Russia's MTS Buys Controlling Stake in Landline Operator

Russian mobile network operator, MTS is to buy the 50.91% stake in landline operator, Comstar-UTS that is held by their mutual parent company, Sistema. The company will pay around US$1.272 billion for the controlling stake.

The completion of the transaction, which is expected to take place at the end of October 2009, is also contingent upon the fulfillment of a number of conditions, including MTS obtaining the required funding.

In a separate statement, MTS said that it hasn't made a decision yet regarding the extension of an offer to minority shareholders of COMSTAR-UTS.

Mr. Mikhail Shamolin , the President and CEO of MTS, highlighted: "There is no doubt that MTS' markets are changing, and we believe the Comstar acquisition will translate into the right asset and product mix to realize significant growth in the Russian and CIS telecommunications markets. Pairing MTS' brand and footprint with Comstar's product mix and know-how will enable us to deliver wider Internet access, integrated communications services and innovative solutions to our customers. We are confident that this deal will allow both companies to meet the challenges our markets present and seize opportunities to create additional value for our respective shareholders."

MTS said that it believes the transaction will provide access to important growth markets in commercial and residential broadband; realize value-accretive synergies in capital and operational expenditures; and provide a foundation for the development of effective content platforms and services.

Credit Suisse and Merrill Lynch acted as financial advisors to Sistema. Merrill Lynch also provided a fairness opinion to the Board of Directors of Sistema.

Posted to the site on 5th August 2009