The Merging of Technological Giants: Silknet Buys Geocell

On January 26, the largest transaction in the history of Georgia was created by a full spectrum telecommunications company merging: Silknet (internet, cable television and landline) merged with mobile phone operator Geocell. Silknet announced the deal after an agreement was reached with Geocell’s shareholders, Telia Company (STO: TELIA) and Turkcell (NYSE: TKC, IST: TCELL).

The value of the transaction amounted to $153 million. Pending the approval of the Georgian National Communications Commission, the acquisition is to be completed in the first half of 2018. With regards to funding, Silknet said that it would use its own funds along with extra finance from TBC Bank. Houlihan Lokey and Erneholm Haskel served as the financial advisers on the transaction, and Dentons served as the legal adviser.

Silknet is a member of the Orange Alliance, which promotes the development of international telecommunication companies, and their work efficiency and enables them to use the experience and technologies of the world class leading operator.

The merging of the two telecommunications giants will enable Georgian customers to access internet, cable television, mobile and fixed telephone services, including mobile access to exclusive Silknet content.

"The transaction allows us to create an integrated telecommunication operator that owns fixed and mobile networks,” said Giorgi Ramishvili, Chairman of Silknet and its founding company Silk Road Group Supervisory Board. “The increased scale will provide better access for the company to international financial markets, which allows for the continuous development of additional investments and new technologies. Our subscribers will benefit from this, because our main goal is to provide Georgian customers with even higher quality products, services and content. We welcome the merits of Silknet and Geocell with high professionalism and corporate culture. This transaction continues the long-term tradition of our group which implies Georgia’s integration with the rest of the world, and we are confident that it will contribute significantly to the development of digital infrastructure in Georgia.”

Telia Company’s sale of the Georgian mobile operator followed its policy of offloading its non-Scandinavian operations in order to focus on its core market.

“I’m happy to announce another step in our effort to, over time, leave Eurasia and focus on the Nordic and Baltic regions within the framework of our new generation telco strategy,” said John Dennelind, President and CEO of Telia Company. “I would also like to thank Geocell’s employees for their outstanding contributions and wish them all the best in the company’s next phase.”

Silknet

Silknet is the country's largest fixed network, offering customers internet, broadcasting transit (cable TV) and fixed telephone services, in addition to fixed and mobile CDMA services. It has a 41% market share of the internet market, and a further 48% of the fixed telephone market. Since 2015, Silknet has provided 4G LTE fixed internet services and is now the largest wholesale operator in the region.

Silknet is a Silk Road Group company founded by Giorgi Ramishvili in 1997. Shareholders of Silk Road Group are Giorgi Ramishvili, Aleksi Topuria and David Borgeri. Silk Road Group is one of the leading private investment groups operating in the Caucasus and Central Asia, and in Georgia it is represented in different sectors including transport, real estate, hotel business, telecommunication and more.

Nowadays, Silk Road Group companies employ about 5,000 people. Over the last decade, Silk Road Group, with its partners, invested $500m into the Georgian economy.

Geocell

Geocell, Georgia’s second-largest mobile operator, is owned through Fintur, a holding company in the possession of Telia Company and Turkcell.

Finnish-Swedish Telia Company is a leader in the telecommunications sector. It has operations in Nordic and Baltic countries, Eurasian markets including Russia, Turkey and Spain. Telia Company and its partner companies have more than 185 million subscribers in 17 countries.

Máté Földi