11 Aug 2009 16:26

Comstar won't buy Synterra, unlikely to sell Svyazinvest stake until MTS deal finalized

MOSCOW. Aug 11 (Interfax) - Comstar United TeleSystems will not sell or acquire assets until a deal in which it will come under the control of Mobile TeleSystems (MTS) is finalized, MTS President Mikhail Shamolin said at a press conference on Tuesday.

Asked if Comstar-UTS could acquire telecoms operator Synterra as earlier planned, Shamolin said, "Not before the deal is finalized." As part of preparations on its proposal to acquire Comstar-UTS, MTS carried out due diligence on Comstar-UTS and does not expect "the subject of the purchase to change," he said.

Shamolin declined to comment on MTS's position on Comstar-UTS potentially acquiring Synterra.

He also said that Comstar-UTS was unlikely to sell its blocking stake in state-owned communications holding Svyazinvest until Comstar-UTS is taken over by MTS, which is slated for late October. Shamolin stressed that certain agreements on the deal could be reached before October, but the transaction itself would not be registered until then.

At the same time, he said "nothing is impossible." If the deal needs to be made urgently, then it will be finalized, he said. In this case, however, MTS would recall its proposal on the acquisition of Comstar-UTS and make a new offer, he said.

The board of directors at AFK Sistema last week approved the terms of an offer from MTS on the purchase of Sistema's 50.91% stake in Comstar-UTS for $1.272 billion.

Comstar-UTS paid almost the same price - $1.3 billion - for 25% plus one share in Svyazinvest back in 2006. The company had expected to take part in the planned privatization of the holding, however the government later decided against this idea and instead decided to set up a unified national operator on the core of Svyazinvest.

Last fall, Sistema proposed that the government buy its blocking stake in Svyazinvest for $1.9 billion. The government instructed agencies to work out the transaction without attracting budget funds.

In early May, Sistema owner Vladimir Yevtushenkov sent Prime Minister Vladimir Putin a letter proposing to sell the government the blocking stake in Svyazinvest in exchange for the state holding's stake in Moscow City Telephone Network and writing off Comstar-UTS's debt to Sberbank .

In addition to Comstar-UTS, MegaFon and VimpelCom are also vying for Synterra. Until recently, market watchers believed the most likely candidate to buy Synterra was MegaFon, which has already carried out due diligence and received clearance for the purchase from the Federal Antimonopoly Service. Two sources familiar with talks on Synterra's sale, however, now say that odds of MegaFon buying the company have decreased.