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Telecom
October 2019 www.intellinews.com I Page 16
statement on this matter from MTS, which is expected to be made by the end of October, in line with the previously announced timeline.
BCS Global Markets warns on October 10 that such press reports have not always materialized. "However, the key shareholder’s statement looks straightforward and could indicate his personal opinion," the analysts believe.
SCM and Raga reach settlement in Ukrtelecom dispute
A subsidiary of the System Capital Management (SCM) Holdings that belongs to Ukraine’s biggest oligarch Rinat Akhmetov and Raga Establishment Ltd. “formally and finally settled the dispute” concerning the sale of Ukrtelecom in 2013, SCM's press service reported on October 1.
The deal means that all the ongoing legal proceedings shall be discontinued, the press release clarified. No other details of the settlement have been disclosed.
Raga claimed earlier it sold a 92.8% stake in Ukrtelecom to SCM for an agreed price of $860mn, while it only received payment of $100mn. In May 2018, the London arbitration court ruled in favour of Raga, thus making SCM liable to pay about $821mn in compensation. As a part of litigation, some of SCM's Cyprian assets were frozen between December 2017 and June 2018.
Uralsib Capital argued that dropping delisting plans would remove the main risk for MTS shares, which would considerably shrink the company's investor base. As a result, the fundamentals of the company, one of the most attractive in Russian telecom sector, will become the main focus, Uralsib notes, placing the Sell recommendation on MTS ADRs for review.
“Besides the settlement with Raga, SCM
will have to resolve an outstanding conflict with Oschadbank, which managed to arrest Ukrtelecom’s 92.7% stake pledged under
a UAH1.8bn loan to an SCM subsidiary. Ukrtelecom’s value is definitely much smaller than the amount claimed by Raga ($821mn), also taking into account the financials claims
of Oschadbank and Ukreximbank,” Alexander Paraschiy of Concorde Capital said in a note. “Therefore, there is no reason for SCM to pay that amount to Raga. Most likely, the new deal assumes a much smaller payment by SCM (no more than 50% of that amount). As we assumed before, the key source of funds for a possible payment to Raga could be dividends from Metinvest. Now that the conflict with Raga
has been resolved, SCM is able to settle issues with state banks and re-establish its ownership rights over 92.8% stake in Ukrtelecom.”