ROSTELECOM PJSC (RKMD)
ROSTELECOM PJSC: Agreements signed to consolidate 100% of Tele2 Russia
12-Feb-2020 / 11:59 MSK
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
*Agreements signed to consolidate 100% of Tele2 Russia*
*******************************************************
Moscow, Russia - February 12, 2020 - Rostelecom PJSC (MOEX - RTS: RTKM,
RTKMP; OTCQX: ROSYY), Russia's national telecommunications operator,
announces that a number of legal agreements have been signed with VTB Bank
and a consortium of investors as part of the process to acquire the
remaining 55% stake in T2 RTK Holding LLC (Tele2 Russia).
The following agreements were signed by counterparties in line with deal
structure approved by the Board of Directors to acquire 55% of Tele2
Russia[1]:
? A barter agreement to acquire a 10% stake in Tele2 Russia through the
exchange of 10% of ordinary Rostelecom shares held by MOBITEL (Rostelecom
subsidiary). The transaction has a value of RUB 24 billion;
? A share purchase agreement relating to the acquisition of a 45% stake in
Tele2 Russia;
? Other legal agreements and documents.
The deal will be financed as follows:
1) 17.5% of Tele2 Russia will be acquired for RUB 42 billion in cash;
2) 27.5% of Tele2 Russia will be acquired using RUB 66 billion in cash
proceeds received from the additional share issue and private subscription
of Rostelecom ordinary shares awarded to VTB bank at a price of RUB 93.21
per share.
As a result of additional share issue, the number of ordinary shares will
increase by 708,082,975 shares to 3,282,997,929 shares (including shares
acquired in-line with preemptive rights).
The transaction is expected to be completed within the coming month.
The further information on the deal is available in the IR section [1] of
the company web-site.
Mikhail Oseevskiy, President of Rostelecom, commented: "We have entered the
final phase of a complex deal to acquire 100% of Tele2 Russia, the most
successful and rapidly growing mobile player in Russia. The largest
transaction of the recent years will cement Rostelecom's leading position in
the digital service market. We will be updating our strategy in the near
future to account for adjustments in our key strategic goals, with focus
also on new technology and product development including 5G. By combining
the largest fibre backbone and subscriber base in Russia with Tele2's track
record in mobile business we have formed an unrivalled integrated platform
for rendering telecom, IT and other world-class digital solutions. The deal
provides Rostelecom with a significant competitive edge, which has potential
to enhance our financial profile, increase margins and attract new clients,
whose faith and trust we expect to retain for years to come.
Moreover, as a result of the deal, VTB and its partners will become our
shareholders, which provides Rostelecom with supportive and long-term
strategic investors whose motivation matches our aim to increase
capitalization."
Andrey Kostin, President and Chairman of VTB Bank Management Board:
"VTB made a profitable investment by buying into Tele2's capital. Since the
acquisition of the company's shares in 2013, Tele2 has evolved from a niche
player into a federal mobile operator. Divesting Tele2's stake provided the
bank with a unique opportunity to become a major shareholder of Rostelecom,
which following the transaction turns into the country's largest integrated
digital services operator with exceptional competitive advantages. The
company's infrastructure, expertise and technology platform allow for the
implementation of the most complex digital projects nationwide. In this
area, we are counting on a major synergy effect from our cooperation with
Rostelecom."
Further information is available at
https://www.company.rt.ru/en/ir/news_calendar/ [2].
* * *
Rostelecom [3] is the largest digital service provider, operating in all
segments of the telecommunications market in Russia, it serves millions of
households, the state and private enterprises across the country.
Rostelecom is Russia's undisputed market leader, providing high-speed
Internet access to over 13.1 million users and pay-TV services to more than
10.3 million clients, over 5.5 million of which are subscribed to
Rostelecom's IPTV services on a national level.
In the nine months of 2019, the Group generated RUB 242.6 billion of
revenues, RUB 81.4 billion of OIBDA (33.6% of revenue) and RUB 16.4 billion
of net income.
The Group is the leading provider of telecommunications services to
government bodies and corporates of all levels.
Rostelecom is a key strategic innovator that provides solutions in the
following fields: E-Government, cybersecurity, data-centers and cloud
computing, biometry, healthcare, education and housing & utility services.
The Group's stable financial position is confirmed by its credit ratings.
Rostelecom has been assigned 'BBB-' and 'BB+' international credit ratings
by Fitch Ratings and Standard & Poor's respectively, and AA(RU) by ACRA.
* * *
Certain statements in this press release are forward-looking statements
within the meaning of the U.S. federal securities laws and intended to be
covered by the safe harbours created thereby.
Those forward-looking statements include, but are not limited to:
? Assessment of PAO Rostelecom's (the Company) future operating and
financial results as well as forecasts of the present value of future cash
flows and related factors;
? The Company's plans to take ownership stakes in other organisations;
? the Company's anticipated capital expenditures and plans to construct
and modernize its network;
? the Company's expectations as to the growth in demand for its services,
plans relating to the expansion of the range of its services and their
pricing;
? the Company's plans with respect to improving its corporate governance
practices;
? the Company's expectations as to its position in the telecommunications
market and forecasts on the development of the market segments within
which the Company operates;
? economic outlook and industry trends;
? the Company's expectations as to the regulation of the Russian
telecommunications industry and assessment of impact of regulatory
initiatives on the Company's activity;
? other statements regarding matters that are not historical facts.
Such forward-looking statements are subject to risks, uncertainties and
other factors, which could cause actual results to differ materially from
those expressed or implied by these forward-looking statements. These risks,
uncertainties and other factors include:
? risks relating to changes in political, economic and social conditions
in Russia as well as changes in global economic conditions;
? risks relating to Russian legislation, regulation and taxation,
including laws, regulations, decrees and decisions governing the Russian
telecommunications industry, securities industry as well as currency and
exchange controls relating to Russian entities and their official
interpretation by regulatory bodies;
? risks relating to the Company, including the achievement of the
anticipated results, levels of profitability and growth, ability to create
and meet demand for the Company's services including their promotions, and
the ability of the Company to remain competitive in a liberalized
telecommunications market;
? technological risks associated with the functioning and development of
the telecommunications infrastructure, technological innovations as well
as the convergence of technologies;
? other risks and uncertainties. For a more detailed discussion of these
and other factors, see the Company's Annual Report and the Company's other
public filings.
Many of these factors are beyond the Company's ability to control or
predict. Given these and other uncertainties, readers are cautioned not to
place undue reliance on any of the forward-looking statements contained
herein or otherwise. The Company does not undertake any obligation to
release publicly any revisions to these forward-looking statements (which
are made as of the date hereof) to reflect events or circumstances upon the
annual report publication or to reflect the occurrence of unanticipated
events, except as may be required under applicable laws.
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[1] Rostelecom BoD approval as of 13 November 2019 Minutes #6
ISIN: US7785291078
Category Code: ACQ
TIDM: RKMD
LEI Code: 2534001D752JPNM0H170
Sequence No.: 46210
EQS News ID: 973599
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