The Hindu Business Line : Russia’s Sistema buys 10% stake in Shyam Telelink

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First foreign player to invest in India after the Centre raised the FDI cap from 49 per cent to 74 per cent.
Sistema’s most valuable asset is Mobile TeleSystems (MTS), Russia’s biggest mobile phone company.
Shyam Telelink, which offers basic telephony services only in Rajasthan, has applied for new licences in 22 other States.
Shyam will have to invest at least Rs 30,000 crore to set up a green field cellular network across the country.

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New Delhi, Sept. 26 Russian conglomerate Sistema JSFC has finally managed to enter the booming Indian telecom space by picking up a 10 per cent stake in Rajiv Mehrotra promoted Shyam Telelink for $11.4 million. The Russian major has been scouting for a local partner for more than a year and had earlier tried to pick up a 49 per cent stake in cellular service provider Aircel.

As part of the deal, Sistema will ultimately pick up another 41 per cent stake in Shyam and it has the option to increase the stake to a maximum of 74 per cent after taking approvals from the Foreign Investment Promotion Board. Shyam Telelink, which offers basic telephony services only in Rajasthan, has applied for new licences for offering unified access telecom services in 22 other States. “The induction of Sistema in Shyam Telelink ushers a new era in Indo-Russian relationship as this is the first commercial venture between an Indian telecom service provider and any Russian private sector company. This relationship would not only give Shyam Telelink an edge to compete in the competitive Indian market but would also bring new services and practices to benefit the Indian consumers,” said Mr Mehrotra, Chairman, Shyam group.

According to industry estimates, the company will have to make an investment of at least Rs 30,000 crore to set up a green field cellular network across the country. This will enable Sistema to become a pan India operator and take on competition from the likes of Vodafone Essar and Bharti Airtel.

Sistema’s most valuable asset is Mobile TeleSystems (MTS), Russia’s biggest mobile phone company. It also manages the Moscow Fixed line Telephones, and a number of other big telecom companies in the Commonwealth of Independent States (CIS). The Group has business ventures across various sectors including insurance, media, banking and real estate.

The Russian company is the first foreign player to invest in the Indian telecom sector after the Government raised the Foreign Direct Investment cap for the telecom sector from 49 per cent to 74 per cent. Though Vodafone also came in recently to form a joint venture with the Esar Group, it was only replacing another foreign player—Hutchison Telecommunications International Ltd. The other major foreign players which have invested in Indian telecom segment include SingTel, Maxis and Telecom Malaysia. Other global majors including NTT Do Co Mo, Deutsche Telecom and AT&T may also be eyeing a share of the Indian mobile market.

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