MOSCOW—The biggest Russian carrier Mobile TeleSystems (MTS) is likely to pay more than US$85 million for a blocking interest in the fourth-biggest regional carrier Kuban GSM in the Krasnodar territory in the south of the country.
Both carriers announced the deal early this year and said it will begin with the issue of additional shares in MTS’ favor. Then MTS is to buy out stock of existing shareholders.
In February, an extraordinary meeting of Kuban GSM stockholders okayed the issue of an additional 3,600 ordinary shares, and MTS is to pay US$50.4 million for the 26.5-percent stake. In addition, Kubanelektrosvyaz, which currently holds a 24-percent stake in Kuban GSM, said it will sell its entire interest, which experts estimated at US$35 million, to MTS.
Thus, MTS receives a blocking stake in Kuban GSM for US$85.4 million. However, the carrier is said to be eyeing a 62-percent controlling interest in Kuban GSM with 400,000 subscribers, which may cost it US$118 million. The total cost of the carrier is estimated at US$140 million to US$150 million.
Currently, Kuban GSM stock is shared by Kubtelecom (54 percent), Kubanelektrosvyaz (24 percent), private individuals (20 percent) and Sochitelecom (2 percent).
The purchase of Kuban GSM is the only way for MTS to enter the Krasnodar market, where GSM licenses are owned by the pan-Russian Megafon project of St. Petersburg-based Telecominvest and Vimpelcom (BeeLine). In its turn, Kuban GSM has been looking for a partner after Megafon successfully launched its network in the region last year.
