OREANDA-NEWS. July 20, 2007. The Board of Directors at North West Telecom gave the green light to the sale of a 15% stake in Telecominvest which is owned by North West Telecom.

This decision is in line with the strategy announced by North West Telecom aimed at managing its subsidiaries and affiliated companies: to divest assets in which North West Telecom is unable to take an active part.

The 15% equity stake in Telecominvest was a long-term portfolio investment for North West Telecom that primarily aimed to generate profit in the form of dividends. However, the minority interest prevented North West Telecom from having a fair amount of control functions and the ability to impact Telecominvest’s business activities, more precisely, on decisions adopted to pay out dividends to the company’s shareholders. Since its incorporation Telecominvest has paid out no dividends, with all net profit invested in the expansion of Telecominvest Group.

An additional effect from holding Telecominvest shares was the spike in the market value of this equity position which is almost completely determined by the stock performance of its major asset, a 31.3% stake in MegaFon securities. Taking into account current estimates and growth potential of the wireless market, at present MegaFon’s value has reached the level attractive for the sale.

Before selling the 15% equity stake, five commercial offers from interested buyers, representing leading players on the Russian telecommunications market, were reviewed. The highest price was offered by Renaissance Capital represented by AF Telecom Holding.

The transaction price equaled $410 mln, which is considerably higher than the estimate of the market value of Telecominvest’s block of shares that was given in a report compiled by independent appraiser Otsenka Consulting.

The transaction is expected to be wrapped up within 3 months.

The plan is to reinvest proceeds from the transaction in a number of promising projects that aim to boost North West Telecom’s market cap by strengthening the company’s positions in core market segments (broadband Internet access, small and mid-sized enterprises and key corporate clients).

Telecominvest is one of Russia’s largest telecommunications holdings. The company was established in 1994 by Saint Petersburg-based telecom firms PTS and SPb MMT to run their subsidiaries and affiliated companies.

The company’s primary assets are MegaFon (31.3%), Web Plus (100%) and Peter Service (100%).

As of January 1, 2007 Telecominvest’s RAS financials looked as follows: sales totaled Rub 168.6 mln, EBITDA amounted to Rub 4,796 mln and net profit equaled Rub 4.20 mln.