State considering Svyazinvest share swap

26 Jan 2009

The Russian government is interested in retaking full control of state telecoms holding company Svyazinvest, Dow Jones Newswires reports. The operator is currently 25.1%-owned by private telecoms firm Comstar UTS, and it is thought that the government is looking at a share swap deal which would give Comstar control of MGTS, Svyazinvest’s fixed line subsidiary in Moscow, with Comstar returning its Svyazinvest stake to state control. Comstar is known to be open to the idea of divesting its interest in Svyazinvest, with the head of parent company AFK Sistema having written to the government last year to offer to sell the Svyazinvest stake for around USD1.9 billion. Comstar acquired the stake two years ago for USD1.3 billion. With Svyazinvest’s 23% holding in MGTS valued at USD135 million, it is likely that the state would have to look at wiping out Comstar’s debts with government-controlled Sberbank. Outside of Moscow Svyazinvest has majority interests in Russia’s seven mega-regional fixed line operators and a stake in long-distance operator Rostelecom.