Rostelecom may reduce its debts by selling shares

Because Rostelecom’s debt has reached RUB 211bn, the operator is now considering the sale of its own shares. The shares do not belong to Rostelecom directly, as they are owned by Mobitel, its subsidiary. In fact, the shares in question were Rostelecom’s own 3.6%, which were bought back from VTB Capital and Renaissance Securities on behalf of Mobitel in February 2013. At the moment Mobitel, holds a 4.6% stake in Rostelecom. Since the buyout, the price of shares has dropped by one-third.

The latest Rostelecom figures are not very promising. Its revenue fell by 10.3% to RUB 77.1bn, and there were also year-on-year reductions in operating profit and net profit, of 55.0% and 94.4%, to RUB 11.4bn and RUB 6.4bn respectively, in Q1 2013. The bulk of the revenues in Q1 2013 were earned by the company from local telephony services (RUB 21.4bn), followed by broadband services (RUB 13.4bn) and mobile telephony services (RUB 9.5bn). The total number of subscribers increased by 1.5% to 56.7m year on year in Q1 2013.

It is also worthy of note that on 6 March 2013, after completing the acquisition of a 28.2% stake in National telecommunications, Rostelecom acquired 100% control of the company.