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Mobile giant goes on buying spree

There are more signs of an aggressive buying strategy by Russia’s second largest mobile operator, Vimpelcom. It’s offered $US 750 million for regional mobile company SMARTS.

In November Vimpelcom started to look for a loan of $US 4.5 billion to finance acquisitions.

Market watchers questioned whether Vimpelcom was keen on the domestic market or planned to go shopping abroad.

Last week the mobile company announced plans to buy 100% of domestic fixed-line operator Golden Telecom for $US 4.2 billion dollars.

It seems that Vimpelcom wants to spend another $US 750 million on the regional operator SMARTS.

Russia’s telecoms minister Leonid Reiman says the new company will have clear competitive advantages.

“The deal will increase the competitiveness of both companies and they will have more opportunities to participate in large projects, even on foreign markets. Russian companies are now targeting European and Asian markets and a bigger company would have more advantages in such projects,” said Reyman.

During its ten year history SMARTS has managed to drive the number of its subscribers to 4 million.

It operates in 15 Russian regions and accounts for 3% the Russian market.

The purchase will bring Vimpelcom very close to its main rival MTS in term of subscriber base.

Analysts say although Russian market is getting saturated it still makes sense for Vimpelcom to buy assets at home.

“If it acquires SMARTS it will first of all get rid of a strong rival and become the leader in the region. It will also improve its position on the Russian market and will be hot on the heels of MTS,” explained Maksim Sabbatin, telecom analyst of IKS-Consulting.

Vimpelcom seems to have shifted its focus from foreign markets to the domestic one. This month it has already bought an operator in the Irkutsk region and is targeting Russia’s Far East where it has little presence so far.