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Tele2 Eyes Russian Acquisitions

Sweden's Tele2 AB (Nasdaq: TLTO) is on the lookout for acquisitions to expand its operations in Russia, which the operator has singled out as a key growth market.

Tele2 wants to increase its footprint in the country by buying either new licenses or other service providers "in certain regions in Russia, not everywhere," said president and CEO Harri Koponen on a third-quarter earnings call today. (See Tele2 Reports Q3.)

"We continue to selectively look for acquisitions in the Russia region when it fits with our corporate DNA and our numbers," he said.

The operator is already rapidly building GSM networks across Russia, where it has licenses in 37 regions that cover 61 million people. During the third quarter, Tele2 launched GSM and EDGE services in seven new regions in the country and added a total of 1.1 million customers, bringing its Russian mobile subscriber base to 13.3 million. Russian subscribers now account for 62 percent of Tele2's overall mobile subscriber base of 21.3 million.

Koponen said the network rollout in Russia was going "according to plan, and even better." By the end of the first half of 2010, he said, Tele2 will have launched commercial services in all markets where it holds licences.

And Russia will have a big part in driving growth for Tele2, according to the operator. "Tele2's future growth lies within our emerging market footprint, with a strong emphasis on Russia," said Koponen.

Tele2's Russian operations are already a large part of the operator's regional business, which spans Austria, Croatia, Estonia, Germany, Latvia, Lithuania, Norway, the Netherlands, and Sweden. In the third quarter of this year, Tele2 generated revenues from Russia of SEK1.9 billion (US$275 million), about 19 percent of the operator's overall third-quarter revenues of SEK9.7 billion ($1.4 billion).

— Michelle Donegan, European Editor, Unstrung

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