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. Last Updated: 07/27/2016

Sistema Takes Over Key Computer Firm

In the race to invest in the country's information technology market, Moscow financial holding Sistema has taken over a top information-technology company, saying it wants to create the country's leading computer-systems integrator.

No details of the value of the deal are available.

Sistema's acquisition of Ankey, which installs computer systems chiefly in large companies and government agencies such as the Central Bank and Defense Ministry, may indeed give the computer company a market advantage.

Sistema, one of the country's largest financial-industrial groups, with interests in banking, media and oil, was founded in 1994 and is centered on the Moscow Telephone Co., or MGTS. Close to the Moscow city government, in mid-February it posted $180 million in net profits on turnover of $1.5 billion in 1999, and valued its assets at $2.8 billion.

Ankey is not listed on the stock market and no figures of its financials are available.

Sistema chief Yevgeny Yevtushenkov said he wants the new division to snap up no less than 60 percent of the country's systems-integration market, the daily Kommersant reported Wednesday.

But the systems-integration market is too large and complex for such statements, Dmitry Lyudomirsky, general director of Algorithm Consulting Co., said Wednesday in a telephone interview.

"It's like saying a company wants to take over 60 percent of the restaurant business," he said. "By definition, there are many small companies on the market. Each creates individual solutions to problems large companies can't."

The recent takeover will most likely not change the market situation in the near future, Felix Glikman, president of Tops, another systems integrator, said Wednesday in a telephone interview.

"The market isn't as profitable as Sistema's other businesses, such as telecoms or oil, so Sistema might end up acting as a support for Ankey," Glikman said. "That's a different task than the one imagined now."

Ankey will retain its name and general structure under a newly created Sistema division called Sistema Informbizness. The division will employ up to 300 people, and have a budget for this year of $30 million.

Ankey chief Igor Krokhin will remain the company's head in addition to his appointment as Sistema vice president. In a sign that Sistema may be following Western examples by combining telecom and Internet technologies, Sistemy Telekom president Alexander Goncharuk joined Sistema Informbizness' board of directors.

Under Sistema, Ankey's projects will mostly continue unchanged, Krokhin said in a written response to questions from The Moscow Times. The company will develop smartcard and media technology and develop and distribute information-technology systems.

Lyudomirsky of Algorithm said the buyout was a logical move for both companies.

"Ankey did work for City Hall and Sistema thought it would be easier to work with the company by buying it," he added.

Glikman said of all the nation's information-technology companies, Ankey's corporate culture is most likely the closest to Sistema's. But Ankey might still clash with its new owner. "The companies work differently because of the nature of their business," Glikman said. "Sistema has a command culture."

Glikman added it is difficult to tell whether competition from Sistema Informbizness will pose a threat to competitors.

The market lags significantly behind those in the West, not because of a lack of technology or know-how, but from a want of customers seeking to undertake large projects.

Glikman attributes that partially to management style. "Managers are still generally interested in quick money and few think ahead into the future," he said.

Ankey began actively seeking investors in the summer of 1998, and initially looked abroad for cash, Kommersant reported. However, hooking up with a foreign company would mean Ankey would lose its licenses with a number of state agencies, including the Defense Ministry, the State Technology Committee, the Federal Security Service and FAPSI, the powerful security department responsible for monitoring communications.

The search for a Russian investor began precisely when Sistema decided it wanted to buy out an information-technology company.

The signing of the deal, however, dragged on for over a year. Ankey - which was hit by the 1998 ruble devaluation as government agencies' funding dried up - first had to bring its own house in order. The company was also investigated for tax-payment irregularities, of which it was eventually cleared.

In a statement reported in Kommersant, Krokhin said the division's main task will be to "earn money from the market," and in the long run to place the firm's shares in Western stock markets.