Mobile TeleSystems OJSC is a provider of mobile cellular communications services in Russia, Uzbekistan, Turkmenistan, Armenia Ukraine and Belarus. As of March 31, 2010, the Company had a subscriber base of 69.1 million in Russia, 17.3 million in Ukraine, 7.4 million in Uzbekistan, 1.9 million in Turkmenistan and 2.1 million in Armenia.
MTS merges with Comstar creating Russia’s largest integrated telecom company
MTS (NYSE: MBT) and Comstar have agreed to merge to set up the largest integrated telecommunications provider in Russia and the CIS (Commonwealth of Independent States), aiming to integrate their customer bases, achieve cost savings and create additional synergies to strengthen its position in the market.
Under the terms of the merger, Comstar shareholders will receive 0.825 MTS shares for each Comstar share they own, which represents a 7.7% premium to the three month volume weighted average exchange ratio between MTS and Comstar shares.
The merger is expected to be completed in Q2 2011.
A voluntary tender offer (VTO) will be launched for up to 37 million Comstar shares, representing 9% of the issued capital, at US$716 per share, representing a 13.1% premium to the three month average trading price of Comstar on the London Stock Exchange (LSE).
The implied transaction value could total up to US$1.03 billion.
“We believe that the merger of MTS and Comstar is attractive for our shareholders because it will accelerate the delivery of our “3i” strategic goal of realizing growth through increasing customer value, by providing our customers with a broad, innovative and integrated offering of mobile and fixed line telephony, high-speed internet access and pay-TV services,” said president and chief executive of MTS Mikhail Shamolin.
MTS is already the leading telecommunications provider in Russia and CIS while Comstar is one of the largest suppliers of integrated telecommunication solutions in the region. As a result of the merger, Comstar, which is currently 61.97% owned by MTS and shows up in its financial results, will be subsumed into MTS and cease to exist as a separate legal entity.
The integration of the companies’ respective customer bases will enable the cross-selling and bundling of broadband and television services to MTS’s customers.
MTS is currently on track to exceed the US$200 million of cost synergies indicated when it purchased majority control of Comstar in October 2009.