Rostelecom in talks to buy MegaFon

Rostelecom, Russia’s national provider is interested in acquiring MegaFon, one of the country’s top three mobile providers, national daily Kommersant said on Monday, citing sources.

Rostelecom rallied on the news, with ordinary shares up 9.8% from previous closing to 61.89 rubles and preferred shares rising 4.7% to 57.55 rubles each as trading opened on the Moscow Exchange

Rostelecom asked the government for permission to acquire MegaFon at the end of 2022, the paper reported a source close to the government as saying. Other market participants have also heard that Rostelecom is interested in MegaFon.

However, MegaFon also has other suitors, including ones from outside of the telecom industry.

MegaFon is now owned by USM Group. At the end of 2022, MegaFon acquired a number of companies related to telecoms from USM, including InPlat, a developer of mobile payment tools; Nexign, a billing systems developer; and oneFactor, a developer of AI-based analytical services.

Rostelecom, meanwhile, wholly owns mobile provider Tele2. It finalized the transaction to consolidate the provider in 2020.

Rostelecom, MegaFon and USM declined to comment, while the Digital Development Ministry did not respond to questions, the paper said.

CT Bureau