Megafon, the second largest mobile phone operator in Russia, announced on Tuesday that it would initiate a joint venture with Gazprombank, Rostec - the state-backed manufacturer of defense technology products, and USM Holdings, to deploy digital projects, including those related to blockchain. The new company, called MF Technology, will help the partnering companies unite their expertise in various industries, like telecommunications, IT, financial services and high-tech industries, to enter new markets with innovative products.
Megafon will invest in the new entity 11,500,100 of its Mail.Ru Group Class A shares, which account for 5.23% of the Mail.ru’s economic share and give 58.87% voting rights to Megafon. The newly created MF Technology (MFT) is currently 100% owned by Megafon through its subsidiary Lefbord Investment Limited. According to the partnership agreement, MegaFon will retain a 45% stake in MFT after selling 35% to Gazprombank, 11% to Rostec, and 9% to USM – Megafon’s biggest shareholder, and raising $247.5 million in total.
Megafon executive director Gevork Vermishyan reportedly said that his company intended to use the capital raised to cut debt and support investments. Megafon shareholders shouldn’t expect any special dividends after the deal, he added.
Morgan Stanley & Co (NYSE:MS). International submitted a financial report on the fairness of the deal price to Megafon’s Board of Directors.
“Jointly with its partners, Megafon plans to implement a number of digital projects, including creating software products to digitalize the operations of major companies and enterprises, and developing blockchain-based solutions,” the release says.
One of the most important projects of the partnering companies is the development of a digital financial platform that will be used by the parties to provide high-tech services related to payments, credits, and other digital products. For this purpose, MegaFon, Mail.Ru Group, USM, and Gazprombank plan to create a company called Digital JV (DJV).
Last year, Megafon and Megafon Labs took part in a successful blockchain project led by IBM (NYSE:IBM) and Russia’s largest bank, Sberbank.
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