17:28 27.02.2015

MTS Ukraine registered in the Netherlands, to expand investment opportunities

2 min read
MTS Ukraine registered in the Netherlands, to expand investment opportunities

Russia's OJSC Mobile Telesystems (MTS) has transferred 100% of its shares in private joint-stock company MTS Ukraine to indirect ownership, reads a report issued by the Russian company.

From February 26, 2015, 100% of MTS Ukraine now belongs to Dutch Preludium B.V., owned by Luxemburg's Allegretto Holding.

"The asset was transferred to expand the opportunities of raising investment in MTS Ukraine," MTS Spokesperson Elena Kokhanovskaya told Interfax.

MTS Ukraine's press service has told Interfax-Ukraine that the change to European jurisdiction will facilitating dialog with potential investors and attract them towards participating in joint investment projects.

In October 2014, telecommunications market sources said that MTS is looking for a foreign partner for joint investment in the building of a 3G communications network in Ukraine.

MTS Ukraine won a 3G communication license at an auction held on February 23, 2015. The company will pay UAH 2.72 billion (around $100 million). Another two licenses were bought by Kyivstar (subsidiary of Russia's Vimpelcom Ltd.) and Astelit (55% belongs to Turkcell and 45% to Rinat Akhmetov's SCM).

MTS estimates the cost of building the 3G network at $1 billion, including previously invested funds. Over the last three years, MTS Ukraine ha d invested over $500 million in the network's development in Ukraine. According to CEO Ivan Zolochevsky, another $600 million are needed for the network's launch.

The winner of the 3G auction will also have to invest in spectrum clearing. The conversion cost is estimated at UAH 1.6 billion, or around $47 million.

Another possible reason MTS might have sold the stake in the Ukrainian subsidiary is the complicated political environment inside Ukraine, the newspaper Vedomosti reported in October last year. This is why MTS is looking for a western partner, the paper said.

MTS Ukraine accounts for around 8% of MTS' consolidated revenue and 7% of operating income before depreciation and amortization (OIBDA). The Ukrainian operator had 22.7 million customers as of the third quarter of 2014. MTS Ukraine's Q3 revenue was up 6.9% to UAH 2.8 billion, while OIBDA fell 10.7% to UAH 1.2 billion.

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