Thursday, June 24, 2010

Russia's MTS and Comstar to Merge

Comstar-UTS, the leading fixed-line telecommunications company in Moscow, and Mobile TeleSystems (MTS), a leading mobile operator across Russia, Eastern Europe and Central Asia, are planning a merger that will create the largest integrated telecommunications provider in Russia and the CIS.


Under the deal, 0.825 MTS ordinary shares would be exchanged for one Comstar Ordinary Share. The implied price represents a 13.1% Premium to the three month volume weighted average trading price of the Comstar GDR.


MTS currently owns 61.97% of Comstar (64.03% excluding treasury shares) and consolidates Comstar in its financial results. As a result of the statutory merger, Comstar will be subsumed into MTS and will cease to exist as a separate legal entity.


The companies said a full consolidation of Comstar into MTS is strategically important because it would facilitate the full integration of MTS's and Comstar's subscriber bases and enable the cross-selling and bundling of broadband and television services to MTS's customers. There are also operational synergies and cost savings across the combined entity.


Mikhail Shamolin, President and Chief Executive Officer of MTS, commented: "We believe that the merger of MTS and Comstar is attractive for our shareholders because it will accelerate the delivery of our "3i" strategic goal of realizing growth through increasing customer value, by providing our customers with a broad, innovative and integrated offering of mobile and fixed line telephony, high-speed internet access and pay-TV services. The merger will enable the full integration of the Comstar and MTS customer bases and the provision of bundled service offerings across Russia, which we believe will further enhance our combined competitive position."http://www.mtsgsm.com
http://www.comstar-uts.com

  • Including its subsidiaries, the MTS Group services over 103.5 million mobile subscribers in Russia, Ukraine, Uzbekistan, Turkmenistan, Armenia and Belarus, a region that boasts a total population of more than 230 million.


  • Comstar-UTS provides voice, data, television and other value-added services to residential and corporate subscribers and operators, using its extensive backbone network and exclusive last mile access to 96% of Moscow households. The Company also offers communications services in 82 cities in the Russian regions, Armenia and Ukraine. Comstar had 3.6 million residential subscribers including 860 thousand residential broadband internet subscribers in Moscow, as well as 2.6 million regional and international residential subscribers, including 426 thousand residential broadband internet subscribers and 2.0 million residential pay-TV subscribers at the end of the first quarter of 2010.

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