Sistema reiterates advantages of German deal

22 May 2007

Russian holding company Sistema, which owns a 52.8% stake in leading Russian cellco MTS, still sees a merger with German incumbent Deutsche Telekom (DT) as ‘the best for both sides,’ Sistema’s CEO Alexander Goncharuk told newspaper Handelsblatt, adding however that a deal was unlikely in the near future. ‘We think the combination of two such big companies would create a mega-concern with standing in the American, the European and the Asian market,’ Goncharuk said in the interview. ‘The biggest obstacle to such a merger is political opposition to such cross-border transactions and DT’s difficult situation at the moment,’ said Goncharuk, referring to the ongoing strike which has now entered its second week. He noted that Sistema was not actively pursuing a deal.

Sistema said last year that it would be interested in acquiring a stake in Deutsche Telekom via an asset swap, though it denied holding talks with the German telco. At the time German finance minister Peer Steinbrueck said the sale of the German government’s 15% stake in DT, and the 16% holding of state-owned KfW Bankengruppe, was not up for discussion. Goncharuk said in the interview with Handelsblatt that media reports in recent months regarding plans to swap MTS shares for DT’s Hungarian unit Magyar Telekom were mere speculation.

Germany, Deutsche Telekom (DT)