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Sistema chairman placed under house arrest on money laundering charges

MTS logo

Vladimir Yevtushenkov, chairman of the Russian conglomerate Sistema that owns the telecom operator MTS, has been put under house arrest by Russian investigators on charges of money laundering, reports Reuters.

It says these charges were filed against Yevtushenkov in connection to the share acquisition of the oil producer Bashneft, that was acquired in 2009. In a statement, Russia’s Federal Investigative Committee mentioned that they have “reasonable grounds to believe that Sistema Board Chairman Vladimir Yevtushenkov is involved in the legalisation of property acquired by criminal means.” Sistema however has said that these allegations are baseless and has told Bloomberg that it will use all possible legal means to defend its position. The report also notes that MTS’s New York-listed stock fell by 4.6% to a five-week low of $17.75.

Sistema in India

Sistema currently owns 73.71% stake in the joint venture Sistema Shyam Teleservices Limited which operates under the MTS brand. In May this year, Sistema had sought for an approval from the Foreign Investment Promotion Board (FIPB) to increase its 73.71% stake in SSTL. The telco had then stated plans of buying out its Indian partner Shyam Telecom’s stake in SSTL, thereby increasing its stake in the company to 100%. However, Sistema’s proposal has apparently been rejected by FIPB yesterday, as indicated by a Livemint report.

Until recently, Sistema was probably the only telco which was focusing on the CDMA services in the country, with Tata Teleservices surrendering 20MHz CDMA spectrum in December 2013. However, Reliance Communications had mentioned in March this year that it was renewing focus on its CDMA services now that its CDMA voice revenues have started stabilizing and the CDMA handset ecosystem has begun improving in the country.

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