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. Last Updated: 07/27/2016

MTS Buys Control of Kuban

Russia's top cellular operator, Mobile TeleSystems, said Thursday it had agreed terms to buy control of the country's fourth-largest operator, but the size of the stake was undetermined.

The acquisition of Kuban GSM, which operates in a lucrative market near the Black Sea, will add a crucial piece to MTS' patchwork of regional networks.

Sources said earlier this month that MTS would buy a controlling stake in Kuban GSM. They also said that Kuban GSM had been valued at $140 million.

MTS and Kuban GSM said in a joint statement Thursday that in addition to a buyout of existing shareholders, the sides had tentatively agreed Kuban GSM would issue 3,600 new shares that MTS would buy at a market price of $14,000 apiece, or $50.4 million, which would go to develop Kuban GSM.

Kuban GSM shareholders will meet Feb. 15 to vote on the share issue and the volume, and final conditions of the purchase will be agreed individually with Kuban GSM's owners after the shareholder meeting, the statement said.

No single entity has an absolute majority in Kuban GSM.

A southern fixed-line operator, Kubanelektrosvyaz, owns 24 percent of Kuban GSM.

A Kubanelektrosvyaz board member said earlier this month that the operator had approved the sale of the stake to MTS.

Another 27 percent of the company is owned by privately owned Kubtelekom.

Renaissance Capital advised Kuban GSM on the deal.