Telekom Austria Confirms Talks Over Belarus Purchase

The Telekom Austria Group has confirmed market rumours that it is in talks on a potential acquisition in Belarus. The company says that additional information can not be given at this point of time.

There have been rumours that the company is in talks to buy a Belarus mobile phone operator for around US$2.2 billion. Further rumours suggest that the target could be Velcom, however unconfirmed reports a few weeks ago had suggested that the company has already been sold to a Cyprus based entity, Brothers Telecom (SB Telecom) - which had owned 49% of the company.

While it is possible that the sale to SB Telecom was a holding transaction pending a complete sale to a 3rd party, the state's holding in the company was only valued at between US$300-$500 million giving an enterprise value of no more than US$1 billion - considerably less than the price Telekom Austria is said to be considering investing in the country.

Figures from the Mobile World, show that Velcom is the second largest operator in Belarus, with a 42% market share. The largest operator is the local arm of Russia's MTS, and is presumably not for sale. Two other operators, BeST and Belarussian Cellular have negligable market shares.

Belarus's government has faced a cash crisis after the Russian government raised the price of gas it supplies to the military controlled country and the government has engaged in a series of asset sales and privatisations to raise cash fast.