Sistema to gain foothold in China and Bangladesh
AFK Sistema, the largest diversified consumer services corporation in Russia and the CIS, has been working in India since September 2007 and is now seeking a niche in China and Bangladesh. It is negotiating the acquisition of an operator in Bangladesh, most likely Teletalk, valued at $300-$500 million.
The corporation will have to compete in the region with VimpelCom, Russia's second-largest mobile phone operator, which has started its Asia-Pacific expansion in Vietnam.
Sistema has signed telecommunication agreements with the governments of China and Bangladesh, Vladimir Yevtushenkov, the main beneficiary of Sistema, said during a meeting with President Dmitry Medvedev on Friday.
The corporation has been granted a license to provide mobile services in the border provinces of China and is considering buying a local operator, Yevtushenkov said.
According to a source of the business daily Kommersant in the corporation, it will most likely seek to buy a stake in a state-owned company.
At present, six mobile operators are working in Bangladesh. According to the Bangladesh Telecommunication Regulatory Commission (BTRC), the total number of their subscribers as of late May was 42 million (25% of the population).
Sistema, set up in 1993, gained a foothold in the Asia-Pacific region in September 2007, when it bought a 10% stake in Indian cellular operator Shyam Telelink. It has since increased the stake to 74% and plans to invest $5-$7 billion in this project.
Gennady Frolov, the holding's director for corporate communications, said Sistema had agreed with Sberbank to obtain a $450 million loan.
Sistema will have to compete with VimpelCom in the region.
Yevgeny Solomatin, director for development at Russian consulting and marketing company Cominfo Consulting, said: "Their interests are already overlapping in the region, where they will rival for licenses and moderately priced assets."
VimpelCom has announced its interest in Laos and Burma. Its deal to buy a 90% stake in Cambodian operator Sotelco from Altimo, which owns a 44% stake in VimpelCom and is managing the assets of Alfa Group, was approved in June, Solomatin said.
Sistema and VimpelCom have invested as much as $1.8 billion in Vietnam, but even multibillion-dollar investment will not make them leaders on the Vietnamese market.