Russian holding to use $1.5 billion on overseas purchases

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MOSCOW, June 8 (RIA Novosti) - A Russian financial company, Sistema, seems to be withdrawing the $1.5 billion it earned this February after floating 19% of its shares on the London Stock Exchange from plans to take over Svyazinvest, Russia's local fixed telecommunications monopolist.

Today's Vremya Novosti daily reported that Sistema's president, Vladimir Yevtushenkov, said yesterday the money would be used to take over other operators in Russia, the United States, India, and Greece.

Yevtushenkov said Sistema did not see the postponement of Svyazinvest's privatization "as a tragedy."

"Privatization is not likely to happen this year," he added. Previously, Sistema had announced it would bid for 75% minus one share in Svyazinvest - the whole state-owned stake.

Instead, Sistema is considering various acquisitions at home and overseas. One possibility is the acquisition of a 49% stake in Indian mobile operator Aircell for $450 million, part of which will clear India's debt to the USSR. Yevtushenkov said the deal would hopefully be sealed by the end of the year. He also said the corporation would not look only at telecommunications, as a company in the holding, Nauchny Tsentr, is holding talks on buying an Indian electronics producer.

AFK Sistema is one of the biggest and most successful Russian telecommunications holding companies. It has a 50.6% stake in Russia's No 1 Moscow-based mobile operator MTS, and 56% in Moscow's fixed telephone company MGTS, a European major. Yevtushenkov is the founder and, with a 65.18% stake, the key shareholder.

Last year, Sistema posted $5.71 billion in revenues, up 52% year on year, and a consolidated net profit of $411 million.

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