Please install Adobe Flash Player.

Consulting services

  • Market entry strategy
  • Business plan development
  • Strategy audit
  • Competitive intelligence
  • Product evaluation
  • Due diligence
  • Distributor / agent search

Research services

  • Market studies analysis / sizing and trends
  • Customer service / satisfaction surveys
  • Competitive positioning intelligence
  • Brand tracking
  • Advertising effectiveness research
  • Pricing research

Customers

  • National operators
  • International operators
  • Telecom vendors
  • Incumbents
  • New entrants
  • Governments

MegaFon eyes Tele2 Russian assets while debt blights Rostelecom

PDFPrintE-mail

OAO MegaFon, billionaire Alisher Usmanov’s mobile-phone operator, may look into acquiring assets of competitor Tele2 AB in Russia, while OAO Rostelecom doesn’t appear attractive, a board member said.

MegaFon is interested in expanding in the country and would consider parts of Tele2 if they are offered, Ivan Streshinskiy, MegaFon director and head of USM Advisors LLC, which manages Usmanov’s assets, said in an interview at Bloomberg headquarters in New York this week.

“Tele2 positions itself as a discounter and fully combining it with MegaFon could potentially destroy this competitive advantage without adding customers for MegaFon,” Streshinskiy said. For a deal to add value for MegaFon shareholders, it could be carried out with other operators, he said, declining to elaborate.

Sweden’s Tele2, which failed to win a fourth-generation license in Russia in July to offer faster data services, has been looking into selling its unit in the country or forming an alliance with local competitors, RBC Daily and Kommersant have reported. OAO Mobile TeleSystems and Rostelecom confirmed their potential interest to Tele2. Pernilla Oldmark, a Tele2 spokeswoman, declined to comment.

Tele2 Russia may be worth 4.5 times its earnings before interest, taxes, depreciation and amortization, said Anna Kurbatova, an analyst at BCS Financial Group. Based on nine- month figures, that implies a value of at least $3.1 billion.

‘Governance Problems’

Russia’s government, which owns about 53 percent in Rostelecom, may sell shares in the former fixed-line monopoly in 2014, the Economy Ministry said in June.

“I can’t think of any reasonable private investor who will agree to buy Rostelecom in its current shape with a $6.5 billion debt burden and corporate governance problems,” Streshinskiy said. “They need proper management as the current one is affiliated with one private shareholder,” he said, referring to Marshall Capital, which owns a stake of about 10 percent.

Kira Kiryukhina, a spokeswoman for Moscow-based Rostelecom, couldn’t immediately be reached for comment.

Rostelecom lost its focus on broadband Internet and built debt trying to expand into mobile business and overpaying for pay-TV assets, Streshinskiy said, echoing criticism of the company in October by Telecommunications Minister Nikolay Nikiforov.

Rostelecom Network

Prime Minister Dmitry Medvedev’s government has been trying to replace Rostelecom Chief Executive Officer Alexander Provotorov since October, according to Kommersant.

Three years ago, the government weighed a potential merger of Rostelecom with MegaFon, which “could have created a so- called ‘national champion’ in telecommunications with dominant positions in both fixed-line and mobile businesses,” said BCS’s Kurbatova. “I doubt this is still on the agenda.”

Rostelecom has said that its business would most complement that of Tele2, partly because neither of their networks cover all of Russia. Rostelecom Senior Vice President Pavel Zaitsev denied talks with Tele2 earlier this week, telling reporters there is no mutually beneficial plan for a potential tie-up.

OAO Mobile TeleSystems, Russia’s largest wireless carrier, may also be interested in buying Tele2 assets if offered, MTS Chief Financial Officer Alexey Kornya said Nov. 14.

The press office at the Russian unit of mobile operator VimpelCom Ltd. declined to comment on whether the company is interested in Tele2 assets. MegaFon and VimpelCom jointly own handset retailer Euroset Holding NV.

Subscriber Numbers

Russia has three country-wide mobile operators. Billionaire Vladimir Evtushenkov’s MTS was the biggest with 70.7 million users at the end of the third quarter, Usmanov’s MegaFon, which raised $1.7 billion in a London IPO last month, was second with 62.8 million and billionaire Mikhail Fridman’s VimpelCom was third with 56.2 million, according to Moscow researcher AC&M Consulting.

Tele2 and Rostelecom are lagging behind and have mobile coverage only in less than half of the country’s regions. Tele2, which provides services on a second-generation network, had 22.3 million Russian users, while Rostelecom had 13.6 million.

Russia’s mobile market will grow about 5 percent this year to $27.6 billion, with about 20 percent of this from non-voice services, according to AC&M Consulting.

Latest News

23 December 2016

MegaFon to buy Mail.ru stake for $740 million from Usmanov

MOSCOW, Dec 23 (Bloomberg) Alisher Usmanov and his partners are set to pocket $740 million from moving a stake in internet company Mail.ru Group Ltd. to MegaFon PJSC, as the Russian billionaire consolidates...
Read more...
20 December 2016

Deloitte says 7% Russian cell clients change operators in H1

MOSCOW, Dec 20 (PRIME) -- About 7% of Russian mobile subscribers changed their operators in January–June as compared to 4–5% of users who switched to other operators within six months in several...
Read more...
06 October 2016

MegaFon creates VKmobile

Mobile telecommunications carrier MegaFon has plans to register the trademark VKmobile depicted in the form of a SIM card in the social network Vkontakte signature blue color. It is reported by Life.ru....
Read more...
06 September 2016

Russia’s VimpelCom CEO Slobodin quits, Johnsen new CEO

MOSCOW, Sep 6 (Bloomberg) – VimpelCom Ltd.’s head of Russia has resigned after local authorities said he was wanted for questioning in connection with a corruption probe at his former employer....
Read more...
Joomla Templates and Joomla Extensions by JoomlaVision.Com