Another regional acquisition for Golden Telecom
04 Jun 2003
Sibchallenge Telecom has constructed and operates 100,000 telephone numbers in Krasnoyarsk. It owns its own network in Krasnoyarsk, with an EWSD switch, 127 km of fiber-optic cable, 170 km of copper cable, and more than 30 points of presence in the city. It also has a CDMA license, with approximately 8,000 users. It is the main competitor for the incumbent in Krasnoyarsk, OAO "SibirTelecom". Sibchallenge Telecom reported revenues of the rouble equivalent of approximately $7.7 million in 2002, calculated on the basis of Russian Accounting Principles (RAP).
ZAO "Tel" estimates that it controls 50% of the dial-up Internet market in Krasnoyarsk. It reported revenues of the rouble equivalent of approximately $1.1 million in 2002, calculated on the basis of RAP.
Alexander Vinogradov, Chief Executive Officer and President of Golden Telecom, Inc. commented: "Sibchallenge Telecom has been our partner in Krasnoyarsk for some time, and we are pleased that we will be able to include them as a full part of our team. Following our successful transaction in Nizhnii Novgorod last year, this is another step following our regional strategy of consolidating operators outside Moscow. The regions outside of Moscow and St Petersburg generate approximately 25% of our business at present, but we expect to see this percentage grow, as we acquire and build networks in commercially viable regional cities outside of Moscow and St Petersburg."
Oleg Malis, Senior Vice-president of Golden Telecom stated: "Sibchallenge Telecom satisfies our criteria for regional acquisitions in that it has strong margins, can be acquired at a good price, possesses its own
customer access network and numbering capacity, as well as the required licenses and interconnect agreements to support future growth. Furthermore, the company is showing excellent growth in the first
quarter of 2003." Stan Abbeloos, Chief Operating Officer of Golden Telecom, Inc. added: "We believe that we can enhance the margins and growth prospects of Sibchallenge Telecom by using our existing network to reduce its costs, and by investing in numbering capacity to support expected growth in demand from both local companies and mobile operators. Sibchallenge Telecom has an excellent client list, including Sberbank,
Krasnoyarskii Alyuminyevii Zavod and Krasnoyarsk City Administration, to which it provides integrated telecommunication solutions."
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