Russian mobile operator MegaFon is close to finalizing the acquisition of NetByNet, the fourth-largest Internet service provider (ISP) in Moscow, in a transaction valued at around US$360 million. The ISP is valued at approximately nine times its estimated EBITDA for 2011. MegaFon and domestic cableco MultiRegion were both granted permission by Russia's Federal Antimonopoly Service (FAS) to acquire NetByNet in March. If the deal goes through as planned, it will signal MegaFon's long-desired entrance into the lucrative Moscow broadband market.
Founded in 2006, NetByNet provides broadband Internet access and approximately 90 television channels across its cable network, and currently has around 450,000 subscribers (including 6,000 corporate customers), of which about 85 percent are in Moscow and the surrounding region. Its largest competitor in that region's broadband segment is Comstar United TeleSystems (Comstar-UTS), which is believed to have a 30 percent market share in the city. NetByNet posted revenues of US$52 million in 2010, with EBITDA reported at US$25 million.
NetByNet is currently owned by Fairlie Holding & Finance Limited, whose main shareholder is Gregory Bernstein, with a 34 percent stake. Other shareholders include Gazprombank (31 percent), Aton Capital Private Equity Group (16 percent), and Ivan Tavrin (16 percent). The remainder of the company's shares are held by NetByNet's management. The company was put up for sale in October 2010, with national fixed-line operator Rostelecom initially expressing an interest in acquiring the ISP.
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