Svyazinvest mulls wireless sale

26 Jun 2007

Russia’s state-backed telecoms holding group Svyazinvest is considering the sale of its mobile assets, although the move is likely to be blocked by some shareholders. A report from Cnews quotes Svyazinvest director general Alexander Kiselev, who says: ‘Not having a licence for the 3G mobile network, our mobile assets have no prospects in the market; that is why they should be sold.’ He believes that the peak market value will be reached within the next eighteen months, with analysts estimating the combined sale price at between USD1.5 billion and USD3 billion.

Svyazinvest is Russia’s largest fixed line operator, offering services via seven mega-regional subsidiaries plus long-distance arm Rostelecom. Four of the regional operators – Volgatelecom, Sibirtelecom, Uralsvyazinform and Dalsvyaz – also provide GSM cellular services, although their combined subscriber base of just over ten million represents only around 6.5% of the total Russian mobile market. Local press reports claim the country’s second largest cellular operator by subscribers, Vimpelcom, is interested in acquiring the mobile assets of Dalsvyaz, while the Volga regional operator SMARTS is linked with the Volgatelecom GSM networks.

The move to sell off the cellular networks may run into opposition from other shareholders though. The Sistema group, whose 51% subsidiary Comstar UTS holds a blocking stake of 25% plus one share in Svyazinvest, has suggested that the mobile assets should be merged into a single operation which can then enlarge its footprint via wholesale network sharing deals or through spectrum acquisitions. Three firms have national 3G concessions in Russia – Vimpelcom, MTS and MegaFon.