Sistema's India unit seeks foreign investment limit hike

Approval will enable conversion of preference shares in company into equity shares

Sistema Shyam TeleServices Ltd, majority-owned by Russia's Sistema, said on Wednesday that it had sought the government's approval to raise the foreign direct investment limit in the telecommunications carrier beyond 74%.

Govt had last year allowed foreign companies to fully own local telecommunications carriers, removing an earlier cap of 74%. But any stake increase beyond 49% in the telecom sector needs prior government approval.

Sistema and Russia's government together own nearly 74% in the unlisted Sistema Shyam joint venture, while India's Shyam Group has a 24% stake. The rest is owned by individual Indian investors.

A Sistema Shyam spokesman declined to comment beyond the company statement.

According to a copy of Sistema Shyam's application filed in March with the foreign investment regulator and seen by Reuters, the approval will enable conversion of preference shares in the company held by a Sistema unit into equity shares.

Sistema Shyam last year bought new telecommunication permits in an auction after its earlier permits were cancelled by court order on a broader licensing scandal. The company has said it is interested to buy more airwaves in the next auction and would need funding for that.

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