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6 May 2011
VimpelCom to pay $420 mln for New Telephone Co

MOSCOW. May 6 (Interfax) - Russian "big three" mobile operator VimpelCom (RTS: VIMP) will acquire 100% of Vladivostok-based New Telephone Company (NTC) for $420 million, VimpelCom said in a press release.

Final agreement has been reached to purchase 100% of NTC shares from Korea Telecom and Summit Telecom Global Management B.V., a subsidiary of Sumitomo Corporation.

VimpelCom expects to acquire 90% of NTC in the coming four weeks. It will make an offer to the owners of the remaining 10% after that. The purchases under the offer should be completed in the third quarter of 2011.

Korea Telecom, which owns 79.96% of NTC, said it would sell its stake to VimpelCom for $346 million.

Russia's Federal Antimonopoly Service (FAS) has cleared VimpelCom to acquire 100% of NTC shares.

VimpelCom was the only one looking to buy Korea Telecom out of NTC. The FAS rejected VimpelCom's other 'big-3' competitors Megafon (RTS: MEGF) and Mobile TeleSystems (MTS) (RTS: MTSS), because if either company had acquired NTC it would have had more than a 50% share of the cellular communications market in Primorsk Territory

VimpelCom provides only 3G communications services in a majority of the regions in Russia's Far East, and so was the most interested party in an NTC deal, especially in its GSM licenses.

Cellular market sources said not long ago that Korea Telecom had tentatively valued NTC at $500 million.

Among the other named contenders for NTC were OJSC Rostelecom (RTS: RTKM) and Tele2 Russia. A source close to Rostelecom told Interfax that the company had not applied to the FAS to acquire NTC since it considered the price for the company inflated.

Tele2 Russia also told Interfax that it had not considered NTC as an asset for acquisition. "We are planning for geographical expansion with the help of getting new licenses in Russia's regions," the company said.

NTC is one of the top-10 cellular companies in Russia, providing services to around 1.5 million subscribers.