In the end of March, St. Petersburg’s three largest telecommunications firms have announced a $450 million merger that market observers have hailed as marking a new stage in restructuring the country’s floundering telecoms sector. ‘St. Petersburg Telephone, or PTS, will acquire St. Petersburg National-International Telephone, or SPMMT, and St. Petersburg Telegraph in a stock-swap that will create a new entity with a market capitalization of $450 million,’ wrote Gregory Feifer, The Moscow Times. ‘That will push the new company closer to giants like Moscow Telephone.’ The path is now set for this merger to become the precedent for regional consolidation, which should eventually lead to a more efficient Russian telecommunications environment.

Renaissance Capital is acting as financial advisor to the merger. This three-way merger represents the first in the telecommunications sector and one of the few instances in Russia where a multi-party merger has been conducted in a transparent fair manner by an independent financial advisor, without preference to any shareholder group. Moreover, Renaissance is the first investment bank to have a regional telecom merger overwhelmingly supported by the shareholders of the underlying companies with voting approval exceeding 90% in all three cases. ‘These shareholder approvals represent a major milestone and help to put us on track to get back to being recognized as the leading Russian investment bank,’ said Richard Olphert. ‘That has only been accomplished through a dedicated all round effort of Igor Saguirian, Dmitry Ankudinov, Roman Kiryukhin, Yuri Popov, Andrei Braginsky and other experts of the Firm.’

On April 7, official press conference took place in St. Petersburg where the main speakers on 3 St. Pete telecoms merger were Valery Yashin, General Director of Svyazinvest, Sergei Soldatenkov, recently elected General Director of PTS and Yuri Kobaladze, Renaissance PR Director. Representatives of all, important St. Petersburg media outlets and major wire services correspondents attended the conference. Press coverage included articles in Vedomosti, Izvestiya, The Moscow Times and other newspapers.

In order to complete the merger, the only matters outstanding are the necessary regulatory approvals. While a complex transaction, the process is expected to complete by the end of the year.

St. Petersburg merger comes on the back of the Rostelecom and Moscow MMT merger which is expected to be fully completed within the next few months. Renaissance Capital is also acting as financial advisor to the Rostelecom / MMT merger.