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. Last Updated: 07/27/2016

Svyazinvest Changes May Fail

Comstar, a subsidiary of Vladimir Yevtushenkov's Sistema, may fail in its bid to gain control of fixed-line phone monopoly Svyazinvest if the government opposes changes to the company charter favoring minority investors at a shareholders meeting Tuesday.

The government, which holds a 75 percent minus one share stake in Svyazinvest, has decided to vote against the changes in the company, Vedomosti reported, citing two unidentified people close to the company's shareholders.

Sistema, which holds a blocking stake in Svyazinvest through Comstar, could lose any hope of increasing its influence in the firm if the government has its way.

"Sistema will lose some leverage if the state decides not to empower minority shareholders," said Irina Astafyeva, an analyst with J'son & Partners. "It will not augur well for Comstar's strategic standing in the process of an eventual privatization of Svyazinvest."

Comstar, which paid $1.3 billion for its blocking stake last year, wants to boost its presence in Svyazinvest's seven regional subsidiaries. Comstar has said that it wants to bid for the state's stake in Svyazinvest.

Comstar on Monday referred enquires to parent company Sistema. Sistema spokesman Kirill Semyonov confirmed Monday that Comstar would persevere in supporting the changes to the company charter. The IT and Communications Ministry, which manages the government's stake in Svyazinvest, could not be reached for comments late Monday.