Russian cellco Mobile TeleSystems (MTS) has announced that it has completed the statutory merger of its fixed line and broadband subsidiary Comstar United TeleSystems (Comstar UTS). MTS confirmed that Comstar was liquidated as a separate legal entity on 1 April 2011. In accordance with the terms of the merger, qualifying holders of Comstar shares received 0.825 MTS ordinary shares for each Comstar ordinary share. The full consolidation of Comstar into MTS was first announced in June 2010, and is designed to facilitate the full integration of the two firms’ respective subscriber bases and enable the cross-selling of broadband and television services to MTS customers. The merger was expected to generate additional cost synergies of around USD200 million. It has been reported that the integration has involved Russian financial/industrial holding company AFK Sistema’s majority stake in MTS being reduced from 52.8% to 50.8%; the remaining 49.2% of MTS is in free float.
In June 2010 MTS CEO Mikhail Shamolin commented: ‘We believe that the merger of MTS and Comstar is attractive for our shareholders because it will accelerate the delivery of our ’3i’ strategic goal of realising growth through increasing customer value, by providing our customers with a broad, innovative and integrated offering of mobile and fixed line telephony, high speed internet access and pay-TV services. The merger will enable the full integration of the Comstar and MTS customer bases and the provision of bundled service offerings across Russia, which we believe will further enhance our combined competitive position’.