Russia’s Mobile TeleSystems (MTS) has decided not to pursue an acquisition of Moscow-based DTH firm Raduga TV, preferring to focus on developing a satellite TV service under its own brand instead.
MTS president and CEO Andrei Dubovskov confirmed the…
Russia’s Mobile TeleSystems (MTS) has decided not to pursue an acquisition of Moscow-based DTH firm Raduga TV, preferring to focus on developing a satellite TV service under its own brand instead.
MTS president and CEO Andrei Dubovskov confirmed the decision during a conference call on the telco’s third quarter results, a company spokesman said.
At present, MTS is concentrating on launching sales of a satellite TV service by the end of the year, the spokesman added.
Asked whether the company might reconsider buying Raduga next year, he replied that it would not but did not elaborate.
MTS announced earlier this month that it had partnered with Sistema Mass Media (SMM), one of the largest media holdings in Russia, to launch a nationwide satellite TV service this year.
SMM is owned by Sistema JSFC, MTS’ parent company.
Under the partnership agreement, SMM is providing the satellite broadcast licences and has secured the satellite channel lease arrangements while MTS is managing the project, working with the content owners and overseeing construction of the infrastructure on the ground.
Currently Russia’s largest mobile operator, MTS aims to become the country’s second-largest DTH provider within a couple of years.
Earlier this month, the MTS spokesman told TelecomFinance that the company would invest Rbs5bn-Rbs6bn (US$110m–US$130m) in the satellite project between 2014 and 2016.
At the time, he confirmed that the telco was considering acquiring Raduga TV but pointed to certain legal risks connected with doing so.
Timur Nigmatullin, an analyst with Investcafe in Moscow, said MTS has made the right decision by deciding not to go after Raduga at present, adding that the potential benefits are outweighed by the possible risks.
While MTS would benefit from Raduga’s satellite infrastructure and subscriber base, the legal risks attached to a potential purchase are too high, he said, noting that it has had disputes with telecoms, IT and mass communications regulator Roskomnadzor over licences.
In its third-quarter results presentation, MTS said there are “significant opportunities” in the Russian satellite TV market due to low-level penetration of cable TV services, particularly in rural areas, adding that satellite is one of the fastest-growing segments of the local pay-TV sector.
“We believe MTS is uniquely positioned to succeed in this market due to the strength of our brand, the quality and diversity of our content portfolio, our retail platform and existing subscriber base,” Dubovskov commented.
