Russian number two mobile operator MegaFon has secured shareholder approval to acquire smaller rival Scartel (Yota) for US$1.18bn – a deal it contends will make it the nation’s largest 4G operator.
Announcing the approval today, MegaFon reiterated…
Russian number two mobile operator MegaFon has secured shareholder approval to acquire smaller rival Scartel (Yota) for US$1.18bn – a deal it contends will make it the nation’s largest 4G operator.
Announcing the approval today, MegaFon reiterated that it expects the deal, which already has the thumbs-up from the company’s board of directors and the Russian antitrust regulator, to close this September. The acquisition should enable MegaFon to better compete with rivals MTS and VimpelCom.
MegaFon is buying Scartel from holding company Garsdale. The latter, which is 82%-held by oligarch Alisher Usmanov, also owns 50% plus one share of MegaFon.
MegaFon, listed in London and Moscow, said in early August that the US$1.18bn cash consideration for the deal would be paid in two stages: US$590m on the first anniversary of closing and the remainder on the second. MegaFon will also take on Scartel debt capped at US$600m. The debt currently consists of loans of about US$400m from Garsdale and affiliates.
In its statement today, MegaFon said the combination of the two companies’ assets will boost its position as a provider of high-speed data services. Of particular significance is Scartel’s 40 MHz of continuous spectrum in the 2.6 GHz range. MegaFon contends that this added spectrum will enable it to provide 4G services to more customers in densely-populated areas than any other Russian operator.
Upon completion of the deal, Scartel customers will have access to MegaFon’s mobile internet and 2G/3G voice network. Scartel’s network reaches about 27% of the Russian population.
