MGTS waives 2011 dividends
MOSCOW. July 2 (Interfax) - Shareholders of OJSC MGTS voted at their AGM to waive 2011 dividends, an Interfax correspondent reported from where the meeting was held.
MGTS net profit surged 350% in 2011 to 6.1 billion rubles.
Waiving dividends means MGTS will be able to make additional investment in fiber-optic GPON network development and complete the project two years ahead of schedule, the company said earlier. Total investment in the GPON project is estimated at 50 billion rubles and it will be carried out in 2012-3013.
MGTS paid 2010 dividends at 197.94 rubles per share (common and preferred) with a total 18.9 billion rubles spent, an unprecedented amount for the company.
Payments on common shares totaled 15.8 billion rubles (50% of retained profit to Russian Accounting Standards) and on preferreds - 3.16 billion rubles (10% of profit).
MGTS is the main fixed-line operator in Moscow. MTS owns 99.1% of its common shares and 69.7% of its preferred shares, which is equivalent to 94.1% of charter capital.
The MGTS charter sets minimum dividends on preferred shares at 10% of net profit. MTS spokesman Valery Kuzmenko told Interfax that the charter allows for dividends not to be paid on preferred shares under certain circumstances. For example, the charter says that when giving dividend recommendations the board will consider dividend policy, including investment plans for the mid-term.
In 2010 the president of Comstar-OTS (the company previously owned a stake in MGTS and was merged with MTS in April 2011), Sergei Pridantsev, said most holders of preferred shares were former and current employees of MGTS and the dividends enabled them to obtain aditional income.
MTS acquired its current stake in MGTS in December 2011, buying 29% of common shares from its parent company AFK Sistema . MTS plans to merge with MGTS in the next two to three years, MTS President Andrei Dubovskov said earlier.
An offer to buy MGTS preferred shares has not yet been announced.
MGTS shareholders on Friday confirmed the decision to reorganize the company by spinning out CJSC MGTS-Real Estate and merging OJSC Mobile Telematics Positioning Systems (MTPS) and CJSC United Telesystems MGTS (MGTS owns United Telesystems and AFK Sistema owns MTPS).
A buyback will be carried out as part of the reorganization. The price of the shares for each type of shareholder that does not agree with the reorganization is set at 550 rubles per share. Deals with MGTS preferred shares on the MICEX-RTS Wednesday ranged from 481.08 to 535 rubles.
MGTS dividend policy has been a source of conflict between shareholders in the past. The company waived dividends for 2005 and in 2006 various minority shareholders filed lawsuits disputing board recommendations to waive dividends, but these were all rejected by the courts.
The dividend issue was back on the agenda in 2007. Svyazinvest, which owned 28% of MGTS common shares, initiated discussion on 2005 dividend payments. As a result, shareholders decided to pay record high dividends for 2006. The decision to waive 2005 dividends remained in force, despite Svyazinvest voting against that.
MGTS paid 2007 dividends and a year later shareholders voted with a majority of votes not to pay dividends, although the board had recommended they be paid. Shareholders voted in an extraordinary meeting in March 2008 to pay dividends on preferred shares for 2008 at 20.16 rubles per share (as the board had previously recommended). MGTS only paid 2009 dividends on preferred shares - spending a total of 789.4 million rubles (10% of 2009 net profit).
