3 Oct 2017 12:01

Telia sells 6.2% of MegaFon shares at 8.45% discount, earns 22.5 bln rubles

MOSCOW. Oct 3 (Interfax) - Telia Company sold part of its stake in Russian mobile services provider MegaFon for 585 rubles per share, the Swedish company said.

The discount to the closing price of 639 rubles on the Moscow Exchange on Monday was therefore 8.45%.

In the course of the accelerated book building, Telia increased the size of the stake it was selling to 38.5 million shares or 6.2% from 35 million shares or 5.65%. Based on the placement price, Telia will earn 22.5 billion rubles on the sale, or about $390 million at the exchange rate on October 3.

Investors were told a few hours after the start of the book building that bids at a price below 585 rubles per share would probably not be met, a source familiar with the deal told Interfax.

The joint bookrunners for the offering were BofA Merrill Lynch, Citi and Morgan Stanley. Settlements on the deal are expected to be made on October 5.

Telia's total interest in MegaFon was about 25.2% prior to the sale.

Telia's stake in MegaFon will fall to 19% after the stake is sold. Telia has undertaken not to sell any further shares owned in the 90 days following closing of the sale. Telia will reclassify the Russian operator from an associate company to a financial investment beginning in Q4 2017. The sale of a portion of its stake in MegaFon will not be reflected in the financial forecast for the current year, Telia said in its statement.

Telia said in a statement on Monday evening that the sale of a portion of its stake in MegaFon is consistent with the strategy to focus on operations in the Nordics and Baltics.

"Telia Company is one of the MegaFon's founders and from the very beginning we ensured its success in achieving leading positions on Russia's mobile and digital market. Now that Telia has made a decision to concentrate on its business in countries in Scandinavia and the Baltics under the New Generation Telco strategy, reducing our stake in MegaFon is a natural step. Even after the sale, Telia will remain the operator's second-largest shareholder and we will continue our constructive cooperation with the main owner, USM Group, in order to create value for all shareholders," Telia Company President and Chief Executive Johan Dennelind said, commenting on the deal.