Russian regulators object to MegaFon deal
MOSCOW. Jan 12 (Interfax) - Russian regulators are not happy with plans by Russia's Alfa-Group and the Swedish-Finnish telecom firm TeliaSonera to turn cellular providers MegaFon and Turkcell into a holding company, the Vedomosti and Kommersant newspapers reported.
The Communications Ministry and Federal Antimonopoly Service are both uncomfortable with the proposed deal, which MegaFon's third shareholder Alisher Usmanov opposes.
Vedomosti quoted officials from a federal agency and managers at two MegaFon co-owners that the Communications Ministry has submitted opinions about two potential deals by the Alfa-Group, including this one and plans with Norway's Telenor regarding No. 2 Russian cellular provider VimpelCom and Ukraine's Kyivstar. The ministry is said to be wary about the fact that overseas firms would control both MegaFon and VimpelCom, Vedomosti reports. However the article does not suggest that the ministry has any conceptual objections to the MegaFon deal as such.
Officials at the ministry are not yet available for comment.
Kommersant quoted unnamed sources as saying the FAS was not prepared to back the MegaFon deal and that the agency's chief, Igor Artemiyev, had notified First Deputy Prime Minister Igor Shuvalov of this in writing on December 30.
Both deals need approval from the government's commission on foreign investment in strategic companies. The FAS has aired its concerns over the fact that Alfa might gain control of two of Russia's biggest cellular providers as a result of the proposed transactions with foreign partners announced towards the end of last year.
Alfa and TeliaSonera said in November that they had agreed to merge their stakes in MegaFon and Turkcell. They said the alliance was open to Alisher Usmanov's AF Telecom, but the latter turned the invitation down.
There is a risk the agreement is "declaratory in nature and will remain on paper," AF Telecom said the day after the deal was announced. "We see hardly any synergies from the merger. We see a proposal that benefits only some shareholders," it said.
AF Telecom also said it was "interested in pursuing possible cooperation with Svyazinvest." Press reports have said AF Telecom is in talks with the Svyazinvest holding and that Usmanov wants to swap his stake in MegaFon for a stake in Rostelecom , which will consolidate the Svyazinvest assets.
TeliaSonera controls 35.6% of MegaFon via subsidiaries and another 8.17% by virtue of its 26.1%-ownership of Telecominvest. AF Telecom effectively controls 31.13%, including 23.13% via its 73.9%-interest in Telecominvest and 8% via LLC Olimp. Altimo, which is the Alfa-Group's telecom arm, owns 25.1% of MegaFon via Allaction Ltd.