MTS sold the MTS Armenia company and the MobiDram payment system controlled by it

MTS (MOEX: MTSS) sold MTS Armenia, operating under the Viva-MTS brand, and the MobiDram payment system controlled by it. The buyer was the Cypriot Fedilco Group Limited, the details of the final beneficiaries of which were not disclosed. MTS claims that the deal is “aimed at developing its core business in Russia.” Experts talk about growing competition in the Armenian market.

MTS announced on the closing of the transaction for the sale of 100% of the shares of MTS Armenia (serving 2.3 million subscribers) to the Cypriot Fedilco Group Limited, the ultimate beneficiaries of which are not shown in public registers. Together with MTS Armenia, MobiDram (100% owned by MTS Armenia), which provides financial services in the country, was also sold. Before the deal, MTS Armenia was owned by Aramayo Investments Limited, which, in turn, through the Luxembourg Allegretto Holding was 100% owned by MTS.

The operator applied for approval of the transaction back in January 2023, but did not receive permission to sell due to concerns about its fictitiousness. Fedilco Group Limited was suspected of being connected with the beneficiaries of the Russian MTS (see “Kommersant” dated April 10, 2023). But now all the necessary permits have been obtained. “The deal is a continuation of the implementation of the transformation strategy of the MTS group, aimed at further development of the ecosystem and core business in Russia,” the Russian company told Kommersant, refusing to disclose details.

After the sale of the asset in Armenia, MTS still had one more subsidiary telecom operator in the CIS – MTS Belarus (49%).

In 2016, MTS sold the Uzbek operator Universal Mobile Systems, and in 2019, MTS left VF Ukraine.

Senior investment consultant at Finam Timur Nigmatullin estimates the asset sold to MTS at approximately 18 billion rubles: “MTS itself is estimated at approximately 2 OIBDA. Over the past 12 months, the OIBDA of the Armenian operator is slightly less than 9 billion rubles. Thus, the valuation based on the multipliers of the entire MTS company gives an assessment of the Armenian subsidiary at around 18 billion rubles, but without taking into account possible movements in the cash and debt position within the framework of the transaction.”

Alexey Boyko, an analyst at the specialized Telegram channel abloud62, believes that the sale is connected with “the gradual cooling of the business climate in Armenia for Russian businesses and the desire of MTS to concentrate on its core domestic business.” In Russia, the company occupies a leading position, in contrast to the Armenian market, where MTS faced growing competition, the expert explains: “The option that the sale is related to the desire to hide the Russian origin of the asset cannot be 100% excluded, but it does not seem to me the most probable.”

Alexey Zhabin