MegaFon forges joint venture with leading businesses in key Russian sectors to develop IoT and digital economy

MegaFon Completes Incorporation of a Joint Venture to Pursue the Projects Under Digital Agenda of Russia

Moscow, Russian Federation (09 June 2018) — Public Joint Stock Company “MegaFon” (LSE: MFON), a pan-Russian operator of digital opportunities (“MegaFon” or the “Company”), announces the completion of the transaction to create a joint venture with JSC Gazprombank (“Gazprombank”), a state corporation Rostec (“Rostec”) and USM Holdings. The new structure, JSC MF Technologies (MFT) will develop digital ervices and implement projects in the digital economy.

Under terms of the transaction (“Transaction”), as earlier announced at:, MegaFon initially contibuted 11,500,100 Class A shares in Mail.Ru Group Limited (LSE: MAIL.LI) (“Mail.Ru”), representing a 5.23% economic share, and providing 58.87% of votes, to MFT. For the purpose of the Transaction, 11,500,100 Class A shares in Mail.RU Group, comprising a 100% stake in MFT, were valued at US$ 450 million.

Lefbord Investment Limited, a 100% subsidiary of MegaFon and the current shareholder of MFT has sold earlier today a 35% stake in MFT to Gazprombank and a 9% stake — to USM Holdings. Rostec has acquired a 11% stake in MFT. In the result of the Transaction, Lefbord will own the remaining 45% of MFT. The Company will secure US $247.5 million in cash from the sale of 55% shares in MF Technologies pre-tax, and will be used to finance capital expenditures of MegaFon as well as to repay the Company’s debt and, accordingly, reduce the leverage.

The creation of a joint venture by leading businesses in key sectors forming the infrastructure for the digital economy will allow the partners to efficiently develop cross-industry innovation projects including, but not limited to, blockchain- and internet of things-based solutions. Making active use of the relevant expertise and financial capacities of Gazprombank, the partners will also focus on developing digital financial platforms.

“The creation of MF Technologies is a natural step in the implementation of our corporate strategy which aims to achieve the ambitious goal of digital leadership. The newly created joint venture will gain access to its partners’ experience and resources, which will create a platform for the implementation of innovative fintech solutions. While preparing the transaction we have analyzed all the aspects of the new structure with international legal consultants and believe it is the optimal solution for all participants. All partners in MFT agree that the creation of MFT will not impact the independence, corporate governance, procedure or business strategy of and its management team” commented Sergey Soldatenkov, the CEO of MegaFon.

“We are confident that together with our partners in MFT we can contribute to the ongoing growth of the digital economy. We are happy with Mail.Ru Group’s existing strategy and fully support both the corporate governance structure of the company as well as current management. We continue to see opportunities to cooperate in the distribution of financial services for the users and in b2b solutions to the best interest of all partners of the joint venture. Any cooperation will be based on fully commercial terms with a view to strengthening Mail.Ru Group’s product offering and growing capitalization”, — stated press-office of Gazprombank.

“Direct and portfolio investments in growing tech projects arranged with various business partners is a part of Rostec’s corporate strategy. Rostec is a leader and key participant of the Research expertise and technological leadership working group as part of the Government Digital Economy Program. Accordingly, our partnership with other MFT partners will enable us to share our experience in development and adoption of digital technologies”, Rostec press-office commented.

This content extract was originally sourced from an external website (Megafon) and is the copyright of the external website owner. TelecomTV is not responsible for the content of external websites. Legal Notices

Email Newsletters

Sign up to receive TelecomTV's top news and videos, plus exclusive subscriber-only content direct to your inbox.