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. Last Updated: 07/27/2016

Svyazinvest: MGTS Sale by Open Tender

State telecoms holding Svyazinvest on Tuesday said its 23.3 percent stake in Moscow's fixed-line operator MGTS could be sold only through an open tender.

Sistema's telecommunications holding unit Comstar had hoped to secure the stake, equivalent to 28 percent of voting shares, to add to its existing stake in MGTS. Comstar's offer for the stake expired last week.

"Svyazinvest can sell the stake, with the government's permission, only via an open tender," Svyazinvest spokesman Oleg Mikhailov said Tuesday.

Comstar, which already holds 49.54 percent in MGTS, equivalent to 59.5 percent of voting shares, is gearing up for an IPO in London and Moscow.

Svyazinvest's board had been expected to vote on the fate of its MGTS stake last week. Mikhailov said the matter never came to a vote because Svyazinvest did not receive any directives from the government, which is mandatory for making a decision to sell shares.

The government controls a 75 percent stake in Svyazinvest.

Svyazinvest does not know of any government plan to hold a tender to sell its MGTS stake, Mikhailov said.

Comstar's inability to secure the MGTS stake so far is not expected to be a major issue in Comstar's IPO, analysts said, with the share price based on Comstar's current assets.

Comstar's lack of total control over the fixed-line operator adds some uncertainty, said Rostislav Musiyenko, a telecommunications analyst at BrokerCreditService.

"It is just a matter of time before Comstar purchases the remaining stake" in Moscow's fixed-line operator, Musiyenko said.

Sistema, which folded MGTS into Comstar last year, has long wanted to carry out an IPO for MGTS abroad, but has been blocked by Svyazinvest, Vedomosti reported earlier this month.