Russia may buy stake in Indian teleco: report

Russia's government is considering investing 680 million dollars (525 million euros) in an Indian telecoms firm to help out the majority Russian owner, a newspaper reported here today.

Russia has set aside 23.7 billion rubles "for acquiring shares in the joint venture Shyam Telelink," now known as Sistema Shyam TeleServices, in its draft budget for 2009, the 'Kommersant' daily said, citing a copy of the document.

A source close to the deal told the 'Kommersant' the funds would go to buying a 20 per cent stake in Sistema Shyam TeleServices, which has licences to provide mobile phone services in 22 Indian regions and has over 5,00,000 subscribers.

The Indian venture is already more than 73-per cent owned by Russia's Sistema group, which is controlled by billionaire Vladimir Yevtushenkov and also owns Russia's largest mobile phone operator, MTS.

Under the agreement being considered, Sistema would retain a majority stake in the Indian venture and Russia would buy the shares as part of a plan to settle New Delhi's outstanding Soviet-era debt to Moscow, the daily said.

The newspaper said Sistema would find it difficult to pursue its Indian expansion plans without extra support due to its hefty debt burden. Many big Russian companies have scaled back investment due to the global credit crunch.