BELARUS NEWS AND ANALYSIS

DATE:

04/10/2007

Telekom Austria Buys Phone Firm Serving Belarus

By FLEMMING EMIL HANSEN

VIENNA -- Telekom Austria AG said it agreed to buy Belarus mobile-telephony provider Mobile Digital Communication for ?730 million ($1.03 billion).

The Austrian telecommunications company said it will acquire a 70% stake in MDC, with an option to buy the remaining 30%. The transaction is set to close in the fourth quarter.

Telekom Austria said it is taking on some MDC debt as part of the deal, but it declined to specify the amount.

Analysts said the acquisition has the capacity to boost growth and is well priced. In Vienna yesterday, Telecom Austria shares firmed five European cents to ?18.85.

Telekom Austria will buy the stake through a 70% holding in MDC's owner, Cyprus-based Samauwi Brothers Telecom. It signed an option with SB Telecom to buy the outstanding 30% for ?320 million, exercisable in the fourth quarter of 2010.

Telekom Austria Chief Executive Boris Nemsic said the acquisition "is the consistent execution of our strategy for profitable growth in Eastern and Southeastern 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."

UniCredit MIB analyst Alfred Reisenberger said the price is "very low" compared to the average of recent acquisitions in the telecommunications industry.

"From what I've seen so far, there are no skeletons in the closet -- this is very good news," Mr. Reisenberger said. He pointed to MDC's earnings margin, Belarus's good economic growth and its low mobile telephony penetration rate as indicators of strong growth potential.

Last year, MDC had a margin on earnings before interest and taxation, depreciation and amortization of 60.5%, compared with Telekom Austria's margin of 40.1%.

Source:

http://online.wsj.com/article/SB119144399983648052.html?mod=googlenews_wsj