MTS to buy Sistema Telecom assets for RUB13.4 billion

18 Nov 2010

Mobile TeleSystems (MTS), a leading telecommunications provider in Russia and the CIS, has offered Russian financial group Sistema RUB13.39 billion (USD 427 million) for a 100% stake in Sistema Telecom, the group’s telecoms division. The figure comprises RUB11.59 billion of the share capital and RUB1.80 billion worth of net debt.

Sistema Telecom’s key assets at the time of the acquisition will consist of: a 45% stake in TS-Retail, in which MTS presently holds a 55% controlling interest; certain promissory notes previously issued by MTS totalling RUB2 billion; and property rights to the company’s distinctive ‘egg’ logo, as used by MTS, cellco Comstar-UTS and fixed line provider Moscow City Telephone Network (MGTS). MTS currently pays Sistema Telecom a royalty fee of 0.16% of its annual revenues for the use of the ‘egg’ logo; MTS paid aggregate royalties in excess of USD41 million to Sistema Telecom during the financial years 2007, 2008 and 2009.

Mikhail Shamolin, President and CEO of MTS, commented: ‘As our markets continue to develop, we feel it is critically important to control the key assets we use to serve our customers. As MTS’ brand is extended every day through new and innovative services, we feel it is only logical to acquire full control of our logos and trademarks to ensure that all shareholders benefit equally in our brand’s further development’. The deal is expected to close by the end of the year, subject to approval by the Federal Antimonopoly Service (FAS).

Russia, Mobile TeleSystems (MTS), Sistema