The state holding that controls Russia's fixed-line telecoms network, OAO Svyazinvest, has signed a long-awaited asset swap agreement with OAO Comstar United TeleSystems (CMST.RS) and parent company AFK Sistema (AFKS.RS), Interfax news agency reported Friday.

The agency cited people familiar with the situation, one of whom said that the memorandum of understanding signed between the companies stipulates that the deal should be completed by Feb. 15.

Comstar owns a 25% stake in Svyazinvest and Svyazinvst owns 28% of the ordinary shares in Comstar's largest business OAO MGTS, which runs the fixed-line network in Moscow.

As part of the deal, Svyazinvest and Comstar will swap these stakes. In addition, Russia's state development bank VEB will assume Comstar's 26 billion ruble ($901 million) debt to OAO Sberbank (SBER.RS), and Comstar will also give Svyazinvest 100% of Sky Link, a small mobile operator.

Sistema currently only owns half of Sky Link, but Interfax reports that the company will buy the other half ahead of the deal with Svyazinvest.

Auditors Ernst & Young were commissioned to value these assets and Interfax reports that the prices will be determined by the end of the year.

Agency Web site: www.interfax.ru

-By Moscow Bureau, Dow Jones Newswires; +7 495 937 8445
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