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. Last Updated: 07/27/2016

Business in Brief

MDM Energo Stake

MOSCOW (MT) -- MDM Group clinched a deal to buy a 30 percent stake in Kuzbassenergo, supplier of electricity to one of the country's largest concentrations of heavy industry, Vedomosti reported Wednesday.

An MDM source was quoted as saying the deal is in its final stages, while another source said the sale was complete. The undisclosed price tag is estimated to be above the company's current market capitalization of $109 million.

Moscow-based brokerage and investment bank Renaissance Capital sold the shares, rumored to have been bought on behalf of Russian Aluminum.

The deal would make MDM the largest coal consumer in one of the few regions of Russia where it is not yet the dominant coal producer. Kuzbassenergo currently buys its coal from Kuzbassrazrezugl, a unit of MDM's largest competitor in the coal sector, the Urals Mining and Metals Co.

United Financial Group analyst Fyodor Tregubenko said this shows MDM is taking steps to become a major player on the power market, buying up shares in many energos and national power grid Unified Energy Systems.

DTV Keeps Its License

MOSCOW (MT) -- Russia's only fully foreign-controlled television channel, DTV, on Wednesday beat out two challengers hoping to take over its current frequency package.

The Press Ministry announced late Wednesday that DTV, which is controlled by Sweden's Modern Times Group, would be allowed to continue broadcasting after a review of alternative proposals by the Channel One-connected Tekhnoimpex Co. and production company ATV. ATV has tried several times without success to get its own frequencies.

The ministry last year took the frequencies away from second-tier DTV, citing legal violations by the channel's management.

Other bidders included Internet holding Rambler, which wanted to create an interactive educational network on the frequency; Novy Televizionny Proyekt, which is controlled by Alexander Akopov, a former director of No. 2 network Rossia; and eccentric adventurer Andrei Martynov's little-known Neizvestnaya Planeta.

Exxon Cool on Deals

MOSCOW (MT) -- The chairman of Exxon-Mobil, the world's largest energy company, said he does not share the foreign business community's renewed optimism about Russia's investment climate in the wake of the $6.75 billion deal concluded by BP, Sidanco and TNK last month.

"I don't think we look at it that the 'Good Housekeeping' seal of approval will come soon to Russia," Lee Raymond told the Financial Times.

"To the extent that you have the opportunity to make an investment under PSAs [production sharing agreements], those are probably the most attractive projects," he said. "The other form of potential investment [similar to BP's] is yet to be seen, I wouldn't rule it out."

Exxon's Sakhalin project is the only successful large PSA in Russia, but it is believed to have considered the TNK deal, the newspaper reported.

Telecom Privatization

MOSCOW (Reuters) -- Communications Minister Leonid Reiman said Wednesday that he backed the idea of full privatization of state telecoms holding Svyazinvest, but said it should be postponed until it is fully restructured.

"In theory, I think we should sell 75 percent of Svyazinvest," he told a news conference.

"[But] I think that this would not be a useful exercise. Svyazinvest has completed structural reforms but has not reorganized its corporate governance," he said. "So its market capitalization is lower than it could be."

A 25-percent-plus-one-share stake is currently owned by a consortium led by international financier George Soros.

3 Cell Firms Suffice

MOSCOW (Reuters) -- Communications Minister Leonid Reiman said Wednesday that Russia does not need more national mobile operators, saying the market was best served by the current three big networks.

"Only an oligopoly on the cellular market can lead to the best possible development of the market in Russia," Reiman told a news conference.

"You can argue whether it should be two or four. We have three, and I think that is good," he said.

The three top operators are Vimpelcom, backed by Telenor of Norway; Mobile TeleSystems, backed by Deutsche Telekom; and Megafon, backed by Nordic TeliaSonera.

Oil Firm Bomb Threats

MOSCOW (MT) -- Employees were evacuated from Moscow offices belonging to oil companies Tyumen Oil Co. and Sibneft on Wednesday morning after bomb threats, Dow Jones reported, citing Interfax.

Police received three phone calls between 8:00 and 8:45 a.m. saying three bombs had been planted at one TNK office building and two of Sibneft's, the Moscow civil defense and emergency situations department said.

Employees at both companies returned to work at 10 a.m., Dow Jones reported.

Severstal Seeks Capital

MOSCOW (MT) -- No. 1 steelmaker Severstal has secured shareholder approval for a rights issue and will oversee an $80 million capital injection in its auto unit Ulyanovsk Auto Plant, or UAZ, Dow Jones reported.

Analysts told Dow Jones that approval of the capital increase came late Friday and will likely help Severstal consolidate all the automaking interests in its Severstal-Avto unit, and it may inadvertently lead to a weakening of state influence at the struggling plant.

UAZ will issue an additional 2.5 billion ordinary shares, on top of 1.25 billion ordinary and 416.8 million preferred shares, hoping to raise as much as $80 million, the company said Tuesday.

Revisiting Meat Quotas

MOSCOW (Reuters) -- The government may re-examine the system of distributing poultry, beef and pork import quotas, a spokesman for the Economic Development and Trade Ministry said Wednesday.

Konstantin Bogdanov said Agriculture Ministry officials came to an agreement on the subject Tuesday with major meat processing firms.

On Monday, Russia's top meat processing firms published a letter to President Vladimir Putin asking for higher annual meat import quotas. They said the current system could see most of the 2003 quotas go to intermediaries.

On Wednesday, the Association of Meat Suppliers, uniting meat importers from St. Petersburg, published an open letter to the government opposing changes to the system.

Tin Output Hike

NOVOSIBIRSK, Western Siberia (Reuters) -- The country's only tin producer, the Novosibirsk Tin Combine, plans to raise output to around 5,600 metric tons this year from 5,115 tons last year, the plant's chairman said Wednesday.

"We plan to increase output by 9 percent to 10 percent from the 2002 volumes in accordance with an expected increase in demand for our tin inside Russia," Vladimir Sherstov said.

He said the plant intends to keep the share of exported metal in 2003 unchanged from 2002 at around 30 percent of its total output.

Within Russia, Novosibirsk supplies the bulk of its tin to Magnitogorsk Iron and Steel Works.

499 Area Code Station

MOSCOW (MT) -- Moscow City Telephone Network will launch the first of many telephone stations that will service a second Moscow area code by July 1 this year, general director Vladimir Lagutin told Prime-Tass on Wednesday.

Moscow's current area code, 095, has reached its capacity and plans are to transfer part of the city's numbers to the 499 prefix to allow room for growth.

For the Record

Steel output increased 9.9 percent on the year in January to 5.1 million metric tons, the State Statistics Committee said Wednesday. (Prime-Tass)

No. 3 cellular operator Megafon plans to launch its networks in the Siberian and Far East federal districts, Alexei Nechiporenko, deputy general director of Megafon, said at a Communications Ministry board meeting on Wednesday. (MT)

Moscow City Telephone Network telephone numbers prefixed with 97X will return to regular service within a month, following a fire that damaged a switching station last month, general director Vladimir Lagutin told Interfax on Wednesday. (MT)