BELARUS NEWS AND ANALYSIS

DATE:

03/10/2007

Telekom Austria To Buy 70% Stake In SB Telecom At EUR 730 Mln

(RTTNews) - Wednesday, Telekom Austria Group (TKAGY.PK) said it agreed to acquire a 70% stake in Cyprus-based partnership firm SB Telecom Ltd. for an enterprise value of about EUR 730 million. SB Telecom is the sole owner of the Belarusian mobile operator MDC.

The Vienna, Austria-based Telekom Austria noted that the purchase of the 70% stake would be financed using its existing credit facilities. Telekom stated that the stake would be acquired through a subsidiary of its mobile communication arm, mobilkom austria. The deal, which is estimated to be earnings accretive in 2008 only, would have no impact on its earlier stated dividend policy, the company said.

Telekom Austria has also agreed to a call and put option for the remaining 30% shares for about EUR 320 million, which will be exercised only in the 2010 fourth quarter.

Following the acquisition, Ead Samawi would continue as chairman of SB Telecom. Telekom will nominate all executive management positions and would also have full operational control of SB Telecom and MDC.

Telekom noted that the market share of MDC is approximately 42% with a penetration reach of 66% as of June 30, 2007. MDC has more than 2.7 million customers. For 2006, the company generated net income of about EUR 83 million, revenue of about EUR 263 million, and EBITDA of approximately EUR 159 million.

The group has also agreed on a performance based deferred consideration. The amount of the deferred consideration would be payable in the fourth quarter 2010 and would be directly linked to the future financial performance of MDC. In return, Telekom will have full access to the free cash flow and dividend distributed.

Commenting on the developments, Boris Nemsic, CEO, Telekom Austria Group, said, "The acquisition of MDC is the consistent execution of our strategy for profitable growth in Eastern- and South-Eastern Europe, it offers us an entry to the attractive telecommunication market in Belarus while the terms of the transaction once again underline our disciplined approach to expansion."

Telekom noted that the 70% stake in SB Telecom, which comes after the integration of the highly profitable Bulgaria-based Mobiltel, increased its addressable market by approximately 30% to 44 million inhabitants.

TKAGY.PK closed Tuesday's regular trading at $53.30, up $0.05 or 0.09%, on a volume of 3 thousand shares

Source:

http://www.tradingmarkets.com/.site/news/BREAKING%20NEWS/665254/