Rostelecom Forms Media JV; To Contribute RUB 1 Bln Worth Assets

(RTTNews) - Rostelecom OJSC, Russia?s national telecommunications operator, announced Tuesday that its Board of Directors has approved a deal to create a media joint venture with the All-Russia State Television and Radio Broadcasting Company or VGTRK, Russian producer of pay-TV channels for cable and satellite broadcast.

Under the deal, Digital Television will carry out an additional share issue by private subscription, with the proceeds going to Rostelecom. The company will acquire ordinary registered uncertified shares of Digital Television during its additional share issue and receive 25.33% of Digital Television?s voting shares.

Rostelecom will pay for these shares using 100% of its equity interest in NKS-Media and RUB 250 million in cash. The company said its assets contribution to the JV amounts to more than RUB 1 billion.

The JV will be made up of VGTRK?s Digital Television and Rostelecom?s subsidiary NKS-Media.

The main aim of the JV is to accelerate the development of the combined media assets in the field of production and distribution of semantic pay-TV channels for cable and satellite broadcast.

The company noted that the participation in creation of Russian producer of semantic pay-TV channels will provide Rostelecom with access to an expertize of high-quality original content creation.

In addition, this will also enable the company to benefit from economies of scale.

Sergey Kalugin, President of Rostelecom, said, ?We have considered a number of scenarios for the further development of our TV channels and have made the decision to consolidate them with VGTRK media assets, becoming a shareholder of the leading player on semantic pay-TV channels market. We believe they will generate greater value as part of a larger JV with VGTRK rather than attempting to develop our media business as a standalone entity.?