Russia’s AFK Sistema mulls merger of Indian unit with Reliance Communications

By bne IntelliNews May 19, 2015

Russian telecom and industry holding AFK Sistema is looking to merge its Indian mobile unit SSTL, operating under the MTS India brand, with Reliance Communications, Bloomberg reported.

Sistema’s controlling shareholder Vladimir Yevtushenkov already met the owner of Reliance Communications, Anil Ambani to discuss a deal which could be structured as a non-cash transaction, industry sources told the agency on May 15.

Reliance Communications serves 109mn customers in GSM and CDMA standards. It controls 11.3% of the Indian mobile market, while SSTL has 0.9% market share and 8.9mn customers. "The Indian mobile market is highly competitive and highly fragmented, with 11 providers currently operating in the space," UralSib analysts said in a note. "SSTL, as one of the weakest operators, has so far failed to achieve break-even, having generated negative $82mn in OIBDA in 2014."

Nevertheless, any progress towards a merger would support the stock, the analysts said, as it would eliminate the risks of SSTL requiring further financing from Sistema's corporate centre. "At the moment, SSTL has zero value in our SOTP valuation of AFK Sistema. [However], Sistema currently offers 15% upside to our year-end target price of $9.6/GDR. We reiterate our Buy recommendation for the stock," the note added.

Related Articles

Erdogan, Putin discuss deepening strategic relationship

Turkish President Recep Tayyip Erdogan and Russian leader Vladimir Putin on May 27 confirmed in a telephone call “the aspiration for further development of the strategic partnership,” the Kremlin ... more

EU to fund feasibility study on Slovakia’s proposed Eastring gas link to Balkans

The EU has agreed to help fund a feasibility study on the Eastring pipeline project, which would link Slovakia to the Balkan markets, Slovak transmission system operator Eustream announced on May 26. ... more

Opec prolong output cuts by nine months

Opec member countries reached an agreement to cap oil output for another nine months until March 2018, Bloomberg and the Financial Times reported on May 25, citing unnamed sources close to the ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Dismiss