The board of Far East Telecom on a June 16 meeting approved the sale of its 50% stake in Primtelephone, which provides cellular services in NMT-450 and GSM 900/1800 standards, to Mobile TeleSystems.

As early as this February, Far East Telecom’s BoD jumped at MTS’ buyout bid for an equity position in Primtelephone. Theacquisitionpricewasestimatedat $31 mln.

The telecom operator’s board members cast their votes for the terms of the transaction. The deal is expected to be completed at the beginning of 3Q 2004.

The board also examined the question of Far East Telecom’s participation in Wireless Information Technologies, which holds licenses to provide cellular services in GSM-900 standards in the Chukotka Autonomous District and the Sakhalinregion, and also in Intergrator.ru, which owns the controlling interest in Akos, a cellular services provider in the Primorsk region.

According to Far East Telecom’s general director Igor Zabolotny, his company views the sale of Primtelephone as a lucrative deal, since the buyout bid of Mobile TeleSystems, the country’s largest cellular operator, is based on the high estimated value of the asset. The proceeds to be raised from the sale of Primtelephone will be earmarked for acquisition of controlling stakes in other cellular companies operating in the Far Eastand also for development of these cellular carriers. By doing this, Far East Telecom will not only continue to operate on the cellular services market, but, according to our estimates, will also be able to substantially reinforce its positions in this promising and profitable segment.

For reference:

Far East Telecommunications Company

Far East Telecom is a provider of cellular services in the GSM 900/1800 standards in the Magadan and Kamchatkaregion. The company’s subscriber base totaled 11,715 as of January 1, 2004, with a cellular market share in the Far Eastamounting to 4.87%.

Wireless Information Technologies(WIT)

The company, registered on June 6, 2004, holds the licenses to provide cellular wireless services within the range of 900 MHz in the Sakhalinregion (Licenses #18809, granted in July 2001) and the Chukotka Autonomous District (License #18810, granted in July 2001) and some other constituent entities of Russia.

Azor

The company, registered on October 20, 1994, focuses on provision of cellular telecommunications services. The company’s subscriber base included 18,217 users as of January 1, 2004, with a market share in the Primorsk region of 10%.