Acquisition-hungry Rostelecom considers snacking on Qwerty

12 Oct 2011

Russian national operator Rostelecom has reportedly entered into talks with parent company Svyazinvest to acquire Moscow-based internet service provider (ISP) Qwerty, one of the few telecoms assets not consolidated by the telco during its recent ‘mega-regional merger’. 51% of Qwerty parent company Central Telegraph was acquired by Svyazinvest in late-2010, but previous attempts at integrating the lucrative unit into Rostelecom’s central operation have proven unsuccessful. Kommersant now reports that Rostelecom has made a renewed approach to secure Central Telegraph’s shares in a deal valued at RUB1.2 billion (USD38 million).

According to TeleGeography’s GlobalComms Database, Rostelecom entered the Moscow broadband market for the first time in February 2011 when it acquired 71.8% stake in National Telecommunications (NTC) for an undisclosed sum. NTC is said to be Russia’s largest cable TV operator, and its cable network passes at least 5.1 million households in Moscow, Moscow Region, St Petersburg, Yekaterinburg and Novosibirsk. Last month Rostelecom was rumoured to be preparing a bid for Moscow-based ISP Gorcom, which is wholly owned by its CEO Oleg Zaporozhets; the ISP is valued at between RUB1.2 billion and RUB1.4 billion.

Based on data provided by AC&M Consulting, at end-March 2011 Rostelecom was believed to have a 5% share of the Moscow broadband market, and is looking to smaller players such as Qwerty (7%) and Gorcom (2%) to boost its interest in the sector after recent moves by the self-styled ‘Big Three’ mobile operators to carve themselves a share of the spoils. Mobile TeleSystems (MTS) controls around 27% of the market, with AKADO Telecom and Vimpelcom holding approximately 20% of the market apiece. Following its USD270 million acquisition of NetByNet in June 2011, MegaFon effectively seized the fourth spot in Moscow, and could yet attain pole position if its ongoing stop-start negotiations with AKADO Telecom finally come to fruition.

Russia, Central Telegraph (Qwerty), Rostelecom