Golden Telecom Continues Consolidation of Regional Telecommunications Operators
09 Apr 2007
MOSCOW, Russia (9 April 2007). Golden Telecom, Inc. (“Golden Telecom” or the “Company”) (NASDAQ: “GLDN”), the leading provider of integrated telecommunications and Internet services in the largest population areas throughout Russia and other countries of the Commonwealth of Independent States (“CIS”), today announces that, in accordance with its strategy for regional development, it has closed the acquisition of 100% of ZAO Telecommunications Agency (“Atel”) in Perm, Russia for approximately $4.5 million in cash.
Also today, Golden Telecom announces entering into agreements with Consolidated Communications Corporation plc (“3C”) (AIM: “CCM”) for the acquisition of ZAO Direct Net, OAO Satcom-Tel, and the assets of NDNT, Inc. and NDNT (UK) LTd (together known as “3C Russia”) for a total purchase price of $2.9 million consisting of cash consideration of $1.7 million and $1.2 million to be settled in cash upon the satisfactory achievement of certain conditions.
Atel
Atel is one of the largest alternative operators in Perm, a city located in the Urals Region.
Perm is the 13th largest city in Russia with a population of over 1 million residents. The acquisition of Atel establishes Golden Telecom in yet another “million-plus city,” increasing its presence to a total of 18 out of Russia’s 20 largest cities.
Atel was formed in 1995, and its market share of Perm’s fixed-line communications is approximately 7%. Atel’s own 65km fiber-optic network is deployed in the four primary areas of the city where over 65% of the population lives. In 2006, Atel’s revenue was approximately $3.4 million in accordance with US GAAP. According to J’son and Partners, in 2006, Perm’s fixed-line communications market saw volumes of approximately $56 million, while revenues from provision of broadband Internet access services were approximately $4.9 million.
Commenting on the transaction, Jean-Pierre Vandromme, Chief Executive Officer of Golden Telecom, said, “The acquisition of Atel not only strengthens our position in the Urals Region but also allows us to more actively and efficiently realize our strategy for providing broadband access in growing regional markets.”
3C Russia business
The acquisition of 3C Russia will provide Golden Telecom with control over ZAO Direct Net and OAO Satcom-Tel, including the assets and the customers of NDNT, Inc. and NDNT (UK) LTd , which have been active since 1992.
3C Russia has offices and communications hubs in Moscow, St. Petersburg, London and New York. The company offers telephony and data transfer services to corporate clients and works with communications operators around the world. In 2006, the company’s revenue from corporate customers was approximately $4.8 million in accordance with US GAAP.
Historically, 3C Russia has been well known on the Moscow corporate market as Direct Net, a very strong niche player focused on data communication services. It was launched in the same period as TeleRoss, Sovintel and the Comincom-Combellga group, which were acquired and integrated into Golden Telecom in 2002-2004. The company still has a loyal client base consisting of large corporations, including multinational companies, financial and international legal firms and media organizations.
Mr. Vandromme noted that: “Recent changes in Russian laws and regulations make it extremely difficult for a small company to develop in the fast growing telecommunications markets. Golden Telecom, as the largest alternative operator, has all the necessary licenses and technical means, and is able to consolidate smaller alternative carriers effectively and efficiently and integrate their operations, thus strengthening our leading position in the corporate client service sector.”
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