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Russian Government Approves Buy Of 20% In MTS India For $600M

The Russian government has approved an equity investment in Sistema Shyam TeleServices (SSTL), the Indian telecom subsidiary of Russian Conglomerate Sistema. The Russian Government will pay roughly the Indian Rupee equivalent of $600 million, “in the form of Indian rupees held in accounts representing Indian governmental debt to the Russian Federation”.

MTS India will use the funds to finance the growth of its EVDO data cards business, the expansion of its branded retail nework, and launch of operations in new circles. The issuance of shares to the Russian Government is subject to regulatory and corporate approvals, including the approval by the General Meeting of shareholders of SSTL, and the signing of binding agreements.

SSTL President and CEO Vsevolod Rozanov had earlier said that the Russian Government is buying 20% stake, so the investment would value the new telco at around $3 billion. Given the investment, it’s highly unlikely that MTS is among the new telcos looking to exit India. The Economic Times had reported recently that an MTS IPO in India would be likely in early 2011.

Sistema owns 73.71% in Sistema Shyam, which operates in India under the MTS brand, and has licenses to operate services in all 22 circles.

MTS, in terms of gross revenues, has performed the best among the New Telco’s, as per gross revenue data published by the TRAI, and it currently has 0.83% of the revenue marketshare. The company says that its subscriber base is now more than 6 million, up from 5.58 million by the end of July 2010. Rozanov had said earlier that SSTL is on course to break even by 2013.

MTS’s EVDO Data Cards business affords it an ARPU of Rs. 500, compared. ARPU for most incumbent telecom operators in India is between Rs. 150-300.

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    © 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ