As the government manages Rostelecom

Main article: Rostelecom

2020: Putin increased the minimum share of the state in Rostelecom to 38.2%

At the beginning of July, 2020 on the official  Internet portal  of legal information there was a decree signed by the president Vladimir Putin which increases the minimum share of the state in Rostelecom to 38.2%. Earlier it made 33.2% and belongs to Rosimushchestvo.

Rostelecom  within consolidation of 100% of Tele2 mobile operator carried out additional share issue  for benefit of VTB in  which the acting shareholders of operator could also participate.

The minimum share of the state in Rostelecom is increased up to 38.2%

And will not be able to dispose of the share block of Rostelecom of VTB within four years, according to the transaction on the shareholders' agreement with the state. Thus, the state together with VTB and VEB will retain at least several years control over more than 50% of ordinary shares of Rostelecom.

The decree signed at the beginning of July, 2020 cancels a formulation previous where the share of the Russian Federation in the state operator was provided at the level of not less than 33.2% (it was signed in October, 2019 when final parts of the transaction were not sounded yet).

Final parameters became known at the beginning of 2020, after implementation by shareholders of Rostelecom of privilege of the redemption during the additional issue placed within the transaction. The new decree became effective from the moment of its signing by the head of state, i.e. on July 1, 2020.

As explained RIA Novosti in Rostelecom,   not all acting shareholders therefore the state share in the company was higher took part in an additional issue, than it was planned. The share of the state  according to the results of an additional issue is fixed by the decree, added to  the companies.

By the beginning of July, 2020 of Rosimushchestvo owns 38.2% of ordinary shares of Rostelecom, VTB possesses 8.44% of stocks, ВЭБ.РФ — 3.4%, "subsidiary" of Rostelecom — Mobitel LLC has 1.36%.^[1]

2012

In March, 2012 it became known that the Government of the Russian Federation added the list of open joint stock companies concerning which determination of a position of the state as shareholder, on the most important issues of activity of the company it is performed by the prime minister of the country or, on his order, some of Deputy Prime Ministers. The largest Russian telecom operator Rostelecom is entered to this list. Earlier the state directly did not participate in company management as it owned a control share in it not independently, and through Svyazinvest, Deposit Insurance Agency (DIA) and Vnesheconombank (VEB). It is obvious that the order about change of an order of management of Rostelecom is caused by change of a shareholding structure of the company and^[2].

Who approves candidacies of heads

The Deputy Prime Minister Arkady Dvorkovich supervising the communications industry in an interview to the Vedomosti newspaper, September, 2012^[3]

• So at you with Presidential Administration opinions on the one who and how should manage Rostelecom differ?

• At us on all industries including on Rostelecom, there is an accurate position. Determination of the one who should be in councils, naturally, in coordination with Presidential Administration — a prerogative of the ministries. The position of the Ministry of Telecom and Mass Communications is defining. Therefore the minister will develop a position, will report to the Prime Minister, we will approve further with Presidential Administration.

• It turns out, on Rostelecom and Svyazinvest though they are not the strategic enterprises, it is all the same necessary to agree candidacies with Presidential Administration?

• Yes, the president made such decision, turned on these companies in such list. But practice of approval on a big range of the companies is entered at the presidential term of Dmitry Anatolyevich Medvedev, here to make some claim would be ridiculous.

What instructions the government gives

After entering of Rostelecom into the list of the companies in which positions of the state are defined by the management of the government representatives of the Russian Federation in governing bodies of the operator will receive government instructions in several directions. Among them first of all the questions which are submitted for general shareholder meeting: entering into the agenda of a meeting of points for discussion and vote, promotion of candidates for Board of Directors and other governing bodies.

Besides, the government will give directives to the representatives how to vote concerning the agenda of a meeting and also about the requirement of convocation of extraordinary general shareholder meetings if it is necessary. The state can implement However, not all these positions right now, however it will become possible in the long term.

Because of what the state administration became more direct

The decision of the government on the direct participation in management Rostelecom by the edition of directives to the state representatives is connected with the fact that the Russian Federation became the direct shareholder of the company recently. Before state control over Rostelecom was performed through the Svyazinvest controlled by the state, Deposit Insurance Agency (DIA) and Vnesheconombank (VEB). However in January, 2012 the DIA transferred the stocks of Rostelecom owned by it to the state on behalf of Rosimushchestvo. Therefore the state had an immediate possession by stocks of Rostelecom in the amount of 7.43% of voting shares.

It gives the chance to the state to exercise directive control of activity of the company through the representatives. However yet not on all questions the state will be able to make soy offers and requirements. So, for example, there is no opportunity to convene an extraordinary meeting of shareholders as the packet in the amount of not less than 10% of voting shares which is not in immediate state possession is for this purpose necessary. Therefore if the state wants to submit any questions for an extraordinary meeting, he should agree about the joint requirement of it with VEB and, for example, "subsidiary" of Rostelecom — Mobitel.

Nevertheless already now the state can nominate one representative in Board of Directors of Rostelecom that it also made, having included in the candidate list on election in council on annual meeting of shareholders which will take place in June, the adviser to the Minister of Telecom and Mass Communications Denis Afanasyev. Besides, directives of the government on vote of his representative a packet in 7.43% of voices of shareholders can have significant effect on the result of votes.

That direct control will bring in the long term

Further reorganization of Svyazinvest and Rostelecom on the scheme approved by the interested departments will be performed by accession of Svyazinvest with all its assets. The Russian President Dmitry Medvedev issued on March 24, 2012 the decree on an exception of Svyazinvest of the list of strategic assets that is necessary for implementation of the scheme with its accession to Rostelecom. Besides, the president determined the term of holding these actions ― till March, 2013.

According to the approved scheme, as a result of consolidation after share exchange of Svyazinvest on the stock of Rostelecom Rosimushchestvo and VEB will totally possess more than 50% of its stocks, another 0.5% of shares of joint Rostelecom will be received by its "daughter" Mobitel, minority shareholders will have other voting shares. More than 25% of voting shares of joint Rostelecom will be at disposal directly of the state on behalf of Rosimushchestvo that will allow to use more widely influence in the company, including convocation of an extraordinary meeting of shareholders and promotion in Board of Directors to three people. At coordinated actions with the controlled state by VEB the Russian Federation will have an opportunity to have a decisive impact on the most important issues of activity of Rostelecom and will ensure the majority in Board of Directors of the company.

As the state estimates efficiency of Rostelecom

The Deputy Prime Minister Arkady Dvorkovich supervising the communications industry in an interview to the Vedomosti newspaper, September, 2012^[3]

• Since 2009 there is a reform of Rostelecom, and during this time on it there were many complaints, including from state agencies, for example the Ministry of Economic Development. And how you estimate the undertaken reform and whether something will change in its course?

• I will not estimate the past. We are engaged in reorganization in the industry and next year we are going it to complete. According to plans it should be made until the end of March, 2013. We do everything to be in time. If corporate procedures lead to the fact that it will be slightly longer, nothing terrible will occur. The state should receive more than 50% in the consolidated company after completion of all procedures. In this sense nothing will change. As for introduction of specific packets, their assessment is the current work. We complete a stage on accession of a number of share blocks now, everything goes normally — routinely. We have questions to the strategy of work of Rostelecom, to the investment program, to those results which we reach at the expense of the resources which are available in the company. There are many good projects in Rostelecom. For example, pilot projects on separate frequency zones which can grow further in more large-scale projects. But in general we consider that Rostelecom is capable of bigger, is capable to become much more effective company, including in terms of an infrastructure component. I mean providing the Internet on the most part of the territory of the country - it is that task which was set. It seems to me, we can move more in high gear, and Rostelecom plays a key role here. As for corporate management, we discuss this subject with Presidential Administration now, I hope that we will develop the joint solution.

• What now prevents Rostelecom to work as you from it wait?

• We have questions to efficiency of those investments which are made. At such resources, it seems to us, it would be possible to move quicker.

Notes