MegaFon embarks on acquisition talks with AKADO Telecom

23 Jun 2011

According to local news sources, MegaFon, Russia’s second largest wireless operator in terms of subscribers, is in the midst of negotiations with regional cableco AKADO Telecom, a broadband/wireline provider with a network presence in all of Moscow’s administrative districts, as well as the nearby areas of Zelenograd, Solnechnogorsk and Ivanteevka. The development was disclosed to local journalists by AKADO’s largest shareholder Victor Vekselberg, who holds a 57.2% stake in the company. Although Vekselberg was reluctant to disclose a purchase price, co-shareholder Yuriy Pripachkin told Interfax that he considers USD1.2 billion a fair price for AKADO. At end-2010 AKADO Telecom reported 618,900 broadband subscribers and 511,700 cable TV customers; no fixed line subscriber figures were made available.

According to TeleGeography’s GlobalComms Database, back in August 2010 state-owned telecoms holding company Svyazinvest reached an agreement to acquire AKADO for around USD650 million. In September 2010, however, the acquisition was put on hold due to an internal dispute between recently-resigned Svyazinvest chairman Yevgeny Yurchenko and company director Konstantin Malofeyev. Yurchenko was allegedly aggrieved at the manner in which the acquisition was handled, and complained that he was excluded from the negotiations. In late 2010 Svyazinvest ended its interest in AKADO, and pressed ahead with the acquisition of alternative cableco National Telecommunications (NTC) instead.

The potential deal between MegaFon and AKADO follows the former company’s acquisition of 100% of Moscow-based internet service provider (ISP) NetByNet for USD270 million earlier this month. NetByNet is believed to be the fourth largest broadband provider in Moscow, and also has a presence in Belgorod, Voronezh, Kursk, Lipetsk and Orlov. The deal effectively green-lit MegaFon’s long-coveted entrance into the lucrative Moscow broadband market.

Russia, AKADO Telecom, MegaFon