OJSC ER-Telecom arranged for extending the period of exclusive talks for the acquisition of Akado till mid-October 2013, the Kommersant informed referring to a source familiar with the progress of negotiations.
While it was ER-Telecom that requested for a longer period, the shareholders of Akado would also rather take their time to consider the whole matter again. The negotiations are still underway, as stated by a manager close to Viktor Vekselberg's Renova Group which owns 67% of Akado.
The transaction may be finalized in late September / early October, one of the paper's sources in the telecom market pointed out. Earlier, the shareholders of Akado estimated the company at $1.2 billion; today, the parties are negotiating the price of ca. $1-1.1 billion including the debt amounting to $390 million.
ER-Telecom showed interest in the acquisition of Akado in the spring of 2013 and secured an exclusive right to negotiate the purchase of the operator in early June.
In June, OJSC MTS offered Akado shareholders to sell the company for RUB 30 billion (about $940 million, proceeding from the Central Bank's exchange rate as of the start of June), but the shareholders refused to consider the offer referring to ER-Telecom's exclusive status as a negotiating party.
The acquisition of Akado is strategically important for ER-Telecom which could boost its market share and enter the prestigious market of Moscow.
CJSC Company TransTeleCom (TTK), a subsidiary of OJSC Russian Railways, was previously reported to be interested in this asset, but did not conduct official negotiations with the target company.
In mid-2011, the shareholders of OJSC MegaFon were ready to purchase Akado for $900 million taking into account its debt estimated at $350-500 million at that point, but the Akado owners refused to sell their company at this price. In the summer of 2010, OJSC CenterTelecom (a structural unit of OJSC Rostelecom since April 1, 2011) targeted Akado, but the negotiations were discontinued after Yevgeny Yurchenko, ex-CEO of OJSC Svyazinvest (Rostelecom's controlling company), slammed the Akado stock acquisition scheme.
OJSC ER-Telecom (tax number: 5902188230) is a regional multiservice communications service provider based in 2001. The company provides cable television, broadband Internet access, and telephony services using the FTTB technology under the Dom.ru brand. ER-Telecom's shareholders are Perm Financial and Industrial Group and Baring Vostok Capital Partners (10%). As of today, companies of the ER-Telecom holding are providing services to ca. 5 million subscribers in 56 cities of Russia.
IFRS revenue of CJSC ER-Telecom Holding for 2012, according to the company's preliminary data, grew by 43% to RUB 13.896 billion from RUB 9.684 billion for 2011. EBITDA was RUB 956 million against negative RUB 513 million in 2011. EBITDA margin was 7% against a negative value of -5%.
Akado Group is a telecommunication holding focused on providing a fiber line based telecom services (television, high-speed Internet and telephony) to corporate and private customers as a single package ("triple play package"). The key assets of the holding are: OJSC Comcor (the operator of Moscow's backbone fiber-optical network operating under the Akado Telecom brand), CJSC Akado-Stolitsa (Moscow's cable TV, broadband Internet access and digital telephony operator) as well as Internet providers and cable TV operators in St. Petersburg, Yekaterinburg and Minsk (Belarus).
Akado Group's IFRS revenue for 2012 grew by 9% to RUB 11.227 billion from RUB 10.316 billion for 2011. EBITDA increased by 25% to RUB 4.256 billion from RUB 3.413 billion, EBITDA margin to 38% from 33%.