Russia's Sistema to acquire 17 per cent of its subsidiary in India

NEW DELHI: Russian oil-to-telecom conglomerate Sistema JSFC will acquire 17.14% in Sistema Shyam Tele-Services Ltd (SSTL) from the Russian government. "Under the agreement, payment for the shares will be made to the Russian federal budget in instalments over a period of five years as follows: 30% in 2016, 25% in 2017 and 15% in each of 2018, 2019 and 2020," the company said on

Monday. The Russian Federation had acquired 17.14% of SSTL shares in March 2011and simultaneously concluded an option agreement with Sistema to sell these shares back to the company after a period of five years for the higher of $777 million or the market value determined by an independent valuator. Sistema did not share the value at which it will be buying the shares back from the Russian government. Sistema currently holds 56.68% in SSTL, which offers mobile telephony services under the MTS brand across nine telecom circles in India, and 23.98% is held by its Indian partner Shyam Group. The remaining is with other Indian partners and minority stakeholders.

The move comes as SSTL is in the process of merging its teleccom operations with Reliance Communications (RCom), which itself will combine with Aircel to form a new entity, expectedly in the coming month.

In November 2015, RCom had announced the acquisition of Sistema's Indian telecom unit in an all-stock deal. Promoters of SSTL will hold about 10% in RCom after the deal.