Leading Russian mobile operators VimpelCom and MTS are eying to acquire Utel, the mobile unit of Ukrtelecom, a major fixed-line Ukrainian operator. Astelit, a subsidiary of the Turkish Turkcell, was also named as potential buyer.
VimpelCom already controls 45% of the Ukrainian mobile market through its subsidiary KyivStar. MTS Ukraine is the country’s second largests mobile operator with a 34% market share. Astelit, which works under the brand Life, is the third ranking operator.
Utel’s market share amounts to just 2%, but it is the only Ukrainian mobile operator to hold a 3G UMTS license, reminds Alexander Paraschiy of BG Capital, the investment arm of the Bank of Georgia.
“The chances for a successful sale now look fair,” Paraschiy comments. “There look to be few regulatory roadblocks impeding the sale, whereas the government is reluctant to offer a new 3G license before the sale, meaning the player buying Utel will have ample time to develop a 3G network incorporating the competitive advantages from its scale. Secondly, the management at EPIC, Ukrtelecom’s majority shareholder, is experienced in CEE M&A activity and is likely to prepare a tender in order to sell the asset at a sufficiently high price.”
Utel was put on the block at the annual general meeting of Ukrtelecom last week. Proceeds from the expected sale will be used to strengthen Ukrtelecom’s broadband segment, including DSL and IPTV.
Formerly state owned Ukretelecom, which the Financial Times recently called “a highly bureaucratic and mismanaged corporate dinosaur,” was acquired last March by EPIC, an Austrian investment company. The deal was criticized for contradicting Ukrainian President Yanukovich’s pledge to conduct competitive and transparent privatizations. EPIC is reported to be close to Ukraine’s top political officials and businessman.
Blocked situation on the Belorussian scene
While expressing interest in the acquisition of Utel last Friday, MTS President Andrey Duboskov also commented on the undergoing discussions surrounding MTS Belarus, the local operator in which MTS has a minority stake and Beltelecom, the national telecommunication operator in Belarus, a majority stake.
Responding to Belorussian President Alexander Lukashenko, who recently expressed intentions either to sell its 51% stake directly to MTS or put it up for bidding, Duboskov said that under existing shareholder agreements, none of the parties can sell its stake without the other party’s consent.
Duboskov confirmed MTS’s interest in acquiring Belorussia’s stake, but for a reasonable price, which is “difficult to determine after the devaluation” of the Belorussian ruble, he said. MTS considers that the sale price of $1 billion, earlier mentioned by MTS’s Belorussian partners, would overvalue the company.
On the other hand, Duboskov seemed to rule out selling MTS’s stake in MTS Belarus. “We are satisfied with the current situation [even if] we do not consolidate the Belorussian asset in our accounts,” he said.
Sources: RIA Novosti Ukraine, Financial Times
Updated June 27 with the participation of Beltelecom’s PR Dpt.
