1st acquisition outside Kazan

RNS Number:0628H
Teleset Networks PCL
06 November 2007


Press Announcement


FOR IMMEDIATE RELEASE                                   Tuesday, 6 November 2007
                                                                   

        Teleset Networks announces first acquisition outside Kazan with
             RR 267 million (US$10.8m) purchase of OOO Svyazinvest

Teleset Networks ("Teleset" or "the Company"), a leading private fixed-line
telecom network operator in Kazan, the capital city of the Republic of
Tatarstan, Russian Federation, announces the acquisition of the telecom assets
and business of OOO Svyazinvest ("Svyazinvest"), a private fixed-line telecom
operator in Naberezhnie Chelny, the second largest city after Kazan in the
Republic of Tatarstan.

Yiannis Demetriou, CEO of Teleset Networks, commented:

"The acquisition of Svyazinvest is our first strategic move outside Kazan and is
in line with our stated strategy of expanding our network coverage and
operations both within the Republic of Tatarstan and in other cities of the
Russian Federation. It follows the successful integration of TNPKO which we
acquired a year ago and reflects our goal of becoming a leading regional telecom
industry consolidator."

Svyazinvest is the third largest telecom operator in Naberezhnie Chelny, where
it provides services solely through its own fully digital telecom
infrastructure, and currently has a market share of approximately 10.4 per cent.
It has 17,945 telephone subscribers including 13 primary-rate ISDN interfaces
and a total installed capacity of 19,684 lines with one main exchange and 16
remote switching units in the city. This provides a free capacity of 1,739 free
lines to satisfy continued subscriber growth. The assets acquired include three
premises with a total area of 512 square metres, primary, ducting, fiber-optic
and distribution lines as well as work in progress and materials that will be
used for future expansion of the network in Naberezhnie Chelny.

For the year ended 31 December 2006, Svyazinvest increased revenue by 29 per
cent year on year to US$2,314,906.

Naberezhnie Chelny is located some 200 kilometres from Kazan and has a
population of approximately 500,000. Best known for KAMAZ, a leading
manufacturer of heavy trucks, the city is highly industrialised and accounts for
approximately 20 per cent. of the gross regional product of the Republic of
Tatarstan. Since 2005, demand for communications services in the city has grown
at a rate of approximately 110 per cent per annum and is expected to continue to
grow strongly over the next few years. Economic growth in Naberezhnie Chelny is
reflected in the construction of new housing space which in 2007 is expected to
total approximately 5,000 new apartments compared to 4,500 new apartments in
2006.

The purchase consideration for Svyazinvest is RR 267 million (approximately
US$10.8 million) and includes RR 25 million (approximately US$1 million) worth
of work in progress and materials that will be used for future expansion of the
network in Naberezhnie Chelny. Teleset is not assuming any Svyazinvest debt.

The management of Teleset expects to achieve a number of significant benefits
from the acquisition particularly in the following areas:

   *an immediate and significant presence in the second biggest city of the
    Republic of Tatarstan where economic prospects are positive
   *significant penetration of the corporate market in Naberezhnie Chelny
    where approximately 24 per cent of Svyazinvest's customer base is
    represented by corporate subscribers
   *synergies and new revenue opportunities for the combined business
    resulting from increased scale and utilisation of Teleset's existing
    network.

The Company expects to complete the integration of Svyazinvest during the first
half of 2008 and anticipates that the acquisition will enhance earnings per
share for next year.

ENDS



CONTACTS

Teleset Networks PCL                                             +357 22 450 790
Yiannis Demetriou (CEO)

Blue Oar Securities - Nominated Adviser                     +44 (0) 20 7448 4400
Shane Gallwey

Metropol (UK) Limited - Broker                              +44 (0) 20 7439 6880
Alexander Selegenev

Bankside - Financial PR                                     +44 (0) 20 7367 8888
Simon Bloomfield, Steve Liebmann or Andy Harris



About Teleset

Teleset is the leading private fixed-line telecom operator in Kazan, the capital
of the Republic of Tatarstan, Russian Federation, where the business has been
operating since 1996. Teleset owns an all-digital local network with current
switching capacity of 130,000 lines. Its US$17 million acquisition of TNPKO in
2006 improved its coverage of Kazan and increased its market share in Kazan to
27 per cent for voice traffic and 29 per cent of data traffic.

The Company's strategy is to become Kazan's leading telecom operator and to
expand into other cities in Tatarstan and elsewhere in the Russian Federation,
both organically and through carefully selected acquisitions. As part of
management's objective of generating incremental revenues from its network, in
August 2007 the company launched a new cable TV service.

Major long-term shareholders include funds managed by Templeton Asset Management
Ltd., by the Black Sea Trade and Development Bank, an international financial
institution, and by Deutsche Bank.






                      This information is provided by RNS
            The company news service from the London Stock Exchange

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