MTS has acquired a 100% ownership in US-based MCT Sibi Corp., a wholly-owned subsidiary of MCT Corp., which owns 93.53% of Sibintertelecom, for $37.3 million.

Sibintertelecom is the sole GSM mobile phone operator in two regions of Russia with a total population of 1.23 million (1.16 million in the Chita Oblast and 72 thousand in the Aginsk-Buryatsk Autonomous District). The company provides its services to over 100 thousand subscribers. Mobile penetration in these regions is at around 8%, substantially lower than Russia’s average penetration of 42.5%. MTS has GSM licenses for both regions but is not yet operational in either of them. This acquisition increases the number of regions where MTS and its subsidiaries operate to 66.

According to unaudited US GAAP numbers, in the first six months of 2004 Sibintertelecom’s revenues totaled $8.0 million, operating income $5.6 million¹, and net income $4.2 million. The company’s net cash² was $0.8 million as of June 30, 2004. As part of the transaction MTS will assume Sibintertelecom’s obligation as of the date of the purchase to pay to MCT Corp. approximately $3.9 million. The company’s average monthly revenue per user (ARPU) was $28.5 in H1 2004.

Commenting on the acquisition, Vassily Sidorov, President and CEO of MTS, said: “This transaction is in line with our strategy of seeking attractive acquisition targets in the regions where we have not yet launched operations. Our purchase of Sibintertelecom enables us to enter two Far Eastern regions ahead of competition, further expanding MTS’ geographic reach and immediately placing us in the leading position.”