UPDATE 1-MegaFon says to launch London IPO

(Adds details on selling shareholders, banks, background)

MOSCOW, Oct 9 (Reuters) - Russia's second-largest mobile phone operator MegaFon , in which Russia's richest man Alisher Usmanov took control in April, said on Tuesday it plans to launch an initial public offering on the London Stock Exchange.

The IPO, to be completed in the fourth quarter, will give investors the chance to buy into a player that is outpacing its peers in a growing home market, but unlike rivals is shielded from tricky overseas operations and complex corporate disputes.

MegaFon received regulatory approval in September to list 123.38 million shares, or 19.9 percent of the total, in London, and analysts estimated at the time that the share sale could raise around $3 billion.

The company did not disclose the size of the offering. Russian newspaper Kommersant reported on Tuesday that MegaFon may reduce the size of the IPO to around 15 percent of its shares from 20 percent expected earlier.

A source familiar with the deal told Reuters on Monday that proceeds may total $2 billion, down from earlier estimates.

Shares will be sold by Nordic co-owner TeliaSonera and MegaFon itself. TeliaSonera had been expected to offer a 10.5 percent stake and MegaFon had been expected to sell 9.4 percent of treasury shares. MegaFon said it plans to use the proceeds of the offering of its treasury stock to repay debts.

MegaFon said that Morgan Stanley and Sberbank had been appointed joint coordinators for the IPO. Sources previously told Reuters that Goldman Sachs was one of the lead banks for the IPO. The bank was not listed by MegaFon as working on the deal.

(Reporting by Megan Davies and Maria Kiselyova; Editing by Douglas Busvine)

((megan.davies@thomsonreuters.com)(+7 916 391 8262))