October 31, 2017 / 7:24 AM / 3 years ago

Telia sells remaining Megafon stake to Gazprombank for $1 billion

STOCKHOLM (Reuters) - Nordic telecom operator Telia Company (TELIA.ST) is selling its remaining 19 percent stake in Russia’s Megafon (MFON.MM) to Gazprombank (GZPRI.MM) for around 8.6 billion Swedish crowns ($1.03 billion), it said on Tuesday.

A flag flutters at the Telia telecommunication company headquarters in Helsinki, Finland, May 5, 2017. REUTERS/Ints Kalnins

Telia said it was selling at a price of 514 rubles ($8.86)er share, implying a discount of almost 10 percent to Monday’s closing price.

“The transaction is in line with the company’s strategy to focus on the Nordics and Baltics,” Telia said in a statement.

Earlier in October, Telia sold a 6.2 percent stake in Megafon, Russia’s second-biggest mobile phone operator, at a price of 585 rubles per share.

The investment had been classified as a financial holding.

Telia said although Gazprombank was one of the banks under U.S. and European capital market sanctions, the deal did not violate those sanctions.

Gazprombank, which is partly-owned by Russian gas giant Gazprom (GAZP.MM), said it had “a positive view of Megafon’s value growth potential as one of the fastest-developing companies in the telecommunications sector and expects it to strengthen its market position further.”

USM Holding, which owns 56.3 percent of Megafon shares, said it was confident that it could work with Gazprombank to develop Megafon’s strategic goals and future.

Megafon, which is trying to reinvent itself as an internet player, earlier forecast flat revenues for this year as rivals have been forced to cut prices to retain customers in a mature market.

Gazprombank, Russia’s third-largest bank, has agreed to a lock-up of six months from the date of the sale, subject to certain exceptions, Telia said. The bank did not immediately respond to Reuters questions regarding its plans for the stake.

Telia expanded rapidly into central Asia and other parts of the world from the 1990s but has been reversing that process to focus on core markets.

Earlier this year, Telia agreed to pay $965.8 million to settle U.S. and European criminal and civil charges that it paid bribes to win business in Uzbekistan.

Telia’s former chief executive and two other former high-ranking Telia officials have been charged with bribery by Swedish prosecutors.

In its third-quarter report, Telia said it hoped to sell its businesses in Azerbaijan, Kazakhstan, Georgia and Moldova by the end of the year.

Reporting by Helena Soderpalm; Additional reporting by Katya Golubkova and Maria Kiselyova in Moscow; Editing by Louise Heavens

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