Russian state-controlled Rostelecom is reportedly in talks to acquire WiMax operator Freshtel.
Negotiations have continued for more than a month but Rostelecom has not yet taken a final decision on whether to purchase Freshtel, local newspaper…
Russian state-controlled Rostelecom is reportedly in talks to acquire WiMax operator Freshtel.
Negotiations have continued for more than a month but Rostelecom has not yet taken a final decision on whether to purchase Freshtel, local newspaper Kommersant reported, citing a telecoms sector source.
Rostelecom is currently conducting due diligence on the smaller company, indirectly controlled by Russian tycoon Suleiman Kerimov and Ukrainian businessman Victor Pinchuk, the report added.
There was no information on the potential price, however Freshtel was valued at about US$200m last year when TransTelecom (TTK) looked at buying it. According to the report, Rostelecom may fund the deal with equity rather than cash.
Rostelecom and Freshtel have declined to comment.
UralSib Capital head of research Konstantin Chernyshev said in a note to investors that Freshtel owns nationwide spectrum in the 3.5 GHz range, used to provide WiMax mobile broadband services, which would could help Rostelecom to deliver universal services.
Chernyshev described the potential acquisition as strategically justified, but said its likely effect on Rostelecom’s valuation is currently unclear given the lack of information on Freshtel’s value or financials.
Timur Nigmatullin, an analyst at Moscow-based research firm Investcafe, said he believes the deal is very likely to go ahead as Freshtel’s spectrum would be very valuable to Rostelecom. He explained that Rostelecom needs an M&A deal to be able to use its own LTE frequencies in the 453-475.5 MHz range effectively.
Like Chernyshev, he said it is hard to assess the value of the asset, but estimated Rostelecom might pay the equivalent of US$70-US$100m.
The president of Russian Railways-owned TTK told media in late 2013 that talks to acquire Freshtel had been suspended as it planned to bid for what it considered more attractive spectrum in the 2.5 GHz range.
Rostelecom and Tele2 Russia completed the first stage of their deal to create a mobile joint venture, T2 RTK Holding, in March. They expect to complete the second and final stage by the end of the year.
