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. Last Updated: 07/27/2016

Mobile Telesystems Gets Part of EBRD Grant

Mobile Telesystems, the cellular phone division of MGTS Moscow City Telephone, has received part of a 29.5 million ecu ($26 million) European Bank for Reconstruction and Development grant awarded in August 1995, a bank official confirmed Wednesday.

The EBRD spokeswoman, however, declined to comment on why the money to develop and finance Mobile Telesystems, or MTS, was disbursed more than 1 1/2 years after it was awarded. She would only say that part of the $26 million grant had been disbursed, but would not provide a date or figure.

The Russian newspaper Kommersant Daily on Wednesday reported that the delay came about as a result of management struggles at Mobile Telesystems.

Kommersant also reported that in exchange for the grant, EBRD received 4 percent of stock originally belonging to MTS' chief investors DeTeMobile, the cellular division of Deutsche Telekom, and Siemens, which supplies the company with equipment. The EBRD spokeswoman declined to comment.

Sistema, which industry followers believe to be a Moscow city investment vehicle, had taken "close to a controlling stake" in Mobile Telesystems, Kommersant reported. The newspaper alleges that the Sistema/Mobile Telesystems alliance plans to compete with Vimpelcom's "Bee Line" cellular provider, which dominates the cellular phone market.

"If Sistema controls this company, it means MTS may get the backing of Moscow city government against the leading mobile provider Bee Line," said one telecommunications analyst who asked not to be identified. "It might help them logistically, leasing space for radio stations and operationally make it easier for MTS day to day."