Uralsvyazinform has raised its stake in Ermak RMS to 100% and become the sole shareholder of Tyumenruscom.  The increase was made as part of the BoD’s decision to consolidate the cellular business of Uralsvyazinform.  

In July 2004 the BoD of Uralsvyazinform adopted a decision to consolidate the company’s cellular business.  In line with this decision, its subsidiaries Ermak RMS, South Urals Cellular Company and Tyumenruscom are to be merged to Uralsvyazinform by the end of Q105.  On the basis of the proprietary complex of the merged entities and the branch Production of Cellular Communications Standard GSM a unified super-regional branch of Uralsvyazinform will be established to provide cellular services. 

In October 2004, the BoD of Uralsvyazinform approved the Master Plan for consolidation of its cellular business, which contains a list of specific corporate and organizational measures. 

Ermak RMS

At the time when the decision was adopted to consolidate the cellular business of Uralsvyazinform the equity positions in Ermak RMS were divided up as follows: Uralsvyazinform (90%), Yugra Telecom (10%). 

In December 2004 the BoD of Uralsvyazinform approved the acquisition of 10% in Ermak RMS from Yugra Telecom for Rub 114.4 mln.  The value of this stake was confirmed by independent appraisers.  In line with Russian legislation, the transaction was endorsed by the Federal Anti-Monopoly Service.  The transaction was executed. 

Ermak RMS was founded in 1994.  It has a license to provide cellular services within a range of 900 MHz (GSM-900) in the territory of Tyumen region and Khanty-Mansiisk Autonomous District - Yugra and the Yamal-Nenets Autonomous District. 

As of December 31, 2004 Ermak RMS had a subscriber base of 668,000 (+93% in 2004), holding around 48% of the cellular market in three regions. 

Tyumenruscom

At the time when the decision was adopted to consolidate the cellular business of Uralsvyazinform the equity positions in Tyumenruscom were divided up as follows: Uralsvyazinform (51%), INANKOcenter Information Research and Communications Center (46%) and Rustel (3%). 

In October 2004 in line with the decision of the BoD of Uralsvyazinform, the company acquired a 3% stake in the charter capital of Tyumenruscom from Rustel for Rub 1.7 mln.  The transaction was executed.

In November 2004 INANKOcenter filed an application to withdraw from Tyumenruscom in line with the federal law “On Limited Liability Companies”.  Thus, Uralsvyazinform became the sole shareholder of Tyumenruscom. 

In accordance with Russian legislation, permission was received from the Federal Anti-Monopoly Service to amend the stake of Uralsvyazinform in the charter capital of Tyumenruscom.

Tyumenruscom was established in 1995.  The company is licensed to provide 800 MHz (DAMPS-800) cellular services and 1800 MHz (DAMPS-1800) in the Tyumen region.

As of December 31, 2004 Tyumenruscom had a subscriber base of 11,000 DAMPS-800 standard subscribers in the southern part of the Tyumen region, holding some 3% of the regional cellular market. 

Comments

Acting general director of Uralsvyazinform Anatoly Ufimkin had the following to say: “Recent actions aimed at raising Uralsvyazinform’s stake in the charter capitals of Ermak RMS and Tyumenruscom are the result of extensive preparatory work.  Earlier, in 2002, the company raised its holding in South Urals Cellular Telecom to 100%. Thus, at present, Uralsvyazinform is the sole shareholder of the company’s three subsidiaries which provide cellular services, and this has considerably facilitated the cellular consolidation process and reduced the company’s risks.  The main objective of the consolidation is to raise the manageability and economic efficiency of the cellular business, including introduction of a single trademark.  The next important stage in the cellular consolidation process is for the shareholders of Uralsvyazinform to hold EGMs, where the issue of merging subsidiaries to the parent company will be examined.