Technology

Mobile operator Veon to sell Russian business for $2.2 bln

  • This content was produced in Russia, where coverage of Russian military operations in Ukraine is restricted by law

MOSCOW (Reuters) – Amsterdam-listed mobile operator Veon (VON.AS) said on Thursday it would sell its Russian business Vimpelcom to senior members of Vimpelcom’s management team led by Chief Executive Alexander Torbakhov for 130 billion rubles. ($2.2 billion)

Veon operates the Beeline brand through Vimpelcom in Russia, a market that accounts for about half of the group’s revenue. Veon also operates Beeline in Kazakhstan and Kyivstar in Ukraine.

Veon, which expects the deal to be completed by June 1, joins a growing list of Western companies that have sold assets in Russia since Moscow sent tens of thousands of troops to Ukraine on February 24.

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Veon said the management takeover of Vimpelcom implies an expected project value of around 370 billion rubles. Although Veon is selling at a discount, the deal represents a relatively rare example of money exchanging between parties as companies race to get out of Russia.

Japan’s Nissan (7201.T) made a $687 million loss handing over its Russia business to a state-owned entity for one euro, reversing an earlier move by Renault (RENA.PA) which sold its majority stake in Russia’s AvtoVaz for one. ruble. Many companies did not disclose the price of divestment of their investments.

The agreement includes a provision that enables Veon to benefit from the sale of Vimpelcom at a higher valuation for 30 months after the transaction closes.

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Shares of VEON rose 8.6 percent in thin Amsterdam trading to 0.57 euros by 1532 GMT. Stocks were trading near record lows since they plunged after Russia launched what it calls its “special military operation” in Ukraine.

“Management’s purchase of our operations in Russia will benefit everyone involved,” Veon CEO Kan Terzioglu said in a statement to Reuters.

“Customers and employees will see a smooth transition, investors and bondholders will see financial deleveraging on our balance sheet, and Veon will be able to focus on our digital operator strategy across our portfolio of operating countries.”

Veon said that Veon’s operations in Kazakhstan will be transferred to Veon Holdings as part of the deal and some intercompany loans will be cancelled.

Torbachov said the deal marked an important milestone for Beilin.

“The senior management team that I represent, Svetlana Kirsanova, Maxim Zykov, Valery Churzin and Rinat Nasretdinov, managed to put together the most balanced proposal for Veon Group, which ensured its victory in the competitive process of selling assets,” said Torpakhov.

($1 = 60.3500 rubles)

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(Reporting by Alexander Marrow in Moscow and Subanta Mukherjee in Stockholm; Additional reporting by Jake Cordell and Toby Sterling; Editing by Jay Faulconbridge, David Goodman, Mark Potter and Sandra Mahler

Our Standards: The Thomson Reuters Trust Principles.

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