MTS Turned From the Red Sea
Russia’s big cellular operator, MTS, lost the tender for the third GSM license in Egypt. The successful bidder was Etisalat of the United Arab Emirates, which offered $2.9 billion for the license vs. the starting price of around $430 million. The analysts say expansion of domestic mobile companies to far-abroad markets will hardly happen soon.
MTS confirmed the failure yesterday, saying the defeat could be attributed to the enormous sum offered by Etisalat for the license. “Our strategy implies approaching foreign markets,” said MTS briefer Kirill Alyavdin, “but we must be sure in good return on invested capital. Egypt didn’t provide this opportunity to us.”
Egypt was the fourth abortive attempt of MTS, where AFK Sistema is the principal holder, to go far abroad. Previously, MTS endeavored to buy cellular operators in India and Turkey but was always outbidden by bigger players.
For domestic cellular operators, the attempts to step out of Russia don’t make sense, the analysts speculate. This expansion couldn’t be regarded as an effective growth instrument for Russian companies, said Yuly Matevosov, who heads an analytic department at Dresdner Bank. “And it is not just the high cost of the assets. It is that the geopolitical situation and the absence of adequate political support make them outsiders at tenders. Neither local companies nor authorities view Russia’s investors as partners of top priority.”
www.kommersant.com
All the Article in Russian as of July 05, 2006
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