BELARUS NEWS AND ANALYSIS

DATE:

03/10/2007

Telekom Austria Buys 70% of Belarus GSM Operator

Telekom Austria has announced that it is paying EUR730 million (US$1.04 billion) to aquire a 70% stake in the Belarus GSM network operator, MDC. The company is technically buying 70% of the Cyprus based Brothers Telecom (SB Telecom) - which itself recently increased its holdings in MDC to 100%. Telekom Austria has also entered into a call and put option agreement related to the remaining 30% stake exercisable in the fourth quarter 2010 for approximately EUR 320 million (US$454 million) - depending on performance.

Mr. Ead Samawi will remain chairman of SB Telecom, all executive management positions in SB Telecom and MDC will be nominated by the Telekom Austria Group, which will have full operational control. Telekom Austria Group will acquire the stake in SB Telecom through a subsidiary of its mobile communication arm, mobilkom austria.

SB Telecom originally founded MDC, but the Belarusian government later seized 51% of the company. This was recently sold back to SB Telecom for a rumoured $300-$500 million, giving an enterprise value of no more than US$1 billion. If the price SB Telecom paid is correct, then the company has managed to turn an effective 50% profit within just a couple of months.

"The acquisition of MDC is the consistent execution of our strategy for profitable growth in Eastern- and South-Eastern Europe, it offers us an entry to the attractive telecommunication market in Belarus while the terms of the transaction once again underline our disciplined approach to expansion. After the successful integration of the highly profitable Bulgarian market leader Mobiltel we once again engage in a similar transaction and increase our addressable market by approximately 30% to 44 million inhabitants in the countries Telekom Austria Group is present" says Boris Nemsic, CEO of Telekom Austria Group and CEO of mobilkom austria.

MDC, which markets its mobile communication services under the brand names "Velcom" for postpaid services and "Privet" for prepaid services, is the number 2 operator in Belarus with a market share of approximately 42% and more than 2.7 million customers in a market that reached a penetration of 66% as of June 30, 2007. For 2006, the company generated revenues of approximately EUR 263 million and EBITDA of approximately EUR 159 million. The net income for the period was approximately EUR 83 million.

Source:

http://www.cellular-news.com/story/26438.php

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