MTS LEADS IN ARMENIA

Kommersant

Sep. 17, 2007
Russia

Russia’s cellular giant MTS announced Friday the entry into Armenia’s
market. For this purpose, MTS paid ~@310 million to buy out 80 percent
in the country’s biggest operator K-Telecom. The analysts say MTS
managed to acquire the promising asset, having benefited from support
of Armenia’s leadership.

According to press release of MTS, it paid ~@310 million to buy out 80
percent in the stock capital of Armenia’s K-Telecom (VivaCell brand)
from International Cell Holding. MTS also sealed an option with Cell
Holding to acquire the remaining 20 percent and undertook to pay to
it ~@50 million over three years, provided the stipulated revenues
and efficiency of the operator are attained. Besides, MTS will loan
~@140 million to K-Telecom to refinance current liabilities of the
operator, which amount is a top secret so far.

K-Telecom is Armenia’s biggest cellular operator with April 1
subscriber base of 986,000, which corresponded to the market share
of 66 percent. 2006 revenues stood at $104.1 million, OIBDA was $57.8
million, OIBDA margin – 54.4 percent, ARPU – $15.62.

As K-Telecom owners had refused to sell till the very last moment,
the deal triggered lots of rumors. An anonymous source with Sistema
said MTS clinched a strategic partnership agreement with Armenia’s
authorities and undertook to promote tourism, bank and health care
businesses in that country. Sistema CEO Alexander Goncharuk refused
to comment on the suppositions. "I don’t think we’ve bought cheap
K-Telecom, it’s the adequate price for the asset, which MTS top
management succeeded to agree on," Goncharuk said.

From: Emil Lazarian | Ararat NewsPress