Russian Govt to Take 20% in MTS India Televenture

By June 24th, 2010 AT 11:43 AM

Sistema Shyam Teleservices Ltd(SSTL), the Indian arm of Russia’s Sistema in joint venture with India’s Shyam Group which operates CDMA mobile brand MTS is going to sell off 20% share to Russian Government. Russian Govt is going to invest around $680 million in India via SSTL by October 2010 as expected.

Currently Sistema JSFC  owns 73.71% while Shyam Telelink owns 23.79% of the the joint venture, rest owned by public. Russian Govt will take 20 per cent shares from Sistema’s part to cut down Sistema’s share in the JV 54%. The chief executive, MTS India Vsevolod Rozanov has cleared that this investment from Russian Govt. will take care of company’s immediate funding requirements.

The deal with Russian Government is in talk from 2009 but announcement of Indian budget makes the whole process delayed, and now it is expected the deal to be closed by the end of Q3 or early Q4 of 2010. The company is also planning to go for an Initial Public Offer once the Russian government makes its scheduled investment by the end of the third quarter.

MTS India, as SSTL brands its CDMA services is operational in 12 circles of India, bagged a pan India UAS licence in 2008. In one year MTS India has crossed the milestone of 5 million CDMA subscribers. It also rolled out EVDO based high speed wireless internet in selected cities. Company expects to turn EBITDA positive in 2013 inspite of continued falling of mobile call tariffs to be expected.

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