MOSCOW-Deutsche Telekom is reportedly considering the sale of a part of its 40-percent stake in Russia’s biggest carrier Mobile TeleSystems (MTS) to decrease its multi-billion dollar debt load.
The Vedomosti newspaper quoted an anonymous high-ranking official from Deutsche Telekom as saying the corporation may decrease its stake in MTS to 25 percent plus one share.
“We are not planning to abandon the Russian market completely, but we consider a possibility of selling a part of the interest,” the official said.
Russian media linked the expected sale to Deutsche Telekom’s intention to decrease its huge 64 billion euros (US$62.2 billion) debt accumulated by the previous management to 50 billion euros (US$48.6 billion) by the end of 2003. The Prime-TASS business news agency estimated the cost of the 40-percent stake in MTS at US$1.3 billion and said the capitalization of the carrier with more than 5 million clients is US$3.2 billion.
Alexei Buyanov, first vice president of Sistema Financial Corporation, which holds a 42-percent stake in MTS, said Deutsche Telekom had hired a financial consultant for recommendations on how to decrease the debt. The sale of MTS’ stake is among the recommendations, according to Buyanov.
Deutsche Telekom refused official comment. Its spokesman Hans Ehnert only said the corporation is reviewing the strategy regarding subsidiaries and will make plans public in the middle of November.
Russian market experts believe Sistema is the most likely buyer, as it wants to have a controlling interest in the biggest Russian carrier. Buyanov confirmed that “consolidation of the controlling interest in MTS may be of interest for Sistema.”
Analysts believe the likely option is that Deutsche Telekom will keep a 25-percent stake and sell 9 percent to Sistema, thus raising its interest to 51 percent, while the remaining 6 percent will be floated to join 18 percent of shares that already circulate in the open market. Sistema Telecom President Alexander Goncharuk, who manages Sistema’s telecom assets, also believes such options are realistic.
Alexei Yakovitsky from the Moscow-based consultancy Unified Financial Group (OFG) said the sale will hardly affect MTS, as Deutsche Telekom currently has little influence on the activities of the carrier, which is practically managed only by Sistema Telecom.
