Sistema Vladimir Evtushenkov sold 7.5% of shares in Indian telecom company Reliance Communications, having left the market where it had been operating since 2007. Sistema’s losses from investments in the Indian telecommunications industry are estimated at $4 billion
The Economic Times reported that Sistema 51 had exited the capital of Indian telecommunications company Reliance Communications (RCom). A Sistema spokesman confirmed the sale, noting that the decision was made “as part of a group-wide strategy to manage liquidity.” “The package was sold on the public market,” the corporation representative added. Thus, Sistema completely left the Indian telecom market, where it had been operating since 2007. Then the Corporation purchased 51% of the company Sistema Shyam TeleServices Ltd (SSTL) for $58.1 million.
Evtushenkov’s company received a stake in Reliance Communications in the fall of 2017 as a result of the merger of RCom and SSTL (Sistema owned 73.7% in this company). As a result of the merger, RCom received SSTL licenses and its frequencies in the 800-850 MHz range. Initially Sistema’s stake in the merged company was 10%, but after SSTL minority shareholders converted their shares in the RCom papers, it diluted to 7.5%, said a representative of the corporation earlier.
A representative of Sistema did not say how much the company gained from the sale of its stake in RCom. A source, familiar with the details of the deal, said the sale of the stake had lasted since March. RCom’s market capitalization on the National Stock Exchange of India now stands at 40.4 billion rupees (about $593 million). Sistema’s stake could be worth about $45 million. At the time SSTL and RCom merged, 10% in the latter was valued at $250-290 million.
The Russian company no longer intends to invest in the highly competitive and rapidly consolidating Indian telecommunications market, the Economic Times wrote. According to the newspaper, there is a more compelling reason – a disagreement between Sistema and RCom’s main owner Anil Ambani. Sistema has also abandoned plans to buy other RCom assets worth $1.5 billion, such as submarine cables and data centers.
According to the Economic Times, Yevtushenkov’s holding company recorded a loss of $4 billion from its investment in the Indian telecom. A Sistema spokesman would not comment on this figure. The company has already faced difficulties in managing SSTL, when in February 2012 the Constitutional Court of India unexpectedly revoked 21 of the 22 licenses of the operator. The frequencies, for the purchase of which the company had previously spent $296 million, had to be acquired anew. They cost an additional $ 382 million. SSTL is still suing the Indian Department of Telecommunications because of the frequencies purchased at an auction in March 2013. If the Supreme Court (the next hearing will be held on July 10) will support the company, RCom, under the terms of the merger deal, will have to compensate Sistema for $300 million, according to a source of the Economic Times.
After leaving the telecom market in India, Sistema continues to operate in Southeast Asia through its venture capital fund Systema Asia Fund. The $50 million fund was founded in 2015 in Singapore and specializes in investments in high-tech companies.