Russia gets FIPB okay to buy 19.8 pc in Sistema :ET

NEW DELHI: The Foreign Investment Promotion Board (FIPB), the apex government body that approves all major investments into the country, has cleared the Russian government’s proposal to acquire a 19.8% stake in telecom company Sistema Shyam for about $676 million (Rs 3,051 crore). While the proposal had already been cleared by the telecom and commerce ministries, FIPB has now given its approval after the home ministry said it was not opposed to the deal. ET had first reported in March this year that the Russian government planned to pick up a 20% stake in Sistema Shyam for about $680 million. This values the company at about $3.5 billion. Russia’s Sistema currently holds a 73.7% stake in the telco while the rest is held by the Shyam Group. “Sistema Shyam previously arranged around $1 billion foreign funds and has been trying to arrange more funds through a foreign direct investment for the network establishment in various telecom circles. Accordingly, the foreign promoters of the company approached the Russian Federation for additional financial support to the company, that agreed in principal for an investment of up to $676 million in the equity of Sistema Shyam,” FIPB said when clearing the proposal, as per the minutes of the agency’s meet that held on November 20. The telco will now allot 662.7 million shares to the ‘Federal Agency for State Property Management of the Russian Federation’. Following the stake sale, Sistema’s stake in the company will come down to 54.08%. Sistema, which offers mobile services under the MTS brand in India, was among the nine new companies which were given licences early last year. The telco, which recently launched mobile services in Delhi, plans to be a pan-India player by the end of next year and currently has over three million subscribers here. Sistema Shyam’s top management had earlier told ET that it was looking at listing the company on the local bourses next year. The Russian government will be utilising the money under the Rupee-Rouble debt agreement between both the countries to finance its 19.8% stake in the telco. With India owing huge money to Russia (for products bought prior to the collapse of the Soviet Union), the two governments have agreed that Russia can utilise this rupee debt to finance its investments and joint venture projects in India.