Media Oligarchs Buy Key Stake in Major Russian Mobile Operator

Oligarchs close to President Putin (pictured) have bought a key stake in Tele2 Russia

Tele2 Russia may now merge with state-owned mobile network to challenge country's "big three."

MOSCOW -- A consortium of influential Russian tycoons has bought a 50 percent stake in Russia's fourth largest mobile telephone operator Tele2 Russia.

The consortium includes St. Petersburg banker Yuri Kovalchuk, said to be close to Russian President Vladimir Putin, and Alexei Mordashov, owner of steel-maker Severstal.

The two billionaires, who in 2008 combined their media holdings to form National Media Group, which owns daily newspaper Izvestia, commercial TV channel Ren-TV and a stake in pubcaster Channel One, paid an undisclosed sum to Russian bank VTB for the stake.

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Kovalchuk is a co-owner of commercial TV network CTC Media with the Stenbeck family, Tele2's largest shareholder. He is also linked to the management structure Gazprom Media, the media arm of state-owned natural gas monopoly Gazprom. Its holdings include radio station Ekho Moskvy and TV network NTV.

State-owned VTB bought the Russian operation of Swedish telcoms giants Tele2 last April for $3.5 billion.

In a statement Thursday, Yuri Soloviev, a senior VTB manager, said: "Partnership with new strategic investors will significantly strengthen the market position of Tele2 Russia and allow the company to become one of the leaders of Russia's telecommunications market."

Tele2, which has no license in Moscow and limited reach in other parts of the country, may merge with state-controlled Rostelecom, Russia's fifth largest mobile operator to challenge the dominance of the country's big three, MTS, Vimpelcom and Megafon, Russia media reports said Thursday.