The purpose of the reorganization is to establish on the basis of Rostelecom an integrated operator capable to achieve leading positions in Russian telecommunications market.
The creation of integrated operator will allow to substantially increase competitive ability of the merged company by providing full range of telecommunication services in Russia as well as by elimination of conflict of interests between companies participating in the merger.
In addition, the reorganization aims to reach the following goals:
To realize synergies from merger process by:
Optimization of capital expenditures due to cost reduction on construction of overlapping infrastructure and centralization of equipment procurement;
Optimization of administrative and management expenses by economies of scale, centralized management and elimination of overlapping functions.
According to estimates of McKinsey & Co. and Roland Berger strategy consultants, the total net present value of synergies could amount to RUR 30 bln.
To raise flexibility in adopting strategic and managerial decisions by management levels’ reduction.
To enhance the share liquidity of the merged company by switching of all the minority shareholders of the merged companies, including the holders of preferred shares, into a single share.
To strengthen credit rating and lower the cost of borrowing by bolstering the financial stability and market positions of the merged company.
The achievement of these goals is expected to entail market capitalization of the merged company.
