MegaFon to borrow $2 billion to fund share buyback By Douglas Busvine and Maria Kiselyova MOSCOW (Reuters) - MegaFon MGFON.UL, Russia's No.2 mobile operator, has signed a $2 billion syndicated loan with three international lenders as it raises funds to buy back a one-quarter stake owned by oligarch Mikhail Fridman. Sources familiar with the company say the stake sale could be a prelude to a bid by billionaire minority shareholder Alisher Usmanov to take control of Megafon. The company said on Wednesday it would borrow the money for six months from Citibank, BNP Paribas and Barclays, with an option to extend the loan by another six months, without specifying the purpose of the loan. The bridge loan, which was signed on April 17, was split equally between the three banks, one banking source close to the deal told Thomson Reuters LPC on Wednesday. The source said the purpose of the loan was the acquisition by Megafon of the stake held by Altimo, the telecoms arm of Fridman's Alfa-Group. The stake is reported to be worth up to $5 billion. Earlier the Vedomosti daily reported that MegaFon was seeking funds to buy back the 25.1 percent stake. According to banking sources, MegaFon is seeking more funds from Russia's largest lender Sberbank (SBER.MM) and No.2 lender VTB (VTBR.MM), though details have not yet been confirmed. Two of the three main shareholders in MegaFon - Altimo and Nordic group Teliasonera (TLSN.ST), which owns 43.8 percent - have confirmed that talks are under way on MegaFon's ownership. Sources familiar with the matter say Usmanov, who owns a 31.1 percent stake, is seeking majority control of MegaFon and to partner operator Scartel in next-generation mobile services. Scartel holds a so-called fourth generation license and is on the verge of launching services, while Russia's top-three mobile phone firms - MTS (MBT.N), MegaFon and Vimpelcom (VIP.N) - and long-distance operator Rostelecom (RTKM.MM) have yet to secure enough spectrum to roll out full 4G services. Bank of America Merrill Lynch said in a research note Russia would in coming months hold a tender for Long Term Evolution (LTE) - or 4G - licenses in which the big three mobile operators and Rostelecom should prevail. Banking and industry sources say the upfront costs of 4G are likely to have prompted Fridman, widely regarded as more of a financial than a strategic investor, to sell his MegaFon stake. Teliasonera has declined to say whether it might reduce its stake, with a company source saying its main focus was on getting MegaFon to initiate dividend payments and improve its corporate governance structure. Sources have said, however, that Teliasonera could reduce its holding, paving the way for MegaFon to launch an initial public offering of shares that could raise over $1 billion later this year. One banking source said the most cost-effective way for Usmanov to secure control would be for MegaFon, which has $1.5 billion in net cash on its balance sheet, to buy out Fridman. Carrying a prudent amount of debt would also be positive for MegaFon's tentative plans to launch the IPO, which could give the company a valuation comparable to MTS and Vimpelcom, which are valued at $18 billion and $17 billion respectively. According to reports and sources, the stake sale and IPO could be a prelude to an all-Russian merger between MegaFon and Rostelecom that could create a market leader in 4G services like mobile broadband internet. MegaFon had 61.6 million Russian mobile users at the end of 2011, while MTS and Vimpelcom had 70 million and 57.2 million respectively. MegaFon's sales last year were $8 billion. Representatives for Usmanov, Fridman and Teliasonera have declined to comment on the ownership talks. Additional reporting by Katya Golubkova and Michelle Meineke; Editing by David Cowell