Telia quits Russia with sale of $1bn MegaFon stake

By:
James Pearce
Published on:

Russian investment bank Gazprombank has agreed to buy Telia's remaining 19% holding in Russian operator MegaFon

Telia Company has completed its withdrawal from Russian mobile operator MegaFon after agreeing a deal to sell its remaining 19% stake to Gazprombank for $1 billion.

The sale is in line with the Swedish operator’s plan to divest assets outside of its key markets – the Nordics and the Baltics – and retreat from Eurasia.

Telia has slowly offloaded shares in MegaFon, which it co-founded in 1993, over the last few years, but remained the company’s second biggest shareholder when it sold a 6% stake in early October.

Johan Dennelind, Telia Company’s president and CEO, said: “Telia Company is one of the founders of MegaFon and we have since the inception actively contributed to its success of becoming a mobile and digital leader in Russia. 

“After recently commencing our exit from MegaFon by placing 6.2 percent of our holding on the open stock market, this divestment now puts an end to Telia Company's ownership in MegaFon in accordance with our strategy to focus on the Nordics and Baltics.”

When Telia last offloaded MegaFon shares, it said it would not sell any further assets for 90 days as part of the agreement. However, this was only referring to partial sales, and the deal with Gazprombank sees Telia exit the Russian market completely.

Gazprombank is the third largest bank in Russia and is funding the acquisition with cash, meaning there is no funding or credit commitments from Telia Company or any other party.

Telia formed its strategy of withdrawal from its Eurasian activities after the company became embroiled in corruption in Uzbekistan, which last month saw it fined $965 million by US, Dutch and Swedish authorities. 

Following the fine, Swedish authorities arrested Dennelind’s predecessor as CEO, Lars Nyberg, and two former colleagues, the former president and general counsel of its Eurasian business unit.

It announced plans to exit Eurasia in 2015, and reduced its stake in Turkcell in September, while Dennelind has also outlined plans to offload its stake in Fintur Holdings, which looks after shares in Moldova, Georgia, Kazakhstan and Azerbaijan.