The central government has rejected Sistema Shyam Teleservices' (SSTL) proposal to up its foreign stake to 100 percent due to conversion of redeemable preference shares into equity, an official statement said here Friday.
SSTL, which operates under the MTS brand, had applied in May to increase total foreign direct investment (FDI) in the company in excess of 73.95 percent.
"Increases in FDI upto 100 percent in M/s Sistema Shyam Teleservices Limited and its downstream WoS M/s Shyam Internet Services Limited, both engaged in telecom sector, on account of conversion of Redeemable Preference Shares into equity," a finance ministry statement said.
The decision was taken in a meeting Sep 16 by the Foreign Investment Promotion Board.
SSTL is controlled by Russian conglomerate Sistema JSFC, which holds 56.68 percent in SSTL. The remaining stakeholders are the Russian government with 17.14 percent and with 0.13 percent lying with other foreign entities.
The central government in July 2013 allowed 100 percent FDI in the telecom sector.