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MOSCOW, Nov 25 (Reuters) - Russia's biggest mobile phone
operator MTS has agreed to sell its Ukrainian
business to Azerbaijan's Bakcell for what analysts said was a
cut-price $734 million.
The departure of MTS from the Ukrainian market comes at a
low point in Moscow-Kiev bilateral relations and follows a wider
trend among Russian companies in quitting foreign markets to
focus on domestic investments.
MTS acknowledged the "general instability" and "economic
deterioration" of Ukraine in the company's 2018 consolidated
financial statements.
In a deal with Britain's Vodafone MTS rebranded its
Ukrainian unit as Vodafone Ukraine in 2015, shortly after the
separatist conflict began in the Donbass region, in a move
widely viewed as a way for the company to distance itself from
its Russian shareholders.
The rebranding was part of a strategic partnership agreement
with the Vodafone, which has no economic interest in MTS
Ukraine.
MTS will sell its Vodafone Ukraine operation to Bakcell and
will pay a special dividend as a result, it said on Monday,
lifting its Moscow-listed shares more than 2% by 1214 GMT.
The board has approved the special dividend of 13.25 roubles
per ordinary share, or 26.5 billion roubles ($415.1 million) in
total, MTS said.
Vodafone Ukraine is the second-largest mobile operator in
the country behind VEON-controlled Kyivstar, though
MTS's Russian operations account for more than 90% of the
group's revenue.
"Given the small share of our Ukrainian operations in our
overall business, we reaffirm our commitment to fulfilling our
updated dividend policy and continuing to generate attractive
returns for our shareholders," said MTS Chief Executive Alexey
Kornya said.
Aton Research analysts said the deal implied the unit's
enterprise value at 3.9 times core profit, reflecting the high
risk of operating a business in Ukraine, adding that the special
dividend of more than 4% would be viewed positively by
investors.
Analysts at BCS Global Markets said the valuation multiple
was lower than expected, suggesting the sale was at a discount.
The deal was given approval by Ukraine's anti-monopoly
committee in October and MTS said the transfer of shares to
Bakcell-controlled Telco solutions and Investments LLC is
expected to complete shortly.
NESQOL Holding, Bakcell's parent company, said the deal will
be financed mainly through resources from international
financial structures.
The change of ownership will not affect operations of
Vodafone Ukraine, NESQOL said.
($1 = 63.8345 roubles)
(Reporting by Maria Kiselyova, Alexander Marrow and Nadezhda
Tsydenova; Writing by Alexander Marrow; Editing by Aditya Soni
and David Goodman)
