MegaFon plans to gain edge with proposed $1.2bn Scartel purchase Russian mobile operator Megafon plans to acquire Scartel, a fourth-generation mobile company, for $1.2bn, giving it greater control of the country's high-speed internet spectrum. London-listed MegaFon has already been relying on Scartel's Long Term Evolution (LTE) technology for more than a year, yet the proposal to merge the companies into a single structure should help it gain a further edge over rivals MTS and VimpelCom. Scartel has about 600,000 subscribers while its services, under the brand name Yota, reach 27 per cent of the Russian population. The proposed deal represents a consolidation of the telecoms assets of Alisher Usmanov, Russia's richest tycoon, according to Forbes magazine. Mr Usmanov owns more than 50 per cent of MegaFon, and 82 per cent of Garsdale, the holding company that owns Scartel. MegaFon's board will recommend the company's shareholders to approve the acquisition at an extraordinary meeting on September 12. TeliaSonera, MegaFon's largest shareholder with a 25.2 per cent stake, has already announced its support for the long-awaited proposal, under which MegaFon will also absorb Scartel's $600m in net debt. MegaFon's London global depositary receipts rose 3.6 per cent in trading on Thursday following announcement of the proposed deal and better than expected earnings figures. MegaFon's net profit surged to Rb13.6bn ($412m) in the second quarter versus a just Rb1.7bn in the same period a year earlier. Sales rose 8.4 per cent year-on-year to Rb72.2bn. The company said it had seen significant growth in sales of smartphones, including its own branded smartphone called "MegaFon Login," which according to the company is the cheapest model on the Russian market.