MOSCOW—Two major Russian carriers, Mobile Telesystems (MTS) and Vimpelcom (BeeLine) said they plan to place their first Euro bonds, and market experts commented the foreign borrowings are necessary for regional expansion.
MTS said it will place bonds worth US$250 million in December through its Luxembourg-based 100-percent owned subsidiary. MTS spokeswoman Eva Prokofyeva said the funds will be used “for a further network development, including in the regions.”
BeeLine scheduled the move for the first half of 2002.
It is the first attempt by MTS to borrow money on the international debt market, while BeeLine last year placed five-year U.S. convertible bonds worth US$75 million.
Mobile market experts believe the MTS haste in placing the bonds could mean the carrier is close to a deal to buy such big regional carriers as Kuban GSM in the south of Russia and SMARTS on the Volga. They estimate the cost of the carriers at US$150 million and US$120 million respectively.
“Both MTS and Vimpelcom have enough funds to build new networks in licensed areas in a short-term perspective. However, they need additional finances to purchase regional carriers,” said Anton Pogrebinsky from J’Son & Partners telecom consultancy.
The third-biggest carrier—the pan-Russian Megafon project—plans no foreign borrowings next year. According to Leonid Roketsky, president of LV-Finance, which is a Megafon shareholder, the project has enough funds for 2002.
