It was last Friday Russia wrote media history when Parliament said yes to the new legislation stopping foreign ownership if it exceeds 20 percent of the Russian Company. MTG owns 38 percent of the Russian television entertainment company CTC Media. It involves an imminent risk that MTG will have to sell fast to meet the statutory requirement. MTG’s shareholders are the last twelve months has been anything but good. A year ago, traded MTG’s shares for SEK 340, today it’s down to under 220 crowns. And the risks of further cases is hung over.
In an analysis on Monday that the news agency Direkt have read, warns investment bank UBS to MTG may suffer further setbacks.
“However, we note that the there is precedent for structures that allow a continued foreign ownership in these kinds of laws that can reduce the impact, “writes the bank.
UBS refers to the possibility for an extension of the law that may enable a similar situation in Kazakhstan , where similar legislation was introduced ten years ago and where CTC continues to have an economic interest of 60 percent in Channel 31
“To follow the law CTC has only 20 percent ownership in the company that owns television license, but has 70 percent of the company exclusively supplies all the content to the channel and 60 percent in the company that has exclusive rights for sales and marketing, which takes the total economic ownership to 60 percent, “writes UBS.
According to the analysis amounts MTG’s EBITA contribution from CTC Media to approximately SEK 600 million and the company has also the pay-TV operations in Russia that also may need to be sold or shut down, which would affect profitability.
“Even without a forced sale will continued uncertainty in the region is likely to lead to increased weakness in fundamentals for some time before the full impact of the law has been clarified, “writes the bank.
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