Reuters
Sistema, one of the country's
largest conglomerates with assets ranging from oil to telecoms, is
looking at a range of possible deals as it seeks to diversify
into new business lines such as agriculture and infrastructure.
"Opportunities in our M&A
pipeline range from transportation to logistics
to infrastructure and forestry, mining and further agriculture
assets, some of which we plan to announce in the near term,"
chief executive Mikhail Shamolin said.
Shamolin also told a conference
call with analysts last month that Sistema, which had sales of $33
billion last year, was considering taking part in the privatization
of Russian state-owned United Grain Company, or UGC.
"Agriculture in Russia has
strong investment potential. Russia has the lowest land prices compared
to European, North and South American benchmarks," he said.
Internal rates of return
in that sector "can exceed 20 percent, and we are considering
further cluster acquisitions in 2012," Shamolin added.
UGC is issuing additional shares
to sell a stake of 50 percent minus one share in the
company, allowing the government to retain majority control.
Several parties have expressed
an interest, including U.S. firm Bunge, Louis Dreyfus Commodities
and Russian investment group Summa.
Sistema recently set up
an agricultural joint venture with members of the Louis Dreyfus
family — which owns one of the world's four dominant agribusiness
companies — with the aim to expand in the grains sector.
It is also midway through other deals
that could help grow the company, which owns media and technology
assets and a controlling stake in oil producer Bashneft.
Sistema's health-care operation Medsi
is merging with the Moscow government's health-care assets, and the
group is also restructuring its electricity business to focus
on power grid operations.
The company, which counts Russia's
biggest mobile-phone group MTS as part of its empire, still trades
at a discount to its sum-of-the-parts valuation.
Shamolin said he would propose
a buyback of about $300 million worth of shares at the
group's board meeting in May. Sistema will then cancel the shares, he
said.
Sistema slumped to a net loss
in the fourth quarter of last year due to a nearly $700 million
write-off related to a February decision by India's Supreme Court
to cancel 122 telecoms licenses held by eight operators, including
Sistema, over alleged irregularities in the way they were awarded
in 2008.
The net loss was $530.2 million
compared with a profit of $447.3 million in the year-earlier
period. Net profit excluding one-off items was $261.4 million.
India's telecoms regulator said last
month that the price of a 2G spectrum in a reissue
of licenses could be hiked tenfold, drawing howls of protest
from operators.
Based on the regulator's
recommendation, which is not binding on the government, Sistema would have
to pay about $6 billion to renew its rights to the licenses
and get rights to additional spectra, Shamolin said.
"This price is absolutely
unacceptable. … So far it is only a recommendation, and we hope
for a more economically reasonable approach," he told reporters
in Moscow.
The company initially paid $460
million for the spectrum, and Shamolin said a fair price could
not be "two or three times more than what we had paid."
"I can definitely say we are not
married to this asset whatever happens, this is not our position,"
Shamolin added. He, however, stopped short of saying Sistema could exit
the market.
Courtesy Themoscowtimes
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