MegaFon Completes $1.2 Billion Purchase of LTE Network

Russia’s MegaFon says that it has completed the previously announced deal to buy the LTE network operator, Scartel/Yota.

MegaFon is currently deploying its own LTE network, but also has a reseller agreement with Scartel. A full merger of the two networks should reduce costs from a lack of overlapping coverage.

In the end the company paid US$1.18 billion for the LTE network, plus its debt. However, the payment is being spread over two years, with half the money paid in a year’s time, and the rest a year later.

That is not a significant issue as the two companies are in fact controlled by the same investor, Alisher Usmanov, who owns just over 50% of MegaFon and 82% of Scartel.

I am happy to announce that we closed the acquisition of “Scartel/Yota”. This transaction is of strategic importance for MegaFon, because we are achieving a unique position in the 4G/LTE market in Russia and special advantages in terms of the provision of 4th generation services. This transaction will help us to expand our 4G high speed networks to significant additional territories, including those where development of infrastructure had been difficult due to economic and technological reasons.”

Ivan Tavrin, CEO of MegaFon.

In connection with the Acquisition, the Company has entered into a revolving intragroup loan agreement with Scartel / Yota. The proceeds of the loan facility will be used to pay off the third party loans referred to above and to finance Scartel / Yota’s future development.


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