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12 May 2011
Acquisition of Sinterra boosts MegaFon's state orders 50% in 2010

MOSCOW. May 12 (Interfax) - Companies in the MegaFon (RTS: MEGF) group saw the volume of state orders rise 50% in 2010.

"The integration with Sinterra has made MegaFon a serious player on the market in state orders," Konstantin Solodukhin, the CEO of Sinterra and the deputy CEO of MegaFon for development of federal corporate sales and the operator business, is quoted in a MegaFon press release as saying.

The company has won tenders leading to the signing of more than 90 state contracts from the end of the fourth quarter of 2010 through to the second quarter of 2011, he said.

MegaFon acquired 100% of Sinterra in the summer of 2010 from Promsvyazcapital for $745 million (including debt). The merger with Sinterra will result in formation of a universal communications operator in two years. Development of the B2G services segment is a company priority.

MegaFon targets B2G revenue to rise 40% to 3 billion rubles in 2010, Solodukhin told journalists on Thursday.

The post-merger company also plans to grow its business on the operator services market (B2O). It targets B2O revenue to rise 31% to 5 billion rubles, by increasing network volume and connectivity, building international junctions and moving into new market areas.

The B2B segment is projected to grow 40% to 2 billion rubles in 2010 thanks to introduction of convergent products, development of loyalty programs and acquisition of regional operators.

MegaFon plans to spend about 9 billion rubles in 2011-2013 in the universal operator project, which will see construction of company-owned access networks in 2,600 Russian towns and regional centers. It will spend 2 billion rubles on the project this year for access in 1,300 towns.

"We are using cellular network infrastructure to provide fixed services to state organizations. Normally just the opposite happens. We are building the universal operator on the basis of trunk and zonal networks of a regional operator, using these capabilities in specific cities and towns, primarily regional centers, in order to connect corporate and state clients and ultimately individuals," Solodukhin said.

MegaFon and Sinterra have practically completed work to merge the trunk networks, IT infrastructure and regional affiliates.

The companies expect to complete the merger process in June 2011.