Press release
The Board of Directors of Svyazinvest (hereafter – the Company), approved the merger for the Svyazinvest Group of companies at its regular meeting, which was held on October 20, 2009 in Moscow. The reorganization will take the form of a merger between regional telecommunications operators (RTOs) and Rostelecom.
The legal aspects of the merger are expected to be wrapped up in May 2011. Share appraisals, corporate approvals, debt restructuring and other merger formalities should be completed in 2010. The plan is for the general shareholders meeting of the merged companies to adopt decisions on the merger during the summer of 2010.
As a result of the merger of the Svyazinvest Group of companies, using Rostelecom as the consolidation hub, an integrated and competitive company will be established which is capable of providing the entire range of telecommunications and datacom services in Russia. In addition, measures are to be taken so as to raise the liquidity of the merged company’s shares, including listings on domestic and foreign stock exchanges.
The merger of the Svyazinvest Group of companies will have a positive economic effect by unlocking synergies capable of optimizing costs and pushing up revenues. These synergies, according to consultants’ estimates, will exceed RUR 30 bln. The credit ratings of the merged company are expected to be higher that the ratings of RTOs and Rostelecom as a result of the enlarged business.
In the run-up to the merger and after it is complete Svyazinvest intends to devote special attention to such areas of business as broadband Internet, mobile telephony and IT services.
An analysis of the headline financial indicators of Uralsvyazinform was also submitted to the Board of Directors of Svyazinvest. Speaking at a meeting, the general director of this RTO Anatoly Ufimkin pointed out that on the whole Uralsvyazinform has been showing stable performance amid the economic downturn. Management’s main focus in 2009 will be on maintaining rapid growth in the broadband Internet segment, boosting share liquidity and deleveraging.
Consequently, the total amount of credits and loans will go down over the next year by RUR 2.7 bln. And as a result of strict cost control Uralsvyazinform is expected to raise its operating efficiency in 2009 in year-on-year terms , which includes higher EBITDA (up at least 15%) and net profit (up at least 40%). As pointed out by Anatoly Ufimkin, after getting through 2008, which was an extremely difficult year on the stock market, Uralsvyazinform’s market capitalization has risen 2.7 times so far this year, and stood at RUR 29.8 bln on the MICEX as of October 19. The Board of Director took under advisement the report on the headline financial and operating indicators of Uralsvyazinform.
The board also reviewed other issues relating to the company’s business activities.
The following members attended the meeting of the company’s Board of Directors:
- Mikhail R. Butrin, managing director of VTB-Invest;
- Mikhail A. Leshenko, deputy director general of Svyazinvest;
- Konstantin V. Malofeyev, managing partner of direct investment fund Marshall Capital Partners;
- Marlen J. Manasov, board member of UBS Bank;
- Sergey V. Pridantsev, president of Comstar-UTS;
- Leonid D. Reiman, advisor to the President of the Russian Federation;
- Ivan I. Rodionov, professor of state university Higher School of Economics;
- Nikita D. Ryauzov, managing director of MDM Bank.
