FAS concerned that MegaFon-Scartel merger will harm competition

1 May 2012

Russia’s Federal Antimonopoly Service (FAS) has reportedly postponed its decision relating to the proposed merger between mobile giant MegaFon and emergent Long Term Evolution (LTE) operator Scartel, which trades under the ‘Yota’ brand name. According to the Prime-Tass business news agency the FAS has expressed concerns that the tie-up will negatively affect competition within the sector. Prime-Tass reports that an official merger application was submitted on Thursday by Garsdale Services Investment Limited, an affiliate of MegaFon. The antitrust regulator’s director, Igor Artemyev, stressed that any deal between the two companies must not prevent third parties from using the LTE frequencies on a wholesale basis, as has previously been agreed.

Last week Telecominvest, which is majority-owned by billionaire Alisher Usmanov, who secured control of MegaFon just days earlier via AF Telecom, confirmed its intention to form a holding company which would own 100% of Scartel and 50% (plus one share) of MegaFon. Usamanov would, in turn, own 80% of the as-yet-unnamed holding company.

According to TeleGeography’s GlobalComms Database, Scartel is 74.9% owned by Telconet Capital Limited Partnership, a privately owned investment fund, with the remaining 25.1% stake held by the government’s Russian Technologies State Corporation.

Russia, MegaFon, Scartel (Yota)