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Rostelecom applies for listing at LSE

October 10, 2011, 23:02 UTC+3
Provorotov said the main purpose of the listing is to increase the liquidity of shares
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MOSCOW, October 10 (Itar-Tass) —— Russia’s national telecom operator Rostelecom has applied for a listing at the London Stock Exchange (LSE).

“According to the LSE rules, [securities] can be listed within six months of the permission,” a company official told Itar-Tass on Monday, October 10.

Rostelecom President Alexanader Provorotov said earlier that the company planned to list its shares on the exchange before the end of the year.

The company will place both ordinary and preferred stocks and has no borrowing plans.

Provorotov said the main purpose of the listing is to increase the liquidity of shares. “We plan to give more liquid shares to investors and expect to attract new foreign investors,” he said.

In August, Rostelecom’s ordinary shares have been included in the prestigious MSCI Russia Standard index after a quarterly review.

Rostelecom shares account for about 3 percent of the index, Reuters reported.

The company integrated Svyazinvest’s inter-regional companies in April of this year. It was expected that Rostelecom shares would be included in the index last quarter, but the decision was postponed till August to allow Rostelecom to consolidate share issues. Integrated Rostelecom share issues started trading on the MICEX on August 10.

The MSCI Russia Standard index is a stock index of the Russian market and is a part of the MSCI Emerging Markets indices. It is calculated on the basis of quotations of Russian companies included in the index. These are LUKOIL, Gazprom, Norilsk Nickel, Sberbank, MTS and its parent company AFK Sistema.

The weight of a company’s shares in the index depends on capitalisation, the number of shares in circulation and their availability to foreign investors. The MSCI Russian index serves as a benchmark for many international investors that invest in Russian assets.

As a result of the Svyazinvest reorganisation, Rostelecom, the main asset of state-owned Svyazinvest, was converted into an integrated company through a merger of its seven inter-regional companies and Dagsvyazinform.

Rostelecom has become the biggest universal national telecom operator with leading positions in key segments of the Russian telecom market.

Svyazinvest is the biggest Russian telecom holding company. Its main assets are seven inter-regional companies, the long-distance and international communication operator Rostelecom, and Russia’s leading communication designer Giprosvyaz. By March 2011, Svyazinvest’s companies have to consolidate around Rostelecom, forming the biggest national telecom operator.

“We expect a new player to appear on the market next year and hope that it will be capable of fulfilling the tasks set to it by the government and on the other hand that it will not demand constant subventions and subsidies and will be able to survive and compete with other major players,” Shchegolev said earlier.

He confirmed that the government’s share in the new consolidated company would exceed 50 percent.

“Our estimates show that more than 50 percent will be controlled by the State,” the minister said, adding, “If in the future a decision is made to move on to a model that allows the company to be run without the full state-owned package, it will be a separate decision.”

The Russian Audit Chamber said controlling interest in Rostelecom should be held directly by the government.

The auditors came to this conclusion after a probe into the reorganisation of the Svyazinvest holding, whose inter-regional companies joined Rostelecom in April 2011.

Initially, the reorganisation plan envisaged that the government would retain control of the new unified company. However now the government controls no more than 53.2 percent of shares indirectly through Svyazinvest, the Deposit Insurance Agency, and Vnesheconombank.

 

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