Rostelecom snaps up cellular duo from SMARTS

6 Sep 2011

Russian national operator Rostelecom has confirmed that it has raised its respective stakes in two separate regional mobile operators, Volgograd-GSM and Orenburg-GSM. Late last week Rostelecom raised its stake in Volgograd-GSM to 100%, having purchased a 50% stake from co-owner SMARTS Group for around USD80.5 million. The cellco offers wireless services to around 90% of the Volgograd Oblast, with some form of coverage in all 33 districts of the region. At the end of Q1 2011 Volgograd-GSM reported 855,000 mobile subscribers, accounting for around 20% of the regional market. For the twelve months ended 31 December 2010 the operator recorded revenues of RUB1.75 billion (USD59.6 million) and EBITDA of RUB708 million.

Elsewhere, the state-owned telco raised its stake in Orenburg-GSM from 51% to 100%, once again buying out SMARTS Group, this time for a total cash consideration of USD4 million. The cellco provides mobile services in the Orenburg Oblast, close to the Kazakhstan border. The company reported 185,000 subscribers at end-March 2011, equivalent to around 8% of the regional market. For the twelve months ended 31 December 2010 Orenburg–GSM recorded revenues of RUB194 million and EBITDA of RUB32.6 million.

Alexander Provotorov, president of Rostelecom, commented: ‘The increase of our ownership in Orenburg–GSM to 100% provides us with a full control over the mobile operator, and will help us to develop the company in a more efficient way for the benefit of the new Rostelecom and its shareholders. Taking into account the recently announced consolidation of 100% stake of Volgograd–GSM, Rostelecom’s mobile subscriber base has increased by 7%’. The deals are effectively a continuation of Rostelecom’s strategy to strengthen market positions in regions where it has a limited presence, following the completion of its so-called ‘mega-regional merger’ on 1 April 2011, which saw the company absorb the operations of seven regional subsidiaries affiliated to parent company Svyazinvest.

Russia, Rostelecom, SMARTS Group