Sistema may buy stake in three telecom firms

Russian conglomorate AFK Sistema has evinced interest in acquiring stake in three Indian telecom companies in an attempt to gain entry into the second largest telecom market in the world.

The company, which has interests in varied sectors like telecom and IT among others, had initiated talks with Reliance Telecom Ltd (RTL), Idea Cellular and Aircel over the past couple of months but failed to strike any deal.

According to telecom industry sources, Idea Cellular and Aircel declined to sell any stake to the Russian billionaire Vladimir Yevtushenkov-controlled company. The fate of the proposal which was sent to RTL is unknown.

They added that Aircel and Idea seemed to be not keen on selling stake to a strategic investor. Rather, they would tap other resources to organise funds needed for their expansion plans.

Top officials of Idea said the company did not entertain the Sistema proposal this time. Top officials of the company quoted statements made by the Tata group chairman Ratan Tata and the Birla group chairman Kumarmangalam Birla that they were serious about Idea and had no intention to sell off the company. Idea, a joint venture between the Tatas and the Birals, had received a similar proposal a year ago.

Ditto was the case with Aircel. The second attempt by AFK Sistema evoked a lukewarm response from the GSM service provider. Aircel, which was also looking for strategic partners, has dropped the idea and is planning for an IPO, the date of which is yet to be finalised.

Sistema had signed a memorandum of understanding to acquire a maximum of 49 per cent in Aircel for $450 million. However, this expired without the parties reaching a conclusive settlement.

The Russian group has recently approached the Anil Dhirubhai Ambani Enterprises group with a proposal to buy RTL, a GSM-based service provider operating in central and northern states of the country, with a reportedly $1 billion offer.

RTL was set up in 1995 by Anil Ambani, who owns 65 per cent in the company, while the remaining was to be transfered to a special purpose vehicle under the restructuring package of the group.

With operations in eight circles "" Kolkata, West Bengal, Orissa, Madhya Pradesh, Himachal Pradesh, Assam and Bihar "" RTL has over 1.52 million customers.