The shareholders also agreed to work towards an IPO of MegaFon, including a listing on the London Stock Exchange as soon as possible. Up to 20 percent of MegaFon's shares will be publicly traded, of which TeliaSonera and MegaFon will contribute up to 10.6 percent and 9.4 percent, respectively. If the IPO has not been completed by the end of 2014, TeliaSonera will have the right to sell to AF Telecom or a subsidiary of MegaFon, and AF Telecom or a subsidiary of MegaFon will have the right to buy 10.6 percent of TeliaSonera’s shares in MegaFon. The price paid will be based on fair market value.
In addition, the shareholders agreed that Megafon will pay a dividend of USD 5.15 billion and adopt a dividend policy to pay annually the higher of 50 percent of net income or 70 percent of cash flow in rubles. MegaFon will target net debt of 1.2-1.5x EBITDA, while excess cash shall also be returned to shareholders. TeliaSonera and AF Telecom will be represented by three members each on MegaFon's board while there will be one independent director. Each will have equal voting rights at shareholder meetings, until the IPO is completed.
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