Russian MTS purchases 80% stake in international cell holding ltd - owner of K-Telecom

YEREVAN, September 14. /ARKA/. The biggest operator of mobile communication in Russia and CIS – Mobile telesystems (MTS) OJSC reported about purchase of 80% stake in International Cell Holding Ltd. that is 100% indirect owner of Armenian leading mobile operator K-Telecom company (VivaCell trademark).

The sides signed an option agreement on purchase/sale of the remaining 20%.

The value of transaction made EUR 310mln, including EUR50mln to be paid to the seller during 2008-2012 if set target indicators of revenue and profitability of K-Telecom are achieved.

MTS is also to allocate EUR 140mln credit to K-Telecom to refinance existing loan facilities and for further investments.

The option agreement on purchase/sale of the remaining 20% comes into force not earlier than June 2010 and will be effective till 2012. The price for the holding of stock is set based on estimate of an independent international bank.
This purchase fully complies with MTS’s strategy to capture rapidly growing markets of CIS, President of MTS Leonid Melamed said. According to him, Armenia became MTS’s sixth country of operations in CIS.

“We are pleased to gain entry into this exciting market by partnering with the market’s leading mobile operator. VivaCell’s high-quality organization, professional management team and exceptional network quality coupled with MTS’s experience in the CIS will create synergy allowing us to fully utilize the market’s potential in the best interests of our subscribers and shareholders,” Melamed said.

“Management has built a solid business in a short period of time, as well as established foundations for future growth of K-Telecom, and we are please to enter into this partnership. We would also like to welcome K-Telecom’s employees in our ranks. Together we will continue our proud traditions of being one of the top wireless operators in the world,” Melamed added.

In his turn, Chairman of the Board of Directors of K-Telecom Pierre Fattouche stressed that he remains committed to Armenia’s potential and to K-Telecom’s development and the consolidation of its leading position in the market. “Looking ahead, we see great growth prospects, enhanced through our partnership with a leading wireless operator such as MTS,” Fattouche said.

K-Telecom operates in GSM standard covering the entire territory of Armenia. The license of the company is valid till 2019. As of July 1 2007 the company’s subscribers numbered 986,000, which, according to the estimates of MTS, make up 66% of the market. –0--