Russia may buyIndian phone stake

Bloomberg

Sistema Shyam TeleServices has licenses to operate in all of India’s 22 regulatory regions, which have a combined population of more than 1 billion. Sistema, which has 74 percent of Shyam, also controls Moscow-based Mobile TeleSystems, which has almost 100 million subscribers, making it the biggest operator in Eastern Europe.

Shuvalov, who runs the government in Prime Minister Vladimir Putin’s absence, did not say how much of Sistema Shyam the government is considering buying. Russian newspaper Kommersant Wednesday said the state may take a 20 percent stake, citing a copy of a draft federal budget. Sistema, which has electronics, property and entertainment units, said in December that its debt was $8.2 billion on Sept. 30.

"The deal might give Sistema some $680 million in cash, allow it to retain control over the company and still give it the chance to either develop it further when the liquidity situation improves or sell the controlling stake in the future," Moscow-based investment bank Troika Dialog said in a research note.

Sistema’s London-traded shares have gained 22 percent this week to $4.86 a piece, valuing the company at $2.3 billion. The stock reached a high of $44 in January 2008.

Shuvalov, 42, said the government needs to approve the revised state budget and make sure there are sufficient funds for the potential acquisition before making a decision.

"If we have such opportunities, we will go ahead with such operations, if not, we will refuse," Shuvalov said. "We would like to understand the intentions of the Indian government, Indian shareholders, with regards to this company, whether they want the Russian government to become a shareholder," he said.

Sistema spokeswoman Julia Belous said a possible government investment "depends on a number of factors."