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Financials

CEO of Russia's VK resigns as state assumes control of internet firm

MOSCOW, Dec 3 (Reuters) - Boris Dobrodeev on Friday said he was stepping down as CEO of Russian internet company VK , amid a significant overhaul of the firm’s shareholder structure that has seen state-owned entities assume control.

State consolidation of decision-making power at Russia’s second-largest internet firm, which runs the country’s most popular social network VKontakte, Russia’s answer to Facebook, could presage greater interference in the sector by the government, an internet analyst said.

Moscow has clamped down on technology companies this year with fines related to banned content and Russians’ user data, in particular foreign social media firms, a campaign critics characterise as an attempt by the Russian authorities to exert tighter control over the internet.

VOTING SHAKE-UP

VK said it had been notified of the planned changes in the shareholder structure of MF Technologies, which holds a 4.8% stake in the company, but controls 57.3% of its voting rights.

On Thursday, Russian billionaire Alisher Usmanov’s holding company USM said it had sold 45% of the 54% MF Technologies stake under its control to state-run insurer Sogaz, which is part-owned by a longtime ally of President Vladimir Putin.

Shareholders in Sogaz, which was founded by gas giant Gazprom, include banker Yuri Kovalchuk, whom Putin has publicly called a personal friend. Gazprom CEO Alexei Miller is board chairman at Sogaz.

As of Oct. 27, Kovalchuk and his wife controlled around half of the shares in the Aquila firm which holds 32.3% of Sogaz, and Gazprom and its companies have another 23.7%.

A USM representative told Reuters a deal with Gazprombank over its remaining 9% stake in MF Technologies was ongoing. Gazprom owns just under 50% of Gazprombank.

On Friday, Gazprom Media said Gazprombank had transferred it a 45% stake in MF Technologies. Previously, Gazprombank held a 36% stake acquired from Sberbank in November.

Gazprom on Friday declined to comment when asked about its plans for VK.

RISKS & UNCERTAINTY

Internet analyst Pavel Klimarev wrote on his Telegram channel, ZaTelekom, that the changes would give Gazprom Media, and consequently the Russian state, more control over the media landscape.

He predicted that more pressure would be exerted on Russia’s independent internet companies, such as Yandex, as well as on the likes of Alphabet Inc.’s YouTube.

The RBC daily reported, citing four sources, that Vladimir Kiriyenko, first vice president at state-owned Rostelecom and son of Putin’s first deputy chief of staff Sergei Kiriyenko, was set to become VK’s new CEO.

Rostelecom declined to comment on the report.

London-listed shares in VK jumped on Thursday’s news but were 8% lower on Friday by 1530 GMT.

“The change significantly increases risks for VK - uncertainty over the strategy, management,” said Maria Sukhanova, TMT analyst at BCS Global Markets.

Reporting by Alexander Marrow; additional reporting by Vladimir Soldatkin and Gleb Stolyarov; Editing by Kirsten Donovan

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