Tele2 offers USD390 million for 97% of SMARTS Group

13 May 2011

Tele2 Russia has tabled an offer of USD390 million (including USD100 million worth of debt) for 97% of Russian cellco SMARTS Group. Regional operator SMARTS, which is headquartered in Samara, provides cellular services in 16 regions, covering approximately 34 million people. Selected key markets for SMARTS include: the Samara, Ivanovo, Astrakhan, Penza, Ulyanovsk, Volgograd and Saratov Regions, as well as the Republics of Bashkortostan, Kalmykia, Tatarstan, Mordovia, Mari El and Chuvashia; TeleGeography notes that Tele2 is not currently active in any of the regions where SMARTS has a presence, suggesting that it would be a useful strategic purchase, and one of the few logical acquisitions to help Tele2 spearhead growth.

According to TeleGeography’s GlobalComms Database, back in early 2009 state-owned telecoms holding company Svyazinvest emerged as the frontrunner in a previous SMARTS Group sale attempt, only to pull out of the deal citing other priorities. At that time SMARTS’ value was estimated at between USD1 billion and USD1.5 billion, meaning that Tele2’s latest offer is a vast reduction on the previous asking price. However, after seeing its subscriber base peak in June 2008 with 4.05 million subscribers, SMARTS’ fortunes have gone into steep decline in recent years, and the cellco had just over 2.5 million subscribers at the end of 2010; ongoing legal battles regarding the company’s ownership are believed to have seriously impacted its market development.

Russia, SMARTS Group, Tele2 Russia