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Berlin/Moscow (pte022/16.12.2004/12:30) - Germany's largest telecommunications group Deutsche Telekom http://www.telekom.de has announced plans to cut its stake in Russia's biggest mobile phone operator Mobile TeleSystems (MTS) http://www.mts.ru by about 12 per cent. Through the sale, which is being arranged by an accelerated bookbuilding, Deutsche Telekom is set to raise around 1.5 billion dollars (1.12 billion euros), reports the Financial Times (FT) http://www.ft.com . The move will reduce the German telecom's holding in Moscow-based MTS to around 13 per cent.
Deutsche Telekom had originally envisaged its MTS investment, currently worth 25.1 per cent, as the key to expansion in the rapidly growing Eastern European market. MTS offers mobile-phone services in Russia, the Ukraine, Uzbekistan and Belarus to almost 25 million subscribers. However, Deutsche Telekom was forced to lower its stake in MTS by 15 per cent from 40 per cent last year as part of a debt-reduction program. The news of the sale comes as no surprise to investors after Kai-Uwe Ricke, Chairman of the Board of Management of Deutsche Telekom, described the MTS stake as merely a financial investment.
The cash raised from the sale will come in handy for Deutsche Telekom, which is set to buy out the minorities in Internet unit T-Online in a deal that is reportedly worth 3 billion euros. The company also needs the cash to fund expansion in the US, where the proposed merger of Sprint and Nextel could raise the competitive bar for its T-Mobile USA wireless unit.
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