Sistema Shyam to sell 20% to Russia
11 December 2009
A Russian government investment agency is to take a 19.8% stake in Sistema’s Indian operation, though Sistema will buy it back in 2014 Read more: [Sistema] [Sistema Shyam] [MTS] [India] [Russia] [Russian Federal Agency]
Comment: This sounds a bit like a disguised — not very well disguised — government subsidy for Sistema’s investment in India. But, given that France Telecom, Deutsche Telekom, Singtel, Global Crossing and a number of other international operators have state shares in one form or other, that is not unusual.
Indian mobile operator Sistema Shyam TeleServices will sell about 20% stake to the Russian government for $677 million. The Indian telecom major is planning to dispose off 662 million shares, which represents a 19.8% stake, on a preferred basis to the Russian Federal Agency at $1.06 per share.
The proceeds will be used to fund the expansion of its operations in the Indian market.
The Indian mobile unit of Russian oil-to-telecoms group, Sistema, is also planning to offload up to 228.55 million shares to its Indian founders at par. The Russian government intends to sign a deal under which Sistema will guarantee to acquire the Russian government’s shares in Sistema Shyam by 2014.
Parent company Sistema controls the MTS mobile phone business in Russia and Sistema Shyam also markets its services under the MTS brand in India.
Sistema holds 73.71% of Sistema Shyam at present, while India’s Shyam Group owns 23.79%. The remaining shares are held by some minority shareholders. The transaction is expected to end before December 31 2009. GTB
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