Russia’s Mobile TeleSystems (MTS) is reportedly considering selling a stake in wholly-owned unit MTS Ukraine to help finance the construction of a 3G network in the country.
Moscow-based MTS has mandated a bank to value the unit, Ukraine’s…
Russia’s Mobile TeleSystems (MTS) is reportedly considering selling a stake in wholly-owned unit MTS Ukraine to help finance the construction of a 3G network in the country.
Moscow-based MTS has mandated a bank to value the unit, Ukraine’s second-largest mobile operator, local newspaper Vedomosti reported.
A source at Sistema, MTS’ main shareholder, was quoted as saying the potential sale has been discussed but not at a high level.
Meanwhile, multiple local and international reports have quoted a source close to MTS as saying the company is seeking a Western partner to help shoulder the costs of network development and spectrum licences in return for a stake in MTS Ukraine and a share of dividends.
The cost of building the 3G network could be as high as Hr4bn (US$308.8m), according to a Bloomberg source; however others have estimated it at about Hr3bn (US$231.6m).
The complex political situation in Ukraine is reportedly a motivating factor for the potential sale.
An MTS spokesperson declined to comment on the M&A speculation but confirmed the company plans to remain in Ukraine and invest in a 3G network and licence.
Earlier this year, Ukraine’s telecoms regulator NCCIR revised plans for its upcoming 3G spectrum auction, ostensibly preventing companies with more than 50% Russian ownership from taking part. Only MTS Ukraine would be excluded under this criterion. However, Vedomosti cited its MTS source as saying the company will be allowed to participate.
Ukraine’s largest mobile operator is Kyivstar, owned by VimpelCom, which focuses on Russia but is based in Amsterdam. Life, controlled by Turkey’s Turkcell, is a distant third player.
MTS Ukraine posted revenues of Rbs7.67bn (US$592.05m) and OIBDA of Rbs3.82bn (US$294.87m) for Q2 2014. MTS claims the unit had 23.1 million subscribers at the end of the quarter, representing a 38% market share.
