India’s Department of Telecommunications (DoT) has given the go-ahead for the Russian government’s mooted acquisition of a 20% stake in mobile network operator Sistema Shyam Teleservices (SSTL), which offers services under the MTS India banner. According to the Hindu Business Line, the DoT, responding to an enquiry regarding the proposals from the Foreign Investment Promotion Board (FIPB) noted: ‘SSTL (Sistema-Shyam Telecom Ltd) is permitted to bring in foreign equity by issue of fresh shares as per the lock-in principles of the DoT.’
SSTL is seeking approval to allow the Federal Agency for State Property of the Russian Federation to grab a 20% stake through the issuance of 662.7 million fresh equity shares at a nominal value of INR10 (USD0.22) per share, which the Russian government body will acquire at a rate of INR49.31 per share, equalling an investment of around USD676 million. Indian promoters in the company meanwhile will also inject additional equity in order to retain a 26% holding, in order to remain in line with the country’s foreign direct investment rules. Upon completion of the proposed deal Sistema’s holding in the joint venture will fall to approximately 54%, while Shyam’s shareholding will remain unchanged at around 26%.