Merko enters the telecommunications and gas network business

AS Merko Ehitus Eesti is investing in the business of designing, building and maintaining telecommunications, electricity and gas networks, and is acquiring a 35% stake in Connecto Eesti AS. As part of the transaction, our electrical construction business line will merge with Connecto and work will continue under the Connecto brand.

Thus far, Merko has focused primarily on high-voltage structures in the field of electrical construction. In addition to high voltage, Connecto also offers services in the field of design, construction and maintenance of low and medium voltage electricity networks, telecommunications and gas networks.

‘Merko and Connecto have been operating in the same market, although each with a different focus. The synergy created by combining the competencies of two strong players allows us to offer even better and more comprehensive service’, said Ivo Volkov, Chairman of the Management Board of Merko Ehitus Eesti. ‘The increasingly important field of telecommunications and the growing volume of distributed energy production have created the need for new network solutions – these are rapidly developing and promising areas in which we see a growing need for an increasingly professional service.’

Once the transaction is completed, the selection of energy and telecommunications services offered by Merko-related companies will expand significantly. Connecto, in turn, will see the strengthening of its competence in the area of design, construction and installation of high-voltage substations, there will be an improvement in project management and engineering competencies, the company’s financial capacity will increase and its readiness to participate in major projects, in both Estonian and foreign markets, will expand.

Juho Järva, Chairman of the Management Board of Connecto Estonia: ‘Connecto has found success through familiarity with our customers’ networks, a capable team, and trust-based cooperation. We have enhanced the company’s competitiveness with our wide range of services and coverage across Estonia. Looking ahead, we will continue to maintain our current values and want to expand our business volumes in both domestic and foreign markets’.

Merko and Connecto have implemented several joint electricity transmission network projects on behalf of Elering. New high-voltage cables were laid in the Suur Strait and Väike Strait in 2019–2020, and high-voltage overhead transmission lines between the Kadaka, Veskimetsa and Harku substations in Tallinn were replaced with underground cables in 2020–2021.

The approval of the Estonian Competition Authority is needed in order for the transaction to take effect. Following the approval of the Authority, employees from Merko Infra AS’s electrical construction business will join Connecto Eesti AS, and in the future electrical construction services will be provided together as a company with more than 300 employees under the Connecto brand.

Merko will continue to offer the construction of buildings and structures, concrete works, the extraction and sale of construction aggregates and the development of residential real estate.

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