Russian national operator Rostelecom has announced the results of its share buyback as part of the company’s ongoing reorganisation, which will see it spin off its mobile assets into a new subsidiary ahead of a merger with Tele2 Russia. During the 45-day period following the most recent extraordinary general meeting, the company received redemption requests equal to 22.0% of ordinary shares and 49.2% of preferred shares by Rostelecom shareholders who voted against the reorganisation, or who abstained from voting. In accordance with Russian legislation that restricts share buybacks to 10% of the value of a company’s net assets, the shares will be bought back from shareholders on a pro rata basis at a rate of 27.8%. Rostelecom will invest a total of RUB23.161 billion (USD649.6 million) in the share buyback, acquiring 6.1% of its own ordinary shares and 13.7% of its preferred shares.
As previously reported by TeleGeography’s CommsUpdate, Rostelecom’s mobile assets will be contributed to a joint venture with Tele2 Russia. The first phase of the merger will see Rostelecom contribute its standalone mobile subsidiaries and assets, including SkyLink, into a holding company called T2 RTK Holding. At the end of this process, Rostelecom will receive a 45% voting interest and a 26% economic interest in T2 RTK Holding. During the second stage, Rostelecom will spin off its integrated mobile businesses into its new wholly owned subsidiary, CJSC RT-Mobile, which will have Rostelecom’s mobile licences – including Long Term Evolution (LTE) concessions – re-issued to it. Upon completion of the spin-off, Rostelecom will contribute its whole stake in CJSC RT-Mobile into T2 RTK Holding, and increase its economic interest in T2 RTK Holding to 45%.