Technical Clarity on recieving Russian govt funds only next year : CEO

Mumbai: Sistema Shyam Teleservices (SSTL) expects to receive the $676 million, parked with the Reserve Bank of India, once there is ‘technical clarity’ on the purchase of the 20% stake in the company by the Russian government. SSTL is a joint venture between Russia’s Sistema and the Shyam Group. The Russian government will be utilising a part of the rupee-rouble trade reserve balance of $2 billion with the RBI to buy the shares in SSTL.
Speaking on the sidelines of the the launch of SSTL's mobile servcies in Mumbai, on Wednesday, Sergey Savchenko, chief financial officer, SSTL, told FE, “We have already received the FIPB (Foreign Investment Promotion Board) approval and the boards approval to issue additional shares. We are now expecting the technical clarity between the two governments (Russia and India) to happen by early next year. These funds would be used for capital and operational expenditure.” The firm said it requires an additional $ 500 million for its capex plans as it wants to invest $ 2 billion by the end of 2010. It has already invested $ 1.5 billion in acquiring specturm and developing the mobile telephony network.
Currently, Sistema, owned by the Russian government, is the majority stakeholder in SSTL with a stake of 73.71% while the Shyam Group holds 23.79% and the public 2.5%. Under Indian foreign direct investment norms, there is a cap on investments by foreign investors in a telecom venture of 74%.
SSTL also plans to raise $ 300-400 million to support its operational expenditure and is already in talks with a number of local banks in India for the same. Vsevolod Rozanov, president and ceo, SSTL, said, “We cannot raise funds from the international market to support our opex according to the RBI norms and therefore we are in talks with most of the local banks in India to raise about $ 300-400 million and these will be long term loans.”