Russian telco market witness major consolidation

Russian telco market witness major consolidation

Russian telecommunication holding company ER-Telecom, in cooperation with the state-owned corporation Rostec, has acquired a 75 percent stake minus one share in the company Akado Holding, running the regional operator Akado Telecom. The minority stake will be held by the company AVK Investments.

Following the deal, ER-Telecom might receive 300,000 new customers as well as the existing orders from the operator. A notification has already been sent to the Federal Antimonopoly Service (FAS), Russia’s regulatory body, but it has not yet been received.

The parties do not disclose the terms of the deal. The share could cost 3-4 billion rubles, taking into account the debt burden, the general director of Telecom Daily, Denis Kuskov, estimated.

"We plan to create a platform for the development of 5G, the Internet of Things, smart city systems, video analytics, data centers, and more. The company plans to create products for private users, corporate clients, and the public sector," said an official release.

"Investments in Akado are part of our development strategy in the market of Moscow and the Moscow region. The creation of a strategic partnership with Rostec and AVC Investments will allow introducing a new quality of service, new digital products, contributes to the transformation of Akado Telecom into a digital technology company and will ensure its leading growth in the capital market," said President of ER-Telecom Holding JSC Andrei Kuzyaev.

Commenting on the transaction, Sergey Chemezov, head of Rostec, said: “This is an alliance of strong players, in which the competencies of our companies together give a synergistic effect. A partnership in this format opens up new opportunities for the creation and implementation of domestic technological solutions in various fields: from internet services for the mass consumer to building a large-scale ICT infrastructure for private, municipal, and government organisations. For Rostec, as a developer and manufacturer of IT and telecom equipment, this is undoubtedly a promising project”.

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