Russian landline giant may buy Tele2 unit
As country's operators jostle for position in LTE, Rostelecom said to be negotiating joint venture with Tele2 Russia
Published: 6 August, 2012
READ MORE: M&A | Russia | Infrastructure | LTE
The Russian operators are jockeying for position as they gear up for 4G. One of the big three cellcos, MegaFon, has effectively taken over the assets of wholesale 4G network owner Scartel/Yota. Now the incumbent landline carrier, Rostelecom, which has acquired LTE spectrum is eyeing a merger with the Russian unit of Tele2 of Sweden.
Such a deal would boost Rostelecom's mobile progress and expertise while expanding the local presence for Tele2, which missed out in the recent auctions. According to sources at Russian newspaper Kommersant, Rostelecom is planning to offer one of its mobile subsidiaries, SkyLink, plus a cash payment, for a stake in Tele2's Russian subsidiary.
However, other structures are under consideration, in an environment where Russian authorities are rethinking some of the rules on foreign investment and ownership. One option could be to create a whole new 50:50 joint venture, combining the assets of both players.
According to Wireless Intelligence, Tele2 had 21.6m mobile connections in Q2 2012, behind MTS (69.6m), MegaFon (62.1m) and VimpelCom's Beeline (55.7m). Since Rostelecom is mainly a fixed line and long distance carrier, its mobile business so far has been minimal, with 12.9m connections in its own right plus a further 1.3m from SkyLink. However, it now it has its own spectrum it will significantly ramp up its cellular ambitions.
It is unclear what will become of the project, initiated and heavily backed by former president Medvedev, to kickstart Russian LTE via Yota's network, which would be funded and used by the big four. However, if MegaFon has taken control, and now the operators have new spectrum in 800MHz, the plan appears to have been pulled back.
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