New Delhi: Paving way for Russian Federation to pick up 20% stake in Sistema-Shyam telecom firm, that operates under brand MTS, the shareholders of the company today approved the proposal at its Annual General Meeting.
The Russian Federation will put $600 million (about Rs 2,800 crore) in the company, which got pan-India telecom licence to offer CDMA based mobile services in January 2008.
“It has been accorded to offer, issue and allot on a preferential basis in one or more tranches, up to 58.406 crore equity shares of Rs 10 each at a price of Rs 49.31 to the Federal Agency for State Property Management of the Russian Federation,” the resolution, passed at the AGM, said.
The shares would be alloted within 12 months from the date of the shareholders’ approval in the AGM.
Sistema-Shyam is a joint venture between Sistema, a Russian diversified group, and Shyam group of India. Prior to Russian Federation’s inclusion, Sistema had a 73.71% stake in the joint venture, while Shyam Group held 23.79% in the company and the remaining 2.5% was held by the public.
The board of director, however, ensured that post this approval the foreign shareholding in the company would remain within the sectoral cap of 74% as prescribed under the existing FDI policy for the telecom sector.
The company has already secured necessary approvals for Russian Federation’s investments in the company.
When contacted, Shyam-Sistema spokesperson said “shareholders of Sistema Shyam Teleservices Limited have once again reposed the trust in their relationship with the Russian Federation by clearing the path for investments being brought in through the partnership.”
SSTL said that the funds would be used for the expansion of MTS’s services in India.
“SSTL plans to use the funds to be received to finance development of the company’s activities, the expansion of its branded retail network and launch of operations in a number of new circles,” it added.
The company has 12 operational circles and expects to start services across the remaining circles by next year. It plans to launch services in UP (east), UP (west) and Gujarat by the end of this calendar year.