Megafon Says It's Getting Ready to Go Public

Megafon said Wednesday it is making plans to go public and will name the lead manager for its IPO in two months, following in the footsteps of MTS and Vimpelcom, its bigger peers in the country's triumvirate of cellular operators, both of which have listings in New York.

"We are getting ready for our IPO and are in the process of selecting a consultant," said Sergei Soldatenkov, Megafon's general director, at a news conference held Wednesday at Moscow's Svyaz Expocom-2003 exhibition.

But before Megafon can go through with its IPO, he said, the company needs to finish boosting its charter capital by $50 million and consolidate its eight legally separate companies into one unified company.

When and where the IPO will take place has yet to be determined, he said, adding that the exact time and venue will depend on market conditions.

To finance further development, the company will issue ruble bonds worth about $48 million in June, and "if this proves to be an efficient instrument, we could have another ruble bond issue later this year," Soldatenkov said.

The company said its revenues almost doubled last year, climbing to $409 million from $215 million in 2001. Earnings before income tax, depreciation and amortization rose 40 percent on the year to $141 million. Soldatenkov said average monthly revenues per user were at $17, and he said sales revenues could reach $700 million in 2003.

Megafon plans to invest $400 million this year, 35 percent more than last year's $260 million.

It will finance 40 percent of those funds itself, while 60 percent will come through bank loans.

Over the course of last year, the number of subscribers tripled to 3 million.

The company now operates in 40 regions, serving 3.8 million subscribers.

Megafon plans to have its networks rolled out in 60 of Russia's 89 regions by the end of the year, stretching its service into the central, Caucasus and Volga regions.

The company has said it will start operations in the cities of Novosibirsk, Kemerovo and Novokuznetsk in Siberia and Khabarovsk and Vladivostok in the Far East by the end of this year.