Russia’s Rostelecom remains open to M&A opportunities in the local mobile and broadband markets as it strives to expand its presence in both.
Speaking on a conference call with analysts today, senior executives at Rostelecom – whose CEO Alexander…
Russia’s Rostelecom remains open to M&A opportunities in the local mobile and broadband markets as it strives to expand its presence in both.
Speaking on a conference call with analysts today, senior executives at Rostelecom – whose CEO Alexander Provotorov is currently caught up in a high-profile fraud investigation – said the company is particularly interested in targets with good mobile businesses, networks and subscriber bases. However, they added that they do not expect the company to engage in as much M&A activity as it did in 2011, when it acquired numerous regional operators.
No comment on Tele2 mobile JV
They declined to comment on a recent report in Russian newspaper Vedomosti stating Rostelecom and Sweden’s Tele2 are considering combining their mobile assets.
Rostelecom, which secured licences to roll out its LTE network at Russia’s recent auction and completed its acquisition of Sky Link earlier this year, is working to develop its mobile business. The company intends to install more than 8,000 base stations in 27 regions – part of the first phase of a plan to build a mobile network which will provide 2G, 3G and 4G services. During today’s conference call, Rostelecom executives said the company expects 6,000 base stations to be ready by the end of this year and an additional 2,000 by the end of Q1 2013.
Rostelecom reported consolidated revenues of Rbs238.7bn (US$7.66bn) for the nine months ended 30 September – up 8% year-on-year. OIBDA was also up 8% year-on-year to Rbs94bn (US$3.02bn), while the OIBDA margin stood at 39.4%, compared with 39.2% in the same period last year.
Capital expenditure of Rbs63.5bn (US$2.04bn) represented 26.26% of consolidated revenues, which the company attributed to developing its video surveillance project, modernising its broadband networks and IT systems, launching new services and building its 3G infrastructure. Net debt for the first nine months of the year was Rbs197.6bn (US$6.34bn).
In the third quarter, mobile revenues were up 2% – which Rostelecom attributed to the Sky Link acquisition -, broadband revenues were up 9% and pay TV revenues were up 40%. Fixed-line revenues, however, were down.
Meanwhile, the UK’s Financial Times reported that Russian investigators have searched the homes of Provatorov and Rostelecom minority shareholder Konstantin Malofeev as part of a broader government-driven fraud investigation. While this and news agency and Russian media reports have stated the investigation is not directly related to Rostelecom, it could hasten a much-anticipated management reshuffle. According to Russian media reports, Provotorov could be replaced by Vadim Semyonov, head of state telecoms holding company Svyazinvest, with which Rostelecom is being merged.
In today’s call the Rostelecom executives refused to discuss the matter.
