Svyazinvest May Announce Acquisitions in Three Months

OAO Svyazinvest, Russia’s holding company for fixed-line regional operators, plans to buy regional mobile-phone companies to strengthen its position in the wireless market, Chief Executive Officer Evgeny Yurchenko said.

Svyazinvest may announce some acquisitions within three months, Yurchenko told reporters in Moscow today. The company is “sticking to very aggressive plans in the mergers and acquisitions market,” he added.

Russia is reorganizing state-controlled Svyazinvest by merging all seven of its publicly traded fixed-line operators with OAO Rostelecom, the country’s dominant long-distance phone operator, also controlled by Svyazinvest. The company is also merging the 13 mobile-phone companies that have 14 million users and are units of Svyazinvest’s fixed-line operators, Yurchenko said today.

“The merger of all these cellular assets into one company will give us the fourth mobile-phone operator” in Russia, Yurchenko said at the press conference. OAO Mobile TeleSystems (MBT), OAO VimpelCom (VIP) and OAO MegaFon are Russia’s three largest mobile-phone companies.

Conversion of Shares

Svyazinvest may seek to combine its wireless assets with one of the three biggest mobile operators, Communications Minister Igor Shchegolev said June 23. “We are in constant contact” with them, Yurchenko said today. “Any decisions would be possible only after the merger of all cellular companies” of Svyazinvest is completed, he added.

Svyazinvest’s restructuring plan includes conversion of the shares in regional fixed-line operators into additional stock of Rostelecom that would be issued for the reorganization, according to the Svyazinvest presentation given out today.

Preferred shares of the regional fixed-line operators will be also converted into the common stock of the “new, merged company,” Yurchenko said today.

Svyazinvest will buy out those minority investors who vote against the reorganization or don’t participate in the vote, the presentation shows.

The restructuring is planned to be finished by spring 2011, Shchegolev said Oct. 5.

To contact the reporter on this story: Maria Ermakova in Moscow at mermakova@bloomberg.net.

To contact the editor responsible for this story: Lars Klemming at lklemming@bloomberg.net

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