Russia-based operator group MegaFon prepared to enter Uzbekistan through a venture with its parent company and the Uzbek state, with the newly formed business set to take control of scandal-hit former Telia unit Ucell.

Under the terms of the deal, ownership of state-run operator Ucell will be transferred into Digital Holding, a JV formed by Uzbek state asset management company AUGA and Digital Invest: a business set-up by MegaFon and parent USM Telecom.

Digital Invest pledged to pump $100 million into Digital Holding as part of the deal, which is expected to complete later this year.

When finalised Digital Holding will be 51 per cent owned by MegaFon and its affiliates, with AUGA holding the remainder.

MegaFon CEO Gevork Vermishyan said: “In terms of the consumption of digital services, Uzbekistan is one of the most promising markets in the CIS, which over the past ten years has shown more than threefold growth in cellular subscribers, but at the same time it is still far from saturation.”

“We do not plan major structural changes within Ucell in 2021, but rather focus on finding synergies and implementing best practices in Ucell to grow its business.”

Ucell has been completely state-owned since Telia divested its remaining stake in the operator in December 2018, as part of its exit of the Eurasia region and in the wake of a bribery case related to the unit.

GSMA Intelligence figures for Q4 estimate Ucell as the country’s largest operator by connections with 10.4 million, followed by Veon-owned Beeline (6.6 million) and Mobiuz (3.3 million).