Largest Russian operator contemplating merger

The biggest mobile operator in Russia may be pursuing a merger as a means of furthering its ambition to become a major global telecoms group.

MTS is reportedly in talks with other carriers, although it is unclear which specific companies are being tapped. However, comments from Vladimir Yevtushenkov, the chief executive of Sistema (of which MTS is a subsidiary), indicate that the top ten global operators would be targeted.

Potential candidates for a merger could include Telekom Austria or South Korean KT – reportedly, MTS is attempting to purchase KT’s 80% stake in New Telephone Co, which operates predominantly in East Russia. Similarly, there have been reports that Sistema was attempting a US$6 billion acquisition of Telekom Austria.

It is likely that MTS is motivated by potential competition from the second-largest Russian carrier, VimpelCom, which is currently attempting to increase its assets in other territories with a beleaguered US$6 billion proposed merger with Wind Telecom.

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