostelecom in a PIPE deal. The two parties provided $237.1m for approximately 72.2 million shares.

Companies
Tele2 established its Russian division in 2003. Moscow-headquartered Tele2 Russia employs around 3,500 staff and recorded turnover of RUB 64.7bn ($1.97bn) in 2012, as well as an EBITDA of RUB 23.6bn ($717.9m). Its mobile division generated turnover of RUB 60bn ($1.82bn).

Also headquartered in Moscow, Rostelecom was founded in 1993. The company recorded turnover of RUB 321.3bn in 2012, while its mobile division generated RUB 41bn in turnover.

People
Aleksandr Provotorov is the president and CEO of Tele2 Russia, while Sergey Kalugin is the president of Rostelecom.

Advisers
Rostelecom – Credit Suisse (Corporate finance); JP Morgan (Corporate finance); Linklaters (Legal).
Tele2 Russia – VTB Capital (Corporate finance); UBS (Corporate finance); Skadden (Legal).

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