Russia’s Sistema ‘loses $4bn’ as it sells remaining shares in RCom
22 June 2018 | Alan Burkitt-Gray
Russian industrial group Sistema has sold all its remaining shares in Reliance Communications of India, only weeks after being poised to buy the whole company.
According to reports the company sold its 10% stake in RCom “in multiple tranches over the past few months”, with reports saying that Sistema lost $4 billion on its investment.
Capacity has contacted Sistema for a comment and clarification, but Sistema has not replied.
In late March 2018, Sistema confirmed to Capacity that it was considering bidding for RCom’s telecoms business, using earn-out payments originally agreed in 2015 when RCom acquired an Indian mobile business part-owned by Sistema.
Reports at the time from India said that Sistema had bid $1.2 billion for the operation, plus $300 million that Reliance Communications (RCom) owed the Russian group. The bids were understood to include Global Cloud Xchange, RCom’s associate company.
Questions were asked about how Sistema, a company with close ties to the Kremlin, could hope to win approval from regulators around the world to buy GCX’s international subsea network.
More recently sources within RCom and GCX told Capacity that Sistema was not one of the three shortlisted bidders for the business, including RCom’s enterprise network, the group’s data centres, and GCX’s subsea cable network. Capacity understands that the three bidders include one carrier, one private equity investor and one partnership between a carrier and a private equity investor. A decision is expected within weeks.
Sistema, which owns the MTS mobile network in Russia as well as the MGTS fixed network in Moscow, used to be part-owner – with an Indian group and the Russian federal government – of Sistema Shyam Teleservices (SSTL), a mobile network that traded as MTS India.
RCom bought SSTL in 2017 in exchange for Sistema’s 10% stake, but in early 2018 RCom pulled out of the Indian mobile market entirely.