Russian Government and Sistema Agree Stake Swap
Russian service conglomerate Sistema has reached an agreement with the Russian government to sell its 25% plus one share stake in national telecom holding Svyazinvest, according to business daily Kommersant quoting a governmental source.
The report said Sistema will give its Svyazinvest stake and half of CDMA operator Sky Link to the government for a 23% stake in fixed-line operator Moscow City Telephone Company, MGTS, owned by Svyazinvest, and the write-off of a RUB 26bn ($826m) loan from Sberbank. The debt will be assumed by state-owned Vnesheconombank.
Sistema-owned Comstar bought the Svyazinvest stake in 2006 for $1.3bn, anticipating further privatization of the company. After numerous public statements by the government against further privatization, the Sistema board offered to sell its stake to the government for $1.9bn last year. The Russian government holds a 75% minus one share stake in Svyazinvest.
The deal would give the government a 100% ownership and pave the way for a revamp of Svyazinvest, which controls fixed-line networks and 13 mobile regional networks in Russia, although none of them cover Moscow. Sistema would retain its stake in cellular provider OAO Mobile TeleSystems, MTS, and also give it an option to merge Comstar and MGTS to consolidate its market share.