Megafon, controlled by the USM Group of Russian tycoon Alisher Usmanov, is the latest Russian company to delist from London, following similar moves by Cherkizovo, Russia's biggest meat producer, gold producer Nord Gold and real estate developer PIK.

In 2012, Megafon raised $1.7 billion in a share offering in London and Moscow, joining rivals MTS and Vimpelcom which went public earlier.

Russian companies started to leave London in 2014 when Western sanctions were first imposed on Russia, citing high costs of maintaining the listing and limited investor appetite for Russian stocks.

Megafon said on Monday that it decided to allow minority shareholders to sell out, as it targets broader partnerships with state-owned firms, transactions with higher risks, investments in infrastructure with lower returns and higher leverage.

The new strategy will also require more cash which may affect Megafon's dividend payments.

"The ambitious scale and nature of the further steps we may need to take to achieve this, could create significant additional risk for our minority equity holders," Gevork Vermishyan, Megafon's executive director, said in a statement.

"It could negate the delivery of our current OIBDA and revenue growth and leverage cap objectives over the medium term."

In May, Megafon said it would set up a joint venture with Gazprombank and state defence conglomerate Rostec to develop digital projects. Megafon will cut its stake in internet company Mail.Ru Group as part of that process.

OFFERING

As part of the tender offer, a Megafon unit will buy up to 128,950,036 of the issued and outstanding ordinary shares and global depositary receipts (GDRs), or 20.8 percent of the firm's issued and outstanding shares, for $9.75 for each ordinary share and for each GDR.

The buyback, worth $1.26 billion and set to take place on July 16 to Aug 22, may be financed by the Russian lender Gazprombank, which already owns an 18.8 percent stake in the telecoms company, Vermishyan told reporters on Monday.

Megafon shares were up 15.8 percent to 583.7 roubles per share in Moscow by 0928 GMT and were trading 6.9 percent higher in London at $9.625 a piece.

"We deem the news positive as the purchasing price implies an 8 percent premium to Friday's close," Aton brokerage said in a note.

Vermishyan said that the company will decide on the specific financing tools closer to the settlement date.

"Due to the complexity and potential costs of delisting the ordinary shares from the Moscow Exchange, the Board of Directors has not decided on such a delisting at this time," Megafon said in a statement separately.

"Megafon will re-visit the question of delisting of the ordinary shares from the Moscow Exchange following completion of the tender offer."

(Writing by Katya Golubkova and Louise Heavens, editing by Emelia Sithole-Matarise)

By Anastasia Teterevleva and Polina Devitt