Russia's MTS eyes Armenia's K-Telecom

MOSCOW, Aug 21 (Reuters) - Russia's top mobile network operator Mobile TeleSystems (MTS) (MBT.N) is in talks to buy Armenia's K-Telecom, Vedomosti business daily quoted MTS' owner as saying on Tuesday.

Vedomosti quoted Alexander Goncharuk, president of Sistema holding (SSAq.L), which holds a controlling stake in MTS, as saying that due diligence is taking place and the deal has not been closed yet.

Vedomosti said sector analysts value K-Telecom, Armenia's largest mobile operator, at up to $600 million.

Russia's leading mobile providers are in fierce competition to expand into post-Soviet countries where fewer people own mobile phones. Vedomosti said mobile penetration in Armenia, a country of 3.2 million people, is about 50 percent.

K-Telecom, controlled by the Lebanese Fattouch Group, launched its mobile services in 2005 and currently has over one million subscribers.

Last year Vimpelcom (VIP.N), MTS' key rival in Russia, bought Armenia's No.2 mobile provider Armentel for $488 million.