Sistema JSFC on Monday said that it will acquire the stake held by the Russian Federation in its Indian telecom venture, Sistema Shyam TeleServices Limited (SSTL).
The Russian Federation, through the Federal Agency for State Property Management, holds a 17.14 per cent stake in the Indian company. It had acquired the stake in March 2011 for about $700 million. At that time it had signed on an option agreement with Sistema to sell these shares back to the company after a period of five years for $777 million or the market value determined by an independent valuator, whichever was higher.
While the actual deal size was not disclosed, payment for the shares will be made to the Russian federal budget in instalments over a period of five years, with Sistema paying 30 per cent of the deal amount in 2016, 25 per cent in 2017, and 15 per cent annually in 2018, 2019 and 2020, said a company statement.
The Russian Government had invested in Sistema at a time when the company was bullish on India.
Sistema had acquired spectrum for pan India operations in 2008 but then had to give it all up following the court ruling cancelling spectrum allocations in the wake of the 2G scam.
The company did try to stay in operation by participating in the subsequent auctions in 2011 but managed to win airwaves in only 8 circles.
Since then it has struggled to compete with bigger players such as Airtel and Vodafone. Recently, Sistema announced a ₹4,500 crore deal under which its telecom assets in India will get merged with Reliance Communications in a bid to be part of a larger entity.
Sistema JSFC will hold 10 per equity stake in Reliance Communications and transfer its 9 million customers and 800 MHz band spectrum to the merged entity. With the announcement it is clear Russia will have no equity stake in RCom.