Russian cable and telecoms company MTS has acquired cable operator Multiregion in a move to expand its activities in the sector.
With the acquisition of Multiregion, which provides cable TV services in nearly 40 cities across Russia, MTS will extends its cable TV coverage to more than 110 cities. The company will be actively looking for new buy-out opportunities on the cable market, particularly in new locations. It is also likely to launch quad-play in the near future. With the addition of Multiregion's 700,000 pay TV homes (and another 200,000 taking the low cost 'social package'), to the just under two million subscribers it already has, MTS becomes the second largest player on the Russian cable market.
MTS paid $123.5m to buy 100 per cent of the shares in Multiregion, also agreeing to pay off debts of $94.4m.
By the end of 2010 MTS is planning to complete integration of Multiregion's service into its own pay TV operations, which are being rebranded from Stream to MTS. It is likely to focus on upgrading to digital in urban rather than regional areas.
Analysis
The relatively low price paid by MTS reflects the financial challenges facing some Russian cable operators, which including declining ARPU, credit difficulties and growing operating costs. The tough financial climate means that many operators are seeking new investment.
Multiregion was close to being sold to a consortium of three cable companies - NCN, Renova Media (now Akado), and Sistema-Media - in 2007. The $300m asking-price, however, was far too high for them. Three years on, the number of Multiregion's TV subscribers has nearly doubled and internet subscriptions have tripled, yet the sale price, including debt, is now less than 50 per cent higher than in 2007.
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