Russia may buy 20% stake in SSTL after investing $800 mn

Telecom company Sistema Shyam TeleServices (SSTL), which is a joint venture between Russian conglomerate Sistema and Shyam Group, today said the Russian government may acquire 20 per cent stake in the company after infusing $800 million in it to help it expand across India.

"The Russian Federation will be investing about $800 million to fund our expansion programme in the country. Following this, the Russian government may have 20 per cent or little over 20 per cent stake in our venture," company's Deputy Chief Executive Officer T Narasimhan told reporters here today.

Stating that this was for the first time the Russian government was investing in such a venture, he said talks between Russia and Sistema were going on to work out the ratio of exact stake of the former in SSTL.

He further said the Foreign Investment Promotion Board (FIPB) had already given its approval to this proposal. "We are just awaiting the clearance from Russian government... and the whole process (capital infusion) will take another 3-4 months to complete all the formalities," he said.

After the investment of the Russian government in the telecom venture, the stake of Sistema in SSTL will come down to about 54 per cent, said Narasimhan.

At present, Sistema holds 73.71 per cent equity stake in SSTL, while Shyam Group has 23.79 per cent and the remaining 2.5 per cent is publicly held.

SSTL has projected to infuse a sum of $1 billion in the next one year to roll out its CDMA services in the balance 11 circles.

SSTL, which is eyeing break even point by year 2013, has ruled out the possibility of an initial public offer in the current fiscal. "The launch of the IPO is being talked about for quite some time but the market has to be conducive. I do not think we will come out with IPO in this fiscal," he said.

"Moreover, the position of availability of funds for expansion is very comfortable with the company," he added.

SSTL, which has invested $1.5 billion already to roll out CDMA services, is aiming to have a subscriber base of 15 million post expansion. "After rolling out services in the remaining circles, we wish to have 15 million subscribers within 12-15 months," he said.

SSTL currently has a subscriber base of 4 million with presence in 11 circles, including Rajasthan, Bihar, Jharkhand, Kolkata, West Bengal and Mumbai.

The company today also announced the launch of CDMA services under MTS brand in Haryana by offering half a paisa per second tariff. The company is also offering a million free minutes on its Mcard 498 plan. It is offering 24 hours free download with a speed of 3.1 Mbps as part of the inaugural offer.