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. Last Updated: 07/27/2016

Sistema Dials Up $166M in Debut

Telecoms to oil group Sistema, a once secretive Moscow-based holding company, on Wednesday reported a 23 percent rise in profits last year, in its first ever results release.

Net profits rose to $166 million in 2002 on $904.1 million of net revenues, up from $135.3 million the previous year on net revenues of $730.8 million.

Earnings before interest, tax, depreciation and amortization were $369.6 million, up from $298.6 million.

Sistema's prize asset is Eastern Europe's largest cellphone network operator Mobile TeleSystems, worth over $6 billion and with over $1 billion in 2002 revenues.

Sistema made its debut eurobond issue earlier this year with a $350 million placing.

Next week it will begin marketing a new 2 billion ruble tranche of a domestic bond issue, first vice president Alexei Buyanov said.

Sixty-four percent of Sistema's $2.33 billion in assets at the end of last year were telecoms. In addition to MTS, Sistema also controls the Moscow municipal phone network MGTS and a clutch of alternative telecoms and Internet providers.

Total assets were up 19 percent.

The bulk of revenue growth came from telecoms, Sistema said, while its banking and insurance assets were also growing strongly.

Sistema bought out a 10 percent chunk of MTS from its partner Deutsche Telekom earlier this year, giving Sistema a controlling stake while Deutsche Telekom retained 25 percent.

Sistema will fully consolidate MTS from the second quarter of this year, Buyanov said.

MTS will pay dividends on 2002, its first payout since going public, but Sistema officials declined to forecast future payouts, which would depend on MTS's future investment needs.

Total investments in all Sistema's telecoms assets in 2003 will be $1.45 billion, Buyanov said.

Sistema sold its Moscow network of gasoline stations and in May bought a small oil production unit, Belkamneft.

"We were effectively buying cash flows, and if we can buy more shares, we will," Sistema president Yevgeny Novitsky told a news conference. Sistema owns 33 percent of Belkamneft, he said.

Sistema did not provide reporters with full accounts but said they would be posted on its web site (www.sistema.ru) later Wednesday evening.