Stockholm, Sweden-based Tele2 said it has purchased 100% of Vostok Mobile Northwest BV from MCT Corp. This deal gives ZAO Arkhangelsk Mobile Networks, ZAO Novgorod Telecommunications, ZAO Murmansk Mobile Network and Parma Mobile (Komi Republic).
The acquired companies have more than 250,000 mobile subscribers and Tele2 now says that it is now the number-four operator in the Russian market, where it has more than 3.9 million subscribers.
Tele2 principally operates in the saturated Nordic and continental Europe markets. Earlier this year, it was forced to sell its UK and Irish operations after finding the competition in those markets too tough. In June it announced it was putting its long-running acquisition of Versatel on hold while it considered other alternatives.
At first glance, the acquisition in Russia makes a certain amount of sense as a move to boost its local unit. However, Tele2’s Russian unit is a distance fourth to the other players (MTS, VimpelCom BV, and Megafon) and doing business in Russia is not without its headaches, as can be seen by the difficulties that Norwegian incumbent Telenor AS has experienced over the past year with its stake in VimpelCom.
In addition, saturation levels in Russia are estimated to be reaching 99%, which means that growth will start to tail off unless it can succeed in snatching market share from the competition.
