Russia's Sistema Ain't YUKOS

Russian holding company Sistemawent public on the Moscow Stock Exchange and as a global depositary receipt on the London Stock Exchange to much fanfare yesterday. It sold roughly 1.6 million shares of common stock in the form of 79.6 million global depositary receipts -- analogous to the American Depositary Receipts used to trade in the shares of companies such as Nokia (NYSE:NOK) or Ericsson (NASDAQ:ERICY) in the U.S.

There's another analogy to those two companies, as well. Sistema is perhaps best known in the West as the parent company (holding a controlling 51% stake) of Russia's largest provider of cellular communications, Mobile TeleSystems (NYSE:MBT). And, as you can judge from its ticker, Mobile TeleSystems, too, is sold in the U.S. through a system of depositary receipts.

Yes, ladies and gentle-Fools, that's right. As of today, you've been given the ability to invest in a single Russian company twice. Oh, joy. Won't the shareholders of bankrupt and guttedYUKOS (OTC BB: YUKOY) be just thrilled to hear that?

Of course, the fact of the matter is that YUKOS and Sistema/Moscow Telesystems have very little in common. YUKOS is run by a guy who crossed the political line and challenged the Russian president essentially all on his lonesome, bereft of political support (and who now sits in Matrosskaya Tishina prison for his troubles). Sistema, in contrast, is one of the most powerful and politically connected corporations in the country.

Sistema also has its corporate finger in many profitable pies -- not just telecom. The company also has operations in the technology, insurance, banking, real estate, retail, and media sectors. With its $7.7 billion market capitalization, Sistema is one of Russia's largest companies. In the first three quarters of 2004, it reported revenues of $4.1 billion.

Annualize that revenue number to $5.5 billion in likely 2004 sales, and the company carries a price-to-sales ratio of just 1.4 -- a relative bargain when you consider that both its subsidiary, Moscow Telesystems, and the No. 2 telecom player in Russia, VimpelCom (NYSE:VIP), sport ratios of just over 4.0. At Sistema's price, you can essentially buy a half interest in Moscow Telesystems for roughly one-third the cost of a pure play investment in Moscow Telesystems itself.

So does the cheap price make this new stock a buy? Perhaps, if you've got a high threshold for risk. Perhaps not, if you've already had your fill of risk after investing in YUKOS.

Read more about the Russian telcos in:

• VimpelCom Calls in the Cavalry
• Vimpel Is No VIP in Russia
• A Mobile Russian Bear
• Savvy VimpelCom
• VimpelCom Calling

Fool contributor Rich Smith owns shares of Nokia, but has no position in any other company mentioned in this article.