Will peace come to Megafon?

North-West Telecom is selling its stake in the company

It seems that corporate conflicts at Megafon , one of the three largest mobile operators, will soon come to an end. The state-owned North-West Telecom (NWT), the St. Petersburg regional telecommunications operator, decided to indirectly sell its part of Megafon for $410 million. The final buyer has not been announced, and market participants suspect that both of the largest shareholders of the mobile operator - the Finnish-Swedish TeliaSonera and the group traditionally called "St. Petersburg telecom operators" - are involved in the transaction. All co-owners of Megafon deny the purchase of the asset.

The ownership structure of OJSC Megafon is very confusing. Alfa Group, through CT-Mobile, owns 25.1% of the shares. But First National Holding (FNH) , whose owner the Danish lawyer Jeffrey Galmond calls himself, also considers this stake to be its own. The market suspects that FNH may be connected with the so-called “St. Petersburg signalmen” who occupy a number of commanding positions in government agencies. FNH controls 8% of Megafon shares and is suing Alfa around the world for a blocking stake. TeliaSonera owns 43.9% of Megafon, Telecominvest - 31.3% (in this holding TeliaSonera accounts for 26%, NWT - 15% and FNH, the main owner - 58.9%).

It was the “St. Petersburg signalmen” who then headed the state telephone companies of St. Petersburg who founded Telecominvest 13 years ago. The holding was initially created as a company uniting diversified telecommunications companies. But over the past few years, FNH has sold its main assets - Interregional Transit Telecom, Neva-Line, Delta Telecom (the Sky Link operator was created on its basis) and Peterstar. Analysts explained this by saying that Mr. Galmond and, possibly, his partners decided to exit the Russian business, taking profits.

Rumors that changes are expected among the warring shareholders of Megafon have been circulating for a long time. But only yesterday NWT announced that it had decided to sell the 15% stake in Telecominvest that it had owned since 1994. NWT, controlled by Svyazinvest, explains this by saying that Telecominvest did not pay dividends and that owning a minority stake did not give the opportunity to influence the economic activities of the holding. Therefore, after waiting for what NWT considered to be the most favorable price, the St. Petersburg telephone company sold the asset, earning $410 million for it. NWT says that five “leading players in the Russian telecommunications market” were bidding for this stake, but did not name them. The buyer was Renaissance Capital Bank represented by AF Telecom Holding LLC.

It is obvious that this deal was concluded in the interests of a certain customer company, and now the market is wondering who it is. It would be logical to assume that Alpha needed the asset to strengthen its position in the conflict with Galmond’s structures. However, the vice-president of Altimo (a division of Alpha) Kirill Babaev says that this group has nothing to do with it. The same is evidenced by sources in the largest Russian telecommunications companies and banks. These same sources say that there may be two versions explaining what is happening. According to one of them, the asset was purchased by the structures of the St. Petersburg signalmen. This version is supported by the low, according to many analysts, amount of the transaction, which should be closed within three months. Experts argue that this asset should be valued at about a quarter more. But if the buyer was Galmond’s partners and structures, then the very meaning of the deal remains unclear, why would FNH structures actually buy a small piece of something where he already has a complete controlling stake. In this case, an additional few percent of Megafon will be in the hands of Galmond’s structures, the ownership of which, from the point of view of corporate wars, gives absolutely nothing. And selling an asset in a situation of tough confrontation with Alfa is probably difficult for FNH.

Another version looks more plausible, which yesterday was spoken of as practically the only correct one by sources familiar with the negotiations between the co-owners of Megafon. Most likely, they argue, Galmond and his partners decided to leave the business, since the prosecution initiated by Alpha in international courts went too far and threatens the loss of the asset. Perhaps realizing this, the beneficiaries of FNH decided to begin the procedure for a phased transfer of control over the operator TeliaSonera, which has never hidden its desire to obtain a controlling stake in Megafon. Taking advantage of the opportunity to influence the decisions made by state telecommunications companies, a deal was initiated between NWT and, as this version says, TeliaSonera, which, in this scenario, is about to agree with FNH to buy out a controlling stake in Telecominvest. Thus, the sale of the assets of Galmond and his partners in Russia will be completed.

Perhaps the deal is another argument in favor of the fact that the privatization of Svyazinvest will still be completed in the foreseeable future. The head of this holding, Alexander Kiselev, recently said that Svyazinvest will get rid of all its cellular assets, and these now include a stake in Telecominvest, which also fell under the pre-privatization cleanup of the state company.

Mr. Galmond yesterday refused to discuss the deal with Telecominvest shares.

Valentin IVANOV