The Russian government has invested about US$600m in Sistema Shyam Teleservices (SSTL) in return for a 17% stake in the company.
SSTL is a joint venture between Russian operator Sistema, which, before the deal, owned 73.71% of the company, and Indian…
The Russian government has invested about US$600m in Sistema Shyam Teleservices (SSTL) in return for a 17% stake in the company.
SSTL is a joint venture between Russian operator Sistema, which, before the deal, owned 73.71% of the company, and Indian conglomerate the Shyam Group, which held 23.8% of the company.
A statement explained that, following an additional share issue expected to take place in the first quarter of 2011, Sistema and the Russian government’s total stakes in SSTL will not exceed 74%, as required under Indian FDI caps.
Sistema Shyam, which has licences in all of India’s 22 circles, will use the funds to expand its retail network and accelerate the launch of operations.
This investment is part of a scheme aimed at settling India’s US$1bn outstanding debt with the former Soviet Union by financing investments in India.
SSTL needed a decision on the investment before it could submit an IPO proposal, expected next year, as it required accurate information about its shareholding structure.
In the meantime, the JV secured a US$200m loan from Russian lender Gazprombank to fund its expansion.
“The signing of the mandate letter by Gazprombank for raising a loan of US$200m in favour of Sistema Shyam Teleservices is very significant for us,” said Vsevolod Rozanov, president and CEO of SSTL, in a statement. “It further reinforces our commitment to roll out a world class telecom network in India by harnessing the power of CDMA technology. This is bound to benefit both our customers and also create value for all our shareholders.”
