Tele2 sells Russian unit to VimpelCom

Russia's No. 2 cell-phone company, OAO VimpelCom, has agreed to the acquisition of its domestic peer Corp. Severnaya Korona (CSK). The ownership will transfer from Swedish telecom Tele2 AB, for about 1.6 billion kronor ($235 million). CSK serves the Irkutsk region of eastern Siberia, with a subscriber base of about 570,000, which is more than 21 per cent of the region's well-saturated cell-phone market. VimpelCom says that CSK's licenses cover a geography with a population of about 2.5 million. VimpelCom Executive Vice President and General Director for Russia Nikolai Pryanishnikov said the region is one of prime importance in the Far East of Russia and Siberia.

This announcement marks is latest in a series of foreign disposals by Tele2, though the company emphasized its ongoing commitment to the Russian market. In January 2007, Tele2 had sold its Dutch and Belgian subsidiaries to Amsterdam-based Versatel Telecom International NV, for $258 million. In October 2006, the company had agreed to the sale of its French fixed-line and broadband operations to SFR SA, France's No. 2 mobile phone services provider, for $446 million.

In conjunction with CSKs sale, Tele2 also signed up a 10-year national roaming agreement with VimpelCom. The company would like the sale not to be viewed as a shift in Tele2's strategy to expand its Russian operations, and expects to announce new Russian acquisitions before the end of 2007the year.

The Alfa Group, a Russian private equity group, is the biggest shareholder in VimpelCom owning about a 40% stake.

In 2006, CSK generated Ebitda of Skr79 million on revenue of Skr237 million.

Russian competition authorities have approved the transaction.