Vimpelcom acquires majority stake in New Telephone Company from KT

6 May 2011

Vimpelcom, Russia’s third largest cellco in terms of subscribers, has reportedly purchased Korea Telecom’s (KT) 79.96% majority stake in Russian regional operator New Telephone Company (NTK) for USD346 million. According to TeleGeography’s GlobalComms Database, NTK is the only telecommunications company operating in the Primorsky Krai, a region in the Far East of Russia, which is bordered by China and North Korea, and often referred to as the ‘Maritime Province’. NTK offers fixed line telephony, mobile communications in the GSM900 standard, ADSL, WiMAX broadband and IP telephony. The company was formed in December 1992 as a joint venture between Russian firms Far East Shipping Company and Dalmorstroy.

In September 2010 it was reported that Vimpelcom and state-owned telecoms holding company Svyazinvest were going head-to-head to acquire KT’s stake in NTK, although cellular giants Mobile TeleSystems (MTS) and MegaFon both submitted bids for the firm in 1Q11. TeleGeography notes that NTK operates in a part of the country not yet covered by Vimpelcom’s licences, making it a desirable option for the cellco. As at December 2010 NTK reported 1.5 million wireless subscribers, making it the tenth largest mobile operator in Russia. KT reported that NTK racked up USD110 million in sales during 2010, posting a net profit of USD25 million.

In a press statement, KT – which acquired the stake in NTK for USD22 million in 1997 – commented: ‘KT concluded that it would be better for a nationwide operator to acquire and grow New Telephone Company’. The proceeds from the deal will be used to support investments in Latin America, Africa, and Central and Eastern Europe. Vimpelcom has yet to comment on the acquisition, but NTK is widely expected to be re-branded under the operator’s ‘Beeline’ banner.

Russia, Beeline (Russia), KT Corp, New Telephone Company (NTK), VEON