MegaFon set to buy remaining SMARTS assets; ER-Telecom completes Novotelecom takeover

6 Mar 2017

Russian cellco MegaFon is purchasing the remaining three subsidiaries of Volga-based operator SMARTS, in Saransk (Republic of Mordovia), Ulyanovsk and Penza, Vedomosti reported. A 2015 deal to sell the remaining SMARTS divisions to another Russian major player Mobile TeleSystems (MTS) failed to complete – reportedly due to revised valuations for the regional units’ 1800MHz LTE-suitable spectrum – leading to a court battle between MTS and SMARTS. A court ban on the sale of the assets reportedly expired in September 2016, and MTS (via subsidiary Volga Telecom) eventually acquired one SMARTS unit, in Yoshkar-Ola, but reportedly refused to purchase the remaining three divisions, leading to a further lawsuit. In previous years, SMARTS’ other regional assets have been sold off in phases to operators including VimpelCom (Beeline), MegaFon, MTS, Rostelecom and Tele2.

MegaFon released a statement confirming that it has completed the acquisition of 100% interests in SMARTS-Ulyanovsk, SMARTS-Saransk and SMARTS-Penza, noting that each of the three companies owns 14.8MHz of spectrum in the 1800MHz band, strengthening the group’s LTE market position in the Republic of Mordovia and the Ulyanovsk and Penza regions.

Elsewhere in Russian M&A developments, multi-regional cableco ER-Telecom (Dom.ru) has agreed to buy broadband ISP Novotelecom, which operates under the Electronic City brand in the city of Novosibirsk. The purchase, which carries a price-tag of around RUB1.1 billion-RUB1.6 billion (USD18.9 million-USD27.5 million), received FAS approval in January this year.

Russia, ER-Telecom (Dom.ru), MegaFon