Telekom Austria eyes Belarus purchase :: Charter'97 :: News

While there is broad consensus that the target is Velcom, Belarus` second-biggest mobile operator after MTS Belarus, co-owned by Russia`s Mobile TeleSystems (MBT.N: Quote, Profile, Research), scant data about Velcom makes its value difficult to assess.

Exane BNP Paribas analyst Justine Dimovic put the value of Velcom at around $800 million, based on its 2.6 million clients at the end of last year, and the $310 per subscriber Vimpelcom (VIP.N: Quote, Profile, Research) paid last month for Tele2`s (TEL2b.ST: Quote, Profile, Research) Russian unit.

Morgan Stanley analyst Christopher Fremantle said in a note to clients that based on comparable operators` data, Velcom`s revenue could be around 200 million euros, and its core earnings margin about 50 percent of that.

"Applying these simplistic assumptions with an acquisition price of 1.6 billion euros would imply a heavily cashflow dilutive deal," he said.

While there is little public financial detail about Velcom, its ownership structure is muddy as well. Russian news agency Interfax reported last month that Cyprus-based SB Telecom had taken over all of Velcom by buying out the Belarus government.

But Velcom declined to comment on that information. SB Telecom gives an address in Cyprus` capital Nicosia on its website. The address belongs to the offices of PriceWaterhouse Coopers, but officials there said they did not know SB Telecom.