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VTB potential minority shareholder in Rostelecom

Acquisition would give Rostelecom funds to buy out shareholders who opposed a spin-off of the operator’s mobile communications assets for a proposed merger

MOSCOW, January 30. /ITAR-TASS/. Major Russian bank VTB may soon become a large minority shareholder in state-owned telecommunications operator Rostelecom by buying stock in a 35 billion ruble, $1.06 billion deal, Kommersant daily reports on Thursday.

Acquisition would give Rostelecom funds to buy out shareholders who opposed a spin-off of the operator’s mobile communications assets for a proposed merger between those assets and another industry player, Tele2 Russia, half owned by VTB, says the report.

This spin-off was voted down at an extraordinary shareholder meeting on December 30 though divestment was backed by the 43%-stakeholding Federal Agency for State Property Management, Rosimushchestvo.

Rostelecom's proposed deal goes to its board for approval next week, sources close to the transaction told the paper.

One source said VTB plans were to buy Rostelecom common stock and stock owned by its subsidiary Mobitel. The proposed 16.6 percent share deal was assessed at around $1.06 billion at market prices.

The parties also plan a forward contract for Rostelecom to buy the shares back in two to three years when the company will have to pay interest calculated on money-market floating rates.