VF Ukraine (formerly MTS Ukraine)

VF Ukraine is a telecommunications company.

History

2022: Stopping payments to MTS

At the end of August 2022, it became known that MTS stopped receiving deferred payments for the sale of its subsidiary in Ukraine. We are talking about the company "VF Ukraine" (operates under the Vodafone brand, its owner is the international group Neqsol Holdings), for which the Russian telecommunications operator was supposed to receive $734 million. This amount was named at the time the transaction was announced.

The company announced in its statements for the first half of 2022 that MTS no longer receives additional remuneration as part of the sale of VF Ukraine. What amount is in question is not specified in the document, but in 2021 MTS received 1.23 billion rubles from the owner of VF Ukraine ($16.75 million at the weighted average rate for that year), RBC notes.

MTS stopped receiving payments for the sale of Vodafone

According to MTS documents, the company received the first part of the earn-out in the amount of 1.2 billion rubles in March 2021. The next payment to the company has not been received.

The fair value of the contingent consideration recognised as at 31 December 2021 amounted to RUB 1.87 billion. As of June 30, 2022, due to significant uncertainty related to the receipt of remuneration due to political and economic instability and sanctions in Russia, the group recognized a reserve for the full amount of remuneration and its value was zero, the MTS materials say.

In a report filed with the U.S. Securities and Exchange Commission (SEC), MTS indicated a different amount. The company agreed to sell VF Ukraine for $689 million, or 44.386 billion rubles. At the same time, the company immediately received $645 million, or 41.567 billion rubles, another $44 million was supposed to be a deferred payment.

MTS and the buyer agreed on the amount of the additional payment, which was calculated on the basis of the final financial statements as of the date of sale, and MTS recognized additional income in the amount of $28 million (2.10 billion rubles).^[1]

2019

Bakcell bought "VF Ukraine" for $734 million

On November 25, 2019, MTS announced the sale of its Ukrainian telecommunications business to the Azerbaijani operator Bakcell. The transaction value is $734 million.

Under the terms of the agreement, Vodafone Ukraine will become the property of OOO Telco Solutions and Investments (a subsidiary of Bakcell). In turn, the Russian operator will make a deal through a subsidiary of Allegretto Holding S.a.r.l., registered in Luxembourg.

MTS announced the sale of its Ukrainian telecommunications business to the Azerbaijani operator Bakcell

The Azerbaijani company will leave Preludium BV, registered in the Netherlands, which, in turn, acts as the sole shareholder of Vodafone Ukraine.

The deal is complementary to the updated MTS strategy, which involves the concentration of efforts in the Russian market, which generates more than 90% of the group's revenue, and the development of a complex of modern digital services based on the basic telecom business, - said MTS President Aleksei Kornya, commenting on the conclusion of the transaction.

According to him, taking into account the insignificant share of Ukrainian business on the scale of the group, MTS will maintain an attractive level of dividend payments within the framework of the policy adopted at the beginning of the year.

According to RIA Novosti, MTS press secretary Aleksey Merkutov, the perimeter of the transaction includes subsidiaries of VF Ukraine. He refrained from details.

Earlier it was reported, in addition to VF Ukraine, MTS will sell a retail network - VF Retail, PTT Telecom Kyiv telecommunications operator, as well as IT SmartFlex, an IT services company.

Raiffeisen Bank analyst Sergei Libin considers the cost of the transaction to be underestimated, given the rapid growth of the Ukrainian telecommunications business.

However, do not forget about the geopolitical situation of recent years, which makes the Ukrainian market now quite risky for Russian business, the expert added.[2]

Preparing the company for sale

On November 6, 2019, it became known that the Antimonopoly Committee of Ukraine (AMCU) published a decision on the petition of the Azerbaijani mobile operator Bakcell to buy the company "VF Ukraine" (trademark Vodafone). The owner of the sold company is the Dutch offshore Preludium, which through the Luxembourg offshore Allegretto Holding belongs to the Russian operator Mobile Telesystems (MTS ).

In October 2019, AMCU has already approved Bakcell's petition to buy VF Ukraine. Documents released by the committee revealed some details of the possible deal.

As a result of the transaction, the offshore Preludium will be sold, and MTS will lose control of VF Ukraine. At the same time, MTS undertakes not to compete with VF Ukraine for three years, and also not to lure employees and suppliers of the company being sold.

In addition to VF Ukraine, the deal will include its retail network - VF Retail, PTT Telecom Kyiv telecommunications operator, and IT SmartFlex, an IT services company.

The MTS press service stated that the submission of documents to the AMCU and the receipt of individual permits are necessary formalities that do not yet indicate the fact of^[3] deal^[4].

2015

Transition to the Vodafone brand and renaming the company to "VF Ukraine"

In 2015, after the deterioration of Russianthe Ukrainian relations MTS , she agreed British with the operator Vodafone to transfer her Ukrainian "daughter" to his brand. Later, the MTS Ukraine company itself was renamed VF Ukraine MTS^[5]

MTS lost 5 billion rubles. in a Ukrainian bank

MTS suffered from the bankruptcy of the Ukrainian Delta Bank. In his accounts, the company kept cash equivalent to 5 billion rubles. MTS warned that the company's future report will reflect the loss of its Ukrainian division. This is due to the bankruptcy of the Ukrainian Delta Bank, one of the financial organizations in whose accounts the operator stores MTS money^[6].

In total, MTS-Ukraine has 1.4 billion hryvnias in its Delta Bank accounts (5.2 billion rubles in accordance with the rate operated by MTS). It is this amount that will be written off at the loss of MTS at the end of the quarter. The lost amount is 14% of MTS Ukraine 's revenue for 2013, which amounted to UAH 9.96 billion (39.5 billion rubles at the exchange rate at the end of 2013).

MTS noted that the accounts of other Ukrainian banks serving the company now contain amounts equivalent to 16.1 billion rubles.

At the beginning of 2015, Delta Bank was the fourth bank in Ukraine in terms of assets - 60 billion hryvnia (165 billion rubles; hereinafter, data on the current exchange rate of the Central Bank of the Russian Federation) are provided, the third in terms of deposits of individuals - 24 billion hryvnia (66 billion rubles). In this regard, he became one of the eight so-called systemically important banks in the country. However, on March 2, the National Bank of Ukraine declared Delta Bank insolvent and introduced a temporary administration in it.

2014

How MTS subscribers in Ukraine were listened to from Russia

The National Commission for the Regulation of Communications and Informatics Ukraine(NCRSI) considered in June 2014 the issue of violation of licensing conditions by MTSUkraine the "-" - "subsidiaries" of the Russian MTS. In April, the Security Service of Ukraine (SBU) discovered that calls from some subscribers of the Ukrainian MTS pass through Russian. switchboards

The relevant data were submitted to the NCRI, which confirmed the violations identified during the audit. In this regard, the question arose of revoking the license from the Ukrainian MTS. In response, the company filed a lawsuit against the regulator.

As a result, the NCRI said that "in the conditions of the temporary occupation of the territory of Ukraine and overcoming the terrorist threat on it, countering unauthorized access to telecommunication networks of telecommunications operators and information transmitted over these networks is difficult." The Commission decided not to deprive MTS of the license, but obliged it to eliminate the revealed violations by December 1.

The Ukrainian MTS expressed satisfaction with the decision of the commission. The company notes that they became a victim of an "attack" from Russian networks, and they themselves informed the regulator about this violation. The Russian office of MTS declined to comment.

The text with the results of the NCRI audit was published on the blog of the Ukrainian Independent News Bureau. The "attack" on the MTS Ukraine network became possible thanks to the peculiarities of the GSM protocol. GSM subscribers are served on switches - MSC, which take data from the database - HLR. To speed up the process, database caches are created - VLR.

When subscriber data is updated in the HLR, a corresponding service signal is sent to the VLR - Stand Alone Insert Subscriber Data (SAI_DN). In the same signal, you can indicate that the subscriber should be served through a special SCP application server - this is necessary, for example, for online charging^[7]

Network disconnection in Sevastopol

On the night of August 5-6, 2014, all subscribers of the MTS Ukraine operator in Sevastopol were disconnected from communication. Another Ukrainian operator "Kyivstar" works intermittently, communication on Life is normal. The communications department of the government of Sevastopol explained to the agency that the problems with cellular communications are explained by the connection of telephone towers belonging to MTS Ukraine to an optical fiber cable extended from the territory of the Krasnodar Territory.

"We switch them to switchboards." Vivacell-MTS This company has its own equipment. From three to seven hours there will be interruptions in communication between both Russian and Ukrainian, "said the head of the department Vadim Dvoryanenko.

Russian mobile communications work stably in Sevastopol, the agency notes. Dvoryanenko said that residents of the city were notified in advance of communication problems, and on August 5, almost all Russian SIM cards, mainly the MTS operator, were sold out. On the evening of August 5, 2014, in the former central office of MTS Ukraine, the sale of Vivacell-MTS SIM cards began, 20,000 packages of this operator were delivered at night, the agency reports. Vivacell-MTS are the legal successor of MTS Ukraine, ITAR-TASS reports. All employees will move to work for a new company. We would like to keep Ukrainian roaming, but this is a big question, "said^[8].

On August 5, 2014, the MTS Ukraine network in Simferopol ceased to operate. On the rest of the Crimea, including Sevastopol, on this day the company's network was still working. MTS representative Dmitry Solodovnikov explained that the operator, for reasons beyond his control, now has no technical opportunity to restore the work of one of the key communication facilities, which is located in Crimea. As a temporary solution to the problem, MTS Ukraine asked other operators working in Crimea to open technical roaming to its subscribers.

2013: Coverage of more than 98% of Ukraine

MTS Ukraine, a 100% subsidiary of Mobile TeleSystems OJSC (MTS), a telecommunications operator in Russia and the CIS countries.

As of September 2013, the MTS Ukraine PrAO network covered more than 98% of Ukraine, where 99% of the population lives. The company served more than 20.76 million subscribers. The company owned licenses for the provision of mobile (GSM-900/1800 standard, CDMA-450), landline and international/long-distance communications, and also provided international roaming services on five continents. Revenue for 2012 amounted to 9.7 billion hryvnia.

The consolidated subscriber base of the company, excluding the subscriber base of MTS Belorus, as of September 2013 amounted to about 100 million subscribers.

MTS and its subsidiaries provide GSM services in all regions of Russia, as well as in Armenia, Belarus, Ukraine and Turkmenistan; in the UMTS standard - in all regions of the Russian Federation, in Armenia, Belarus; in the CDMA-450 standard - in Ukraine. The company also provides fixed-line and cable television services in all federal districts of Russia and Ukraine - the number of MTS paid home television subscribers is more than 3 million households, the number of broadband Internet subscribers is more than 2 million.

2003: MTS entry into Ukrainian telecom market

MTS entered the Ukrainian market in 2003, acquiring the local mobile operator UMC. Later, UMC went to work under the MTS brand, and the company itself was renamed MTS Ukraine^[9].

Notes