Comstar sets ‘aggressive’ IPO share price, aims for more control over MGTS

24 Jan 2006

Russian telco Comstar UTS yesterday set a share price range for its initial public offering (IPO) of a 35% stake in the company. The indicative range of between USD6.5 and USD8 means that the IPO should raise between USD950 million and USD1.17 billion. The flotation on the London and Moscow stock exchanges puts a total value of between USD2.7 billion and USD3.34 billion on Comstar. Brokerage Aton commented that the price range appeared ‘aggressive’ but also that investors may be willing to pay a premium based on Comstar’s position as the dominant provider of last mile infrastructure in Moscow through its parent group AFK Sistema’s stake in Moscow City Telephone Network (MGTS). Comstar said last Friday that it had acquired an additional 3.83% of MGTS, taking its equity interest to 49.5% and its voting stake to 59.5%. Aton said that it would view the share valuation as ‘reasonable’ if Comstar/Sistema succeeded in gaining 100% control of MGTS. MGTS is 28%-owned by the state via holding company Svyazinvest, a large enough holding to block strategic decisions. There has been no recent reports on the government’s plans for its MGTS stake.

Russia, Comstar United TeleSystems (Comstar UTS)