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. Last Updated: 07/27/2016

Telenor, Golden Telecom in Merger Talks

Norway's Telenor is close to acquiring a stake in Golden Telecom, a leading Russian telecoms holding, in a deal reportedly worth as much as $170 million.

Sources close to the negotiations said Wednesday that no concrete deal had been struck yet, but one of the schemes under discussion would see Norway's leading telecom operator exchange its stake in Combellga, a Moscow alternative fixed-line operator, for a stake in Golden Telecom.

Both Telenor and Golden Telecom declined to comment on Wednesday.

By its own calculations, Kommersant on Wednesday estimated the deal to be worth between $150 million and $170 million.

Telenor owns 75 percent minus one share in Comincom, which owns 100 percent of Combellga. The Norwegian operator bought the stake from the former owners of the company -- Russia's Foreign Ministry and two Belgian companies, Alcatel Bell and Belgacom, for $120 million in 2000.

Telenor also owns a 25 percent stake in national No. 2 mobile provider Vimpelcom. Alfa Group also has a 25 percent stake in Vimpelcom, as well as a 43 percent stake in Golden Telecom.

According to Nadezhda Golubeva, an analyst at the Aton investment bank, Combellga had revenues of about $80 million last year, or about 10 percent of the Moscow market.

If it merged with Golden Telecom, the combined company would control 39 percent of the capital's alternative fixed-line market, leaving only one real competitor, City Hall-connected Sistema, which has roughly 34 percent of the market through four subsidiaries -- Comstar, Golden Line, MTU-Inform and Telmos.

"It would only be natural if one of the major players in this market would want to incorporate the only independent player," Golubeva said.

Alexei Yakovitsky, an analyst at the United Financial Group, said the merger of Combellga and Golden would benefit the latter.

"The acquisition would materially impact the size of Golden Telecom, increasing its earnings before interest taxes and amortization by at least 30 percent to around $200 million," he said.

In a separate development, Golden Telecom said Wednesday that it had signed a nonbinding memorandum of understanding to pay $15 million for 100 percent of Sibchallenge Telecom, the leading alternative fixed-line operator in Krasnoyarsk, and Tel, an Internet service provider also based in Krasnoyarsk.

Sibchallenge Telecom operates 100,000 telephone lines in Krasnoyarsk and has a CDMA license with approximately 8,000 cellular subscribers. The company had $7.7 million in revenues in 2002 under Russian accounting standards.

Tel estimated that it controls 50 percent of the dialup Internet market in Krasnoyarsk and reported revenues of $1.1 million in 2002.