telecommunications

Yesterday, Viktor Vekselberg's Renova Capital private equity fund officially announced the purchase of 1,005 shares of the Russian alternative operator Corbina Telecom for $146 million. Experts note that, having received such an investor, Corbina Telecom could become one of the largest players in the broadband access market in Moscow.

Representatives of Renova Capital officially announced the deal yesterday, but Kommersant reported that Viktor Vekselberg's structures were buying Corbina Telecom back in the fall of last year (see Kommersant dated November 18, 2005). As Kommersant reported, the transaction volume amounted to $146 million, for which Renova Capital bought 100% of Corbina Telecom from the American IDT Corporation. “Renova Capital is a direct investment fund, and we make all purchases with the goal of growing the acquired companies,” explained Renova Capital director Dmitry Levonyan yesterday. “Therefore, it is possible that after three or four years we will conduct an initial public offering of shares.” Corbina Telecom' on the open market. Now we intend to expand the company's presence in the cellular and fixed-line segments, as well as continue the construction of a high-speed fiber-optic network in Moscow."

Shortly before the deal between Renova Capital and IDT Corporation became known, representatives of Corbina Telecom announced a large-scale project worth $72 million, within the framework of which the operator plans to install fiber-optic communication channels in every Moscow apartment and by 2008 to capture more than thirds of the capital's broadband Internet access market. Now the share of Corbina Telecom in this sector does not exceed 4%.

The Corbina Telecom group of companies was formed at the end of 1995. Today it ranks fourth in terms of turnover among Russian alternative telecom operators (turnover in 2004 - $73 million). Corbina operates in 24 regions of Russia, providing a wide range of communication services - from mobile telephony to Internet access.

Experts note that Corbina Telecom may well become the largest player in the capital's telecommunications market, but for this the company will have to solve several serious problems. "Corbina's broadband network project is still immature in many ways, and the company will inevitably face the fact that the demand for its services, even in Moscow, is not yet high enough. Moreover, Corbina is starting to work in a very busy market where several already exist major players, including the potential monopolist Comstar-UTS, which can already reach most Moscow apartments by cable,” notes iKS-Consulting analyst Konstantin Ankilov. “At the same time, the broadband Internet access market is now the most attractive for investors - in last year in Russia it grew by 72%, and Renova Capital’s financial capabilities make Corbina’s plans very realistic.”

In connection with yesterday's deal, Comstar-UTS does not expect increased competition in the broadband market in Moscow. “Today money is not a problem for telecom operators,” says Comstar-UTS General Director Semyon Rabovsky. “Therefore, the purchase of Corbina by the Renova Capital fund does not strengthen the operator’s position in the market.”

DMITRY Kommersant-ZAKHAROV

Corbina Telecom changed owner