home Chimneys Shamolin Mikhail Valerievich. Mikhail Shamolin: “The biggest problem is the inability and unwillingness to make decisions Shamolin Mikhail Valerievich President of AFK

Shamolin Mikhail Valerievich. Mikhail Shamolin: “The biggest problem is the inability and unwillingness to make decisions Shamolin Mikhail Valerievich President of AFK

(3)President of AFK Sistema, former president of Mobile Telesystems OJSC (MTS), former vice president for sales and subscriber services of MTS OJSC

"Biography"

Mikhail Shamolin was born in 1970 in Moscow.

Education

In 1992 he graduated from the Moscow Automobile and Highway Institute.

In 1993, he received a second higher education at the Russian Academy of Public Administration under the President of the Russian Federation.

In 1996-1997, he completed a training program for senior managers at the Wharton Business School in the field of finance and management.

Activity

1993–1996 - Financial Director of the Academy of Management and Market

"Themes" "Ratings" "News" Yevtushenkov spoke about the resignation of the head of AFK Sistema

The President of AFK Sistema leaves his position in the company and moves to another job. The new head of the company will be the President of MTS

Alexey Kornya was appointed as the new president of MTS

Alexey Kornya will become the new president of MTS PJSC from March 13, according to the company’s message received by RBC. Previously, Kornya held the position of MTS Vice President for Finance, Investments, Mergers and Acquisitions.

Andrey Dubovskov, who served as president of MTS since March 2011, filed an application for early termination of his powers.

On March 1, the Nomination, Remuneration and Corporate Governance Committee of Sistema JSFC nominated him to the position of president of the corporation, according to the Sistema JSFC website. It is expected that the current president of AFK Sistema, Mikhail Shamolin, will move to another position within the group.

The Board of Directors of AFK Sistema will consider the issue of appointing a new president of the corporation on March 2.

Earlier, the main owner of the company, Vladimir Yevtushenkov, told RBC about Shamolin’s resignation from the post of president of AFK Sistema. He also named Dubovskov as the main contender for his post. Sources from RBC and Interfax previously said that Kornya could become the new president of MTS.

Shares of MTS, Medsi and BPGC belonging to AFK Sistema were arrested

AFK Sistema reported that it received from the Office of the Federal Bailiff Service for Moscow a resolution to initiate enforcement proceedings and a copy of the writ of execution of the Arbitration Court of Bashkiria. The writ of execution seizes 31.76% of shares in the authorized capital of MTS PJSC, 100% of shares in the authorized capital of Medsi Group of Companies JSC and 90.47% of shares in the authorized capital of JSC owned by AFK and Sistema-invest JSC "BESK".

Mikhail Shamolin - RBC: “We cannot make conceptual claims”

The seizure of the assets of AFK Sistema, including the main generator of the holding's money - MTS, thundered like thunder from the sky. The first interview with the head of AFK Mikhail Shamolin since then

The net profit of AFK Sistema grew 12.5 times in the third quarter - up to 6 billion rubles

President of AFK Sistema Mikhail Shamolin noted that the largest asset of the MTS holding, despite high competition and pressure from macroeconomic factors, maintained its market share and demonstrated “decent results.”

“MTS is perfectly positioned for further development in the face of weakening competition in the telecommunications market and the recovery of the macroeconomics in Russia. At the same time, the company maintains its focus on ensuring shareholder returns. During the year, MTS paid out 52 billion rubles. in the form of dividends, and in the fourth quarter announced the repurchase of its own shares in the amount of up to 10 billion rubles,” Shamolin said.

The ranking of the highest paid top managers in Russia is headed by Miller and Sechin

Third in the ranking is the President of the Management Board of Sberbank German Gref with $11 million. He is followed by the CEO of the Onexim group Dmitry Razumov with $10 million, the CEO of Alisher Usmanov's USM Advisors Ivan Streshinsky with $10 million, the General Director of UC Rusal Vladislav Solovyov with $7.4 million, President of AFK Sistema Mikhail Shamolin with $7.4 million, President of the Board of Directors of VTB 24 Mikhail Zadornov with $6.5 million, Chairman of the Board of Gazprombank Andrey Akimov with $6.3 million. Rounding out the top ten of the Board of Directors is General Director of Otkritie Holding OJSC Ruben Aganbegyan with $6 million.

President of AFK Sistema Mikhail Shamolin on the business of the investment company: “As long as all the horses are in the race”

“Oil of Russia”, 11/25/16, Moscow, 10:52 The former owner of Bashneft, AFK Sistema, may consider employment options for oil company employees who were laid off with the arrival of the new owner, Rosneft. At the same time, Sistema does not agree with the position of the head of Rosneft, Igor Sechin, who stated that oil service assets were transferred from Bashneft at a reduced cost. The transaction was carried out at the market price, the president of AFK Sistema, MIKHAIL SHAMOLIN, told Kommersant in an interview.

Sistema bought its own shares for 7.6 billion rubles.

OJSC AFK Sistema announced today that its 100 percent subsidiary OJSC Sistema Finance July 11, 2014. signed an agreement with an unaffiliated seller to purchase 162 million 837 thousand 500 ordinary shares of AFK Sistema, representing 1.7% of its authorized capital, for approximately 7.6 billion rubles

A subsidiary of AFK Sistema bought a 1.7% stake in the parent company for 7.6 billion rubles.

Sistema-Finance (100% subsidiary of AFK Sistema) is acquiring 162 million 837.5 thousand shares (1.7%) of the parent company for 7.6 billion rubles, the AFK said in a statement.

A controlling stake in Bashneft was arrested in the case of an Armenian oligarch

The Basmanny Court of Moscow, at the request of the Investigative Committee, arrested the controlling stake in Bashneft owned by AFK Sistema. The investigation has nothing to do with AFK, but the investigation suspects businessman Levon Hayrapetyan, who could have participated in the sale of the oil company to Sistema in 2008, of fraud. Bashneft's SPO in London, scheduled for September, will most likely have to be postponed, experts warn.

Sistema fell by almost $1 billion after the arrest of Bashneft shares

Shares of AFK Sistema on the Moscow Exchange fell by 7.42% or 32.266 billion rubles. (at 14.00 Moscow time). By this time, the company's receipts on the London Stock Exchange had lost 3.61% or $285 million.

British politician Peter Mandelson became a shareholder of AFK Sistema

Former European Commissioner for Trade and British Minister Peter Mandelson became a shareholder of AFK Sistema. Together with the rest of the board of directors of AFK, he received about 0.0008% of the company’s shares, her statement says.

Moody's assigned MTS a higher rating than Sistema. The European Commission approved the creation of a joint venture between AFK Sistema and Fresenuis Kabi.

The European Commission approved the creation of a joint venture between AFK Sistema and the German Fresenuis Kabi, Bloomberg reported. At the end of April, AFK Sistema announced its intention to transfer 100% of Binnopharm to a joint venture with the German Fresenuis Kabi.

The increase in Sistema's share in its Indian subsidiary may be postponed

The court of the Indian city of Jaipur ruled that until its next hearing the status quo must be maintained in relations between the Indian subsidiary of AFK Sistema Shyam Telecervices ltd (SSTL) and its minority shareholders, follows from the court decision dated May 30, 2014.

Net profit of AFK Sistema in the first quarter of 2014. according to US GAAP grew by 3.5%

06/03/2014, Moscow 12:08:23 Net profit of Sistema JSFC in the first quarter of 2014. according to unaudited consolidated financial results prepared in accordance with US GAAP standards, increased by 19% in rubles and by 3.5% in US dollars compared to the same period in 2013. and amounted to $363.3 million. This is stated in the company’s message.

Mikhail Shamolin - RBC: “The US Attorney’s Office believes that its jurisdiction is the whole world”

Bloomberg analysts noted that Western sanctions could have a positive impact on Russian high-tech business, in particular, they would be beneficial to the companies of AFK Sistema and its Mikron plant, which produces microcircuits. President of AFK Sistema Mikhail Shamolin said that so far Sistema has not received any bonuses and the corporation will be able to take a place in the global IT market only with state support.

MTS changes directors

President of AFK Sistema Mikhail Shamolin and two of the three independent directors are leaving the board of directors

Sistema is trading for wagons

AFK is not giving up attempts to acquire a blocking stake in the First Freight Company and has offered Russian Railways to pay more for the stake than the winning bidder - NTK Vladimir Lisin; Russian Railways rejected the offer

AFK Sistema confirmed problems with the MTS subsidiary in Uzbekistan

President of AFK Sistema Mikhail Shamolin admits that there are problems with the MTS subsidiary in Uzbekistan. “Certain problems began there. I would not like to comment while we are figuring out what is happening there now, the situation is not completely clear,” Shamolin said on the sidelines of SPIEF 2012. “I think everything will become clearer by the end of the week.” He noted that the company is operating normally. “Of course, there is leadership there, they manage. The company operates as usual,” said the head of AFK Sistema.

Executive salary rating - 2011

Experts also explained the generosity of the main owner of AFK Sistema, Vladimir Yevtushenkov, by successful partnerships with government agencies, in particular with Rusnano: the holding’s top managers took third and fifth places in the list of the most expensive transitions in 2011. Former MTS President Mikhail Shamolin became the President of AFK Sistema (estimated annual compensation - $10 million), and former General Director of MTS Ukraine Andrey Dubovskov ($5 million) was appointed in his place

Mikhail Shamolin elected president of AFK Sistema

The board of directors of AFK Sistema elected the former head of Mobile TeleSystems OJSC (MTS) Mikhail Shamolin as president of the corporation. As the corporation's press service told RBC, this decision was made at today's meeting. Yesterday, the MTS board of directors decided to early terminate the powers of Mikhail Shamolin as president of the company. Andrey Dubovskov, who previously served as head of the MTS Ukraine business unit, was elected as the new president of MTS on March 5, 2011. After the appointment of Andrey Dubovskov, the duties of director of MTS Ukraine will be temporarily performed by the marketing director of the Ukrainian division of the company Vasil Latsanich. At the same time, tomorrow the board of directors of AFK Sistema will consider the candidacy of the “dismissed” Shamolin for the post of president of the company.

The board of directors of AFK Sistema elected the former head of Mobile TeleSystems OJSC (MTS) Mikhail Shamolin as president of the corporation. As the corporation's press service reported, this decision was made at today's meeting. Until this moment, AFK was headed by Leonid Melamed, who will continue to work in the corporation as a member of the board of directors of AFK and chairman of the board of directors of NK RussNeft. The day before, the MTS board of directors terminated the powers of the company’s president Shamolin ahead of schedule, appointing Andrey Dubovskov, head of the MTS Ukraine business unit, to this position.

Mikhail Shamolin: “Many industries will depend on mobile networks”

In the near future, MTS will complete the purchase of 100% of the shares of Comstar, after which it will gain full right to call itself an operator of both mobile and fixed communications at the same time. MTS President Mikhail Shamolin does not rule out that there will be new purchases of wireline operators. But the mobile communications industry still promises more events. At the end of last year, Megafon began to breathe in the back of MTS, promising to soon overtake the leader and take first place in Russia in terms of income. And at the end of this year, the state may put fourth generation (4G) mobile communications licenses up for competition.

Mikhail Shamolin had an accident

A helicopter carrying Mikhail Shamolin, vice president of Mobile Telesystems, crashed in the south of the Moscow region. The top manager was hospitalized with broken ribs and a concussion. The helicopter crashed in the Kashira district of the Moscow region - on the 105-106th kilometers of the Kashirskoe highway. The pilot died. A helicopter carrying Mikhail Shamolin, vice-president of Mobile Telesystems, crashed in the Moscow region. The top manager was injured. He was taken to the Kashira city hospital. From there the victim was transported to one of the Moscow clinics.

This is a huge unplowed field

Why do Russians not save on mobile phone calls during a crisis, but MTS is still preparing to cut costs, said company president Mikhail Shamolin. This year is a turning point for the mobile communications market: operators are entering the adjacent markets of fixed-line communications and cellular retail. The Mobile Telesystems company, according to its president Mikhail Shamolin, is in no hurry to purchase new assets, but is concluding alliances.

— Did MTS feel the impact of the crisis?

— So far we have not felt a decrease in conversational activity [of subscribers] or a reduction in payments. Mobile communications have already firmly entered the basic consumer basket, and people will begin to abandon it only if their budget becomes really bad. We do not rule out the possibility of a reduction in consumption in the future if macroeconomic indicators in Russia worsen: if oil prices fall below $50 per barrel, remain at this level for a long time, there will not be enough government reserves, a sharp devaluation of the ruble begins, the volume of layoffs exceeds sensitive thresholds, etc. etc. But we hope that in practice such a scenario will not be realized. Of course, we will monitor the ratio of national currencies to the dollar and try to neutralize as much as possible the possible negative effect on revenue with a more flexible tariff policy and increasing the efficiency of the company’s operating activities as a whole.

MTS will invest more than 7 billion rubles in the development of technological infrastructure in St. Petersburg in 2008-2010.

OJSC Mobile TeleSystems (MTS) and the government of St. Petersburg today, June 6, signed a memorandum of understanding and cooperation. As a REGNUM correspondent reports, within the framework of the agreement, MTS will take part in a number of projects for the social development of St. Petersburg, including the targeted programs of the national project “Education”, the territorial employment program and the program for the development of innovations in St. Petersburg. According to MTS President Mikhail Shamolin, only in 2008-2010. the company plans to invest more than 7 billion rubles in the development of the region’s technological infrastructure. In particular, the funds will be used for the development of the third generation (3G) network and the construction of a fiber-optic transport communication network. Shamolin recalled that St. Petersburg became the first city in Russia where MTS deployed a 3G network. By the end of 2008, the company plans to completely cover the city with a 3G network, and then expand to the Leningrad region.

Cell phone fraud.

Hello, Mikhail! I heard that scammers have taken a fancy to cellular communications. No one has called me yet, but friends have complained. They say they receive an SMS asking you to buy a payment card, and in this case you receive a prize. So, operators cannot take action and track who is deceiving the people? Sincerely, Igor Korobov.

Mikhail Shamolin became the President of MTS

Mikhail Shamolin replaced Leonid Melamed as head of the company, who was appointed to the post of president of AFK Sistema, the largest shareholder of MTS OJSC. As noted, under the leadership of Melamed, at the end of 2007, MTS, for the first time among Russian companies, entered the top hundred of the most influential global brands. The new president, Mikhail Shamolin, said that he hopes to justify the trust and adequately represent MTS to clients, shareholders and employees. Mikhail Shamolin was invited to MTS in July 2005 to the post of vice president for sales and subscriber services. On August 15, 2006, he was transferred to the position of vice president, director of the MTS Russia business unit.

“Many industries will depend on mobile networks,” Mikhail Shamolin, President of Mobile Telesystems OJSC

— Recently, Megafon has clearly increased its growth rate. In the third quarter of 2010, it already surpassed VimpelCom in terms of revenue from mobile communications in Russia, and now it promises to catch up with your company.

MTS President Mikhail Shamolin: “About 25% of MTS subscribers are mobile Internet users”

According to the head of MTS, now about 25% of the MTS subscriber base can be considered real Internet users, and the company plans to increase this figure to at least 50-60% in the next two to three years. Answering a question from Vedomosti about MTS’s income from SIM cards for USB modems, Mikhail Shamolin noted the following: “According to them, the ARPU is about $10. It remains this way from the very beginning, since basically these SIM cards have “flat” tariffs and there are certain restrictions - on speed, on use. 80% of Internet traffic is generated by 5% of the subscriber base - the most active users who download gigabytes of video from the Internet, etc. And the average user does not generate much [traffic]. According to Mikhail Shamolin, for MTS “what is important now is not raising prices, but selling additional services and creating additional value for the product. First of all, of course, this is mobile data transmission, and for this we need to increase the penetration of smartphones and work to reduce their prices. The customer experience of owners of a smartphone and a regular phone are radically different, and over the next three years we want the smartphone to completely displace regular phones from the market. For example, this year we will launch a smartphone on the Google Android platform with a target price of around $100 in order to really make this product mass.”

Shamolin Mikhail Valerievich (born July 5, 1970, Moscow, RSFSR, USSR) is a Russian businessman and manager. President, Chairman of the Board (since 2018). Former President (2011-2018).

In 1992 he graduated from the Moscow Automobile and Highway Institute, in 1993 from the Academy of Civil Service of the Russian Federation, and in 1996-1997 he completed a training program for senior managers at Wharton Business School (USA).

Since 1993, he worked at the Academy of Management and Market as financial director. From 1996-1998, he owned and ran his own consulting company in New York.

In 1998, he began working for the international consulting company McKinsey & Co, where he worked his way up from a business analyst to a junior partner, managing projects in the metallurgical, banking, insurance and aviation sectors. In June 2004, he became managing director of the ferroalloy business of the Ukrainian corporation Interpipe.

In 2005-2011, he worked at MTS OJSC: as vice president for sales and subscriber services and since 2008 as president of MTS OJSC. In March 2011, he took the post of president of Sistema JSFC. In March 2018, he left his post and was appointed president and chairman of the board of Segezha Group (the forestry holding of AFK Sistema).

He is interested in piloting airplanes and poaching (hunting rare animals, such as mountain goats). Married, has three children (two daughters and a son).

Mikhail Shamolin went into the woods after the battle with Rosneft

Mikhail Shamolin explained why he resigned from the post of president of AFK Sistema, why he headed the group’s forestry business, and what scenarios he is considering for its development.

Mikhail Shamolin will become a shareholder of Segezha Group

The head of Segezha Group, Mikhail Shamolin, received an option for 5% of the timber industry holding. According to experts, the value of the company is about 25-40 billion rubles, and the package that Shamolin can buy is estimated at 1-2 billion rubles.

Vladimir Yevtushenkov may sell hotels in nine Russian cities

AFK Sistema intends to sell hotels after the World Cup. This will allow to collect income from the tourist flow, and then get rid of assets.

“We need to separate those who pay from those who treat”

Team Drive partner Leonid Melamed talks about managing and financing projects in medicine and pharmaceuticals and advises changing the healthcare system.

“In the dispute over the reorganization of Bashneft, our legal position is impeccable”

Mikhail Shamolin reveals which subsidiaries Sistema will list for IPO, tells how the company will respond in court to Rosneft’s multibillion-dollar lawsuit, and explains why it still believes in investing in Russia.

Mikhail Shamolin (AFK Sistema)

President of the AFK Sistema corporation, former head of MTS and McKinsey graduate Mikhail Shamolin shared with Snob his views on management and development of human potential:

“The main thing is the quality of the people you select. It is quite difficult to find a person with universal qualities. There are very few people who are called self-driven, that is, who work because they cannot help but work, and enjoy it. They want to develop and move forward. The overwhelming majority of people work either for some kind of material reward and, having received it, relax, or they work to simply ensure stability: there is a job, there is a salary, and how to stay in this job. And after listening to people with burning eyes, burning hearts, purposeful people - there are very few of them, there are only a few of them for real! - we have to create systems into which others can be integrated. Build a system in which they will give the maximum return that they can give. This is perhaps the most difficult thing. In any company, this is the main question: how to place people in their places, based on their current life priorities, how to build a system of motivation and control around them so that they work.

But this is not a feature of doing business in Russia; it happens everywhere.

You shouldn’t think that Russia has features that are much more “special” than any other place, that’s not true. In fact, all successful companies are more or less similar to each other.

Like “all happy families” in Tolstoy.

When you look at the heroes of our time like Steve Jobs or Jack Ma in China, you see that these people are fanatical, goal-oriented, self-driven, and they serve as motivators for everyone else. They use different methods for this, from the most dictatorial to the most creative. But in the end, the goal is the same: how to make sure that people who don’t want to work work with the highest possible efficiency.

What shortcomings of employees, managerial and human, are you willing to put up with?

There are no people without shortcomings; they have to put up with a lot. But it’s hard to put up with people’s indifference, it’s hard to put up with people who, in principle, don’t care. Those who pass by the problem and do not pay attention to it only because “if no one asks me for this problem or punishes me, then it does not concern me.”

But this does not apply to self-driven. If a person is self-driven, then he is not indifferent to everything.

You see, this is too general a question. The person who is responsible for something must be able to solve problems. A successful manager at any level sees a problem, his head turns on, he sees five solutions in front of him at once. He throws away four of them, comes to you with a fifth solution because he's done his homework. All you have to do is figure out whether this decision is the right one or not, support it or not. But the vast majority of people who find themselves in management positions do not come to you with a ready-made solution. They come with a description of the problem and how hard life is for them. They want to shift this problem onto you. If we talk about the peculiarities of Russian business, then this is very often present here. Real delegation is very little developed; very often everyone waits for the boss to make a decision. Until the boss accepts him, no one decides anything.

No habit of taking responsibility and no habit of sharing responsibility with someone?

Yes. Moreover, these are interconnected things. People don’t really want to be delegated, because they understand that if we are talking about real delegation, then you can be punished for one wrong decision. And if you took it to your boss for signature, at his discretion, and the boss signed it, then answer to him.

What are the most important lessons you have learned in your professional life?

There is one lesson that I learned a long time ago while working at McKinsey. At one time we studied the Myers-Briggs theory of psychotypes. For me at that time it was a discovery that people at the genetic level are born with a certain difference in character and in general in the perception of things. That is, a person who has two arms, two legs and a head looks outwardly the same as you, but may perceive some things completely differently. This is not because he is bad, good, white, red, green or speaks a different language. He just perceives reality this way, he rationalizes things differently. When you begin to understand this, it is much easier for you to perceive people as they are.

Another example is when I felt the difference in responsibility between a high-ranking top manager, but nevertheless second in line, and the first person. When I was appointed president of MTS, at that moment, literally within the first two weeks, I felt what a real burden of responsibility was. Because when you work as a line manager and report to someone who makes the final decision, you take it off yourself and shift it onto him. You really don't understand this. It seemed to me that in reality I already made all the decisions. Let the boss not help, the main thing is not to interfere. This is exactly what many ambitious managers experience: you are completely in the feeling that you decide everything, understand everything, know everything.

And now you find yourself in a position where everything ends with you. Then you can only go to the board of directors, which will never make decisions for you. He will tell you: “Okay, please bring us the decision on paper, and we will put our signatures on it.” Well, or “we won’t deliver”... Still, you can never say that “the board of directors decided, and I have nothing to do with it.” You understand that the responsibility is on you. If the situation further explodes, then you are standing at the forefront, and there is no one else in front of you. This completely changes the nature of thinking.

Has your way of thinking changed in the first two weeks?

Yes, absolutely. It was quite a shock to have that kind of weight put on you. There are people who envy big bosses: “Boss, how cool! He gets a lot, decides everything, I also want to be like that, and I can. I could do much better!” In 99% of cases, people don’t even fundamentally understand what they are talking about. When you get into this chair, you realize that no money, nothing can compare with what you begin to feel every day. This leap is quite fundamental.

A helicopter carrying Mikhail Shamolin, vice-president of Mobile Telesystems, crashed in the Moscow region. The top manager was injured. He was taken to the Kashira city hospital. From there the victim was transported to one of the Moscow clinics.

“The health condition of Mr. Shamolin’s companion is assessed as more serious.”

According to MTS PR Director Elena Kokhanovskaya, Mr. Shamolin “was hospitalized with broken ribs and a concussion.” “The condition is satisfactory,” said Elena Kokhanovskaya.

According to Kommersant, Maria Yakushina, an employee of the Ankor company, was flying with Shamolin. The health condition of Mr. Shamolin’s companion is assessed as more serious.

Mikhail Shamolin heads the MTS Russia business unit. Before joining MTS, he worked in the Ukrainian corporation Interpipe in 2004 as Managing Director of the ferroalloy business. From 1998 to 2004, Mr. Shamolin worked at the consulting company McKinsey&Co.

The vice president of MTS received two higher educations. In 1992, he graduated from the Moscow Automobile and Road Institute. And in 1993 - the Russian Academy of Public Administration under the President. In 1996–97, he attended the senior management training program at the Wharton Business School in the field of finance and management.

Mikhail Shamolin made a training flight on an American Robinson R 44 helicopter. The helicopter is capable of speeds of up to 240 kilometers per hour. The flight range is 650 kilometers. The helicopter cabin is equipped with “2+2” seats.

All four seats lift up to provide access to the luggage compartments. A special feature of the helicopter is its highly raised main rotor. It increases the safety of approaching a helicopter and landing on an unprepared site.

The helicopter crashed in the Kashira district of the Moscow region - on the 105-106th kilometers of the Kashirskoe highway. The causes of the incident have not yet been established. The SkyVision aviation training center provided the equipment for the MTS vice president.

The organization’s website states that the company was created by “a group of sports pilots and military pilots.” SkyVision offers its clients flights on Yak-18T and Su-29 aircraft, as well as on the Robinson R 44 helicopter. The flying club is based at the Stupino airfield.

A criminal case will be opened regarding the crash of the helicopter with the vice-president of MTS on board. The helicopter pilot died. “The pilot died while being transported to the hospital,” a source in the Moscow Region Central Internal Affairs Directorate told Interfax.

Mikhail Shamolin took over as president of Sistema in 2011, after working for several years as president of MTS, Sistema's largest asset. Under his leadership, Sistema transformed from a holding into an investment company and went through dramatic events associated with the loss of Bashneft and the arrest of the company's main shareholder, Vladimir Yevtushenkov, in September 2014.

Despite this, the company ended 2015 with a good profit, and a significant share of it came from new assets: in recent years, Sistema has entered new industries.

In an interview with HBR - Russia, Mikhail Shamolin talked about when and what to invest in in Russia, how to place people in top positions, and why not every manager can work in an investment company.

What has changed since AFK Sistema turned from an operating holding into an investment company?

Almost everything. A new management system was created, specific to an investment company. In essence, the company lives by the investment process: it finds targets for assets, weighs them, makes decisions about buying and selling, and about placing shares on the stock exchange. This is all the work of investment portfolios and the investment committee.

And what has the company learned over the years?

An investment company must be good at two things: investing money and appointing people to manage the assets in which it has invested. You can buy a business as good as you like, but without strong management nothing good will come of it. At best, you will earn nothing, and at worst, you will lose everything, and quite quickly. Therefore, we are constantly honing the process of selecting, developing and appointing personnel - primarily at the level of company directors.

What type of people are suited to work in the investment industry?

On the one hand, there must be a healthy appetite for risk, because if there is none, a person will be afraid of everything and will not make any investment decision. On the other hand, this appetite must be limited. If this is not the case, the person will rush into adventures and we will lose money very quickly. Because the influence of the portfolio manager on the decisions of the investment committee is very large. He can lobby and convince you to buy a particular asset, showing it from its most attractive side and smoothing out the negative ones. A portfolio manager must not only invest shareholders’ money correctly, but then manage it all, so he must be an entrepreneur and a manager rolled into one. You also need a professional understanding of the industry and specific knowledge - for example, the ability to work out deals. To conduct a good deal, you need to understand jurisprudence, schematics, and instruments - because transactions can be complex: derivatives, bills, pledges, rights, options - a whole series of instruments.

Are you looking for top managers for the acquired enterprises on the market or within Sistema?

We would like to cultivate as many directors of enterprises as possible at home, because when selecting candidates from outside, hope often triumphs over common sense. A person comes with a nice resume, speaks well and seems promising. You know nothing about his problems, and someone whom you have known for a long time, with all his advantages and disadvantages - and we always pay the most attention to the latter - loses to him. You hope that a person from the outside will perform some kind of miracle, but most often this does not happen. You are waiting for a magician, and a storyteller comes to you.

But it is impossible to completely abandon hiring external candidates. Especially in our activities, where we sometimes enter a completely new business for ourselves. It happens that there is simply no expertise within the company, but in addition to general erudition, energy and knowledge, you need to understand what you are doing here.

Do you mean industry expertise?

Yes, exactly the industry one. You could gather a group of genius techies and ask them to build a car engine in their garage. They can handle it, but the engine will be the size of half a room and won’t fit under the hood. Chrysler or BMW, which have been making these engines for a hundred years, have already stumbled upon all the mistakes that need to be made before making the perfect product. But for us, the path of trial and error is too long. If you don't know in advance where the traps are, then time and money are wasted.

Industry expertise and professionalism in the specific field we are involved in is very important. And if you look at the world's leading companies, often people worked in the industry for 20 years before becoming their CEO.

This is typical for old companies in old industries.

Of course, now there are many stories when something is invented from scratch, and then it is impossible to find people who have experience in this business. But in new technologies there are only a few successful enterprises out of thousands of unsuccessful ones. Of course, miracles happen, but you cannot count on the fact that this miracle will happen to you and that you, as an investor, will find a diamond that others have not noticed.

So you don't count on it at all?

The main thing for a venture investor is to understand people. Because there are many good ideas, but there are only a few entrepreneurs who are ready to bring the idea to commercial implementation and spend their life, talent, energy and soul on it. Many people give up halfway, without realizing it. It is very difficult to say in advance which of the applicants for your money is able to last the last mile - you need to know the psychology and character of each, understand what he breathes, what kind of family he has and what is in his head.

Venture investing is an extremely competitive business. There are several established leaders in this area - large companies that attract most fashion startups. And if the founders reach the third and fourth dozen ventures, this means that they were denied the first two. Still, the venture sector is important - and it would be wrong for us to ignore it. We are now creating a venture fund to gain expertise. So far this is a relatively small amount for us.

Returning to traditional industries. You said that you prefer to grow top people in-house, but how do you find people with relevant knowledge given such a huge industry spread? You have telecom, defense industry, real estate, forestry, agriculture, and retail.

We have been living in this enormous diversity for many years. Therefore, for most of the industries that we have in our portfolio, there is knowledge within the company and there is someone to choose from. In addition, a number of industries are similar to each other in terms of the skill sets of managers. A 100% match is not necessary, but a person who understands retail can also work in mobile retail. A person who knows IT at MTS can do IT at MGTS or even at a bank. Both have CRM and billing systems. We can often confidently use the expertise of people developed in other areas. But sometimes we can’t: for example, we bought a forestry business that we didn’t understand very well, and we were looking for people with experience for it.

But we always place our specialists in positions that require control. We do not hire anyone from outside for the positions of financial director and security director - it is too dangerous in an asset that you do not know completely, to trust management that is also unfamiliar to you.

Are there many foreigners in your company?

Not good. Finding quality managers ready to manage business in Russia is not easy. As a rule, a person who has received a good education and built a career in his homeland will not come here. There are, of course, unique situations when life itself connected someone with Russia: got married, fell in love, soul, etc. But this is rather an exception.

How do you motivate your company's top managers?

We use a system typical for investment companies. We have five different portfolios. The remuneration of their executives depends on the profit that Sistema earns on the investments of their portfolios, with bad investments being subtracted from good ones. That is, if some investments generated income and others - losses, the latter will be deducted from the amount of profit generated. In addition, expenses and the required return are deducted, which we assign each year depending on the cost of our capital.

And minus all this, the team receives a certain percentage of the profit earned. We proceed from actual monetization: it is not calculated on paper that the capitalization has increased by so much, but for example, company X was bought three years ago, and now it has been sold, or brought to an IPO, or attracted an investor. When real money has already arrived from the sale of part of the asset or from the dividends that this asset generated, from the difference between what they bought and what they sold for, the team receives its share. In absolute terms, this can be quite significant.

Are assets divided by industry in the portfolios?

It cannot be said that we have a strict industry principle, but our portfolios do have a direction. For example, one portfolio combines mainly high-tech assets (RTI, BPGC, Sitronics KASU, etc.) and development, while the other includes investments in buildings that provide us with rental income. There is a retail portfolio: Detsky Mir, Concept Group, MEDSI and a number of new projects. Agricultural and forestry assets are also grouped into a separate portfolio. The telecommunications and banking businesses are supervised by separate top managers.

Why have you been acquiring many low-tech companies in recent years?

There is a theoretical explanation, and there is a practical one. From a theoretical point of view, our portfolio strategy describes which industries in Russia will be attractive under different economic scenarios. It also explains how to rebalance a portfolio so that it is partly cyclical and partly countercyclical, because depending on where the economy is going, some companies fall and some rise. We want to put together a portfolio that more or less neutralizes these cycles, so as not to fail along with them.

The fall of the ruble by two and a half times is a “black swan” against which no strategy can withstand. Nevertheless, despite the events of the last two years and the loss of Bashneft, we have survived well.

Did you invest in these industries after the annexation of Crimea took place, the ruble exchange rate fell and your main shareholder Vladimir Yevtushenkov was arrested?

Yes, we carried out the timber deal in 2014. And several investments were made in agriculture at the end of last year, when the ruble exchange rate was already very low. But our main postulate is that no one is going to curtail the market economy in Russia. And the market always creates business opportunities, and there will be growth somewhere. In the situation with devaluation and so-called import substitution, it has simply become more profitable to produce in the country what was previously more profitable to purchase. If a product can compete in terms of its costs not only within the country, but also in foreign markets, this means an opportunity to develop the corresponding industry.

What kind of return do you expect when purchasing an asset? We want to earn 25-30% and therefore take very high risks every time we buy some new business that is unfamiliar to us. To make fewer mistakes, it was necessary to build a very strict investment process.

Which companies did you acquire specifically because of their export potential? For example, forestry business. We get 70% of our revenue from exports. And in terms of cost, we are first in the world for a number of items: kraft paper, plywood, lumber. And we will maintain this best cost position for many years to come.

Is your plywood production really cheaper than the Chinese?

We make birch plywood, but birch does not grow in China. They make products of much lower quality, by hand, mostly in rural areas - and they produce a lot of them. This kind of plywood is really cheaper than our birch plywood. But there is a clearly defined birch plywood market in the world, and in it we, with our premium quality, occupy an absolutely solid position and sell 100% of what we produce. We do not have enough capacity, and we are now building a new plant in Vyatka, next to what we have: just last week we approved investments. Because for this product our cost is two times lower than that of European competitors, and 15-20% lower than that of Russian competitors.

You recently sold your stake in Detsky Mir to a Russian-Chinese investment fund. Why?

Yes, we sold a minority stake in RCIF, which is part of the Russian direct investment fund. A total of 23%, based on the company’s valuation of 42 billion rubles. This deal was fully consistent with our strategy because we always wanted to monetize part of our stake in this company. We created significant value there: three years ago it was worth 8 or 9 billion rubles, and when selling the stake we proceeded from a total value of 42 billion rubles.

Are you planning new investments in retail?

We are interested in this sector, but we need to see the economic sense. We have an asset called Concept Group - a manufacturer of women's and children's clothing, it is no longer small, revenue is over 10 billion rubles and growth is about 40% per year. The company pays for itself; we do not give it any guarantees or loans. But it’s quite difficult to enter classic retail like food retail now. There are major players there - Magnit, X5, Lenta and others. Buying a non-controlling stake is of little interest, because our added value will be zero, and the controlling stake will be put up for sale only if a crisis situation arises and someone cannot withstand the competition. Then we will be able to enter the capital and bring our management team. But simply “killing with money”, buying a controlling stake and trying to make money on it, as a rule, does not work, because you have already overpaid in the first place.

Do you always prefer to acquire a controlling interest?

Yes. But we can enter with a smaller share - as in the case of Concept Group, where we are not an operating partner, but a financial partner. That is, if we come across an asset that the shareholders are successfully developing, we are ready to be satisfied with a smaller package. According to our investment mandate, we cannot invest in greenfields, because their risks are uncontrollable. We invest in businesses with existing cash flow - usually positive and with a certain level of EBITDA. The business model should already be proven.

What role does the in-house bank play in an investment company?

We have it historically, from the times when all corporations included banks. For an investment company, a bank is always a question, because high profits cannot be extracted from it. In addition, there are high risks in this area. According to Central Bank standards, leverage - the ratio of capital and credit - is now 1:10. Roughly speaking, for a ruble of capital you can issue 10 rubles of credit. But if you lose five of these 10 rubles, then your capital will dissolve and you will have to report four more rubles.

We decided to make retail, primarily mobile, the bank's specialization, in order to provide MTS clients with additional banking services in MTS stores - there are more than 5 thousand of them in the country.

Due to the synergy with MTS, this bank does not have a large burden of operating costs. To score creditworthiness, the bank can use information about the payment discipline of MTS clients - of course, within the framework of the law on personal data. Thus, the bank becomes more efficient in the retail lending market. And in the corporate lending market, being part of the group, the bank can lend to our companies. In addition, using Sistema's connections, the bank finds high-quality corporate clients.

But you don't sell it?

MTS Bank is developing, it now has energetic management. But it is very difficult to sell the bank now. Banks are sold for 0.5–0.6 equity capital. It’s better that we develop it.

You said the profit margin is 25%, but each industry has its own ceiling.

This is like the average temperature in a hospital. Let's say the average profitability in the forestry industry is 10%. But some companies lose money, while others make a lot. Agriculture, for example, in Russia has never been attractive for investment. But the devaluation of the ruble and the policy of import substitution have made domestic agribusiness very attractive, at least for some industries. For example, milk production, growing apples, tomatoes and cucumbers. We recently bought the largest farm in Russia - the Yuzhny agricultural complex in Karachay-Cherkessia. There the margin is definitely higher than 25% - if it is managed effectively.

What fundamentally determines the attractiveness of assets?

Now Russia has the lowest prices for electricity and gas in the world - if you count in dollars. Our gas now costs $50 per thousand cubic meters, and before the devaluation it was $130. In America at that time it cost $80-90. That is, before the devaluation, gas, and therefore electricity, was cheaper in America, but now, on the contrary, in Russia. Therefore, previously there was no point in setting up energy-intensive production in Russia - in America it was obviously cheaper, not to mention the fact that the financial market there is developed and the legal system works reliably.

How quickly does AFK increase the profitability of the acquired asset?

In six months or maximum a year. But there are two types of assets: one is enterprises in an established industry that have problems - the whole question is which ones. If the management manages it wrong or purchases from the wrong place, then we can deal with it quickly, but if the enterprise is simply located in the wrong place, it’s unlikely. Investment analysis consists precisely in understanding where the shortcomings are structural and where they are managerial. To invest in an asset, you need to be sure that it will be cost competitive. But there is no point in taking and rebuilding everything again.

Another type of asset is growth, in an existing or new industry. There, cost is not so important, but the main thing is capturing market share and growth rates. An example is our Concept Group. Essentially this is a venture business. But there are relatively few such fast-growing companies that you can successfully enter into. If an entrepreneur successfully develops his business, he needs to pay two, three or four prices for entry and at the same time be sure that in the end the price will be even higher. Therefore, assets of the first type predominate in AFK Sistema, and we restructure and improve them.

How long does it take Sistema to make an investment decision? Do you have an investment committee, procedures and, probably, the path from proposal to transaction is very long?

A good deal takes at least six months. More like a year. That is, six months to a year are spent on the whole process.

Science says that people make decisions very quickly and emotionally. In a split second, we decide something within ourselves, and this is dictated by previous experience, prejudices and subjective factors. The mood at the moment, whether you liked a person or not. And then, under “like,” rational arguments are added in defense of why this particular decision is correct. In the investment process, the main thing is to drive this flow of emotions into a framework. So that even the most beloved and liked investment fits into the Procrustean bed of clear criteria and goes through the “devil’s advocate” system of checks and opposition. The investment committee must be presented not only with arguments for, but also with specially thought-out arguments against.

Are these arguments made by different people?

Yes. As a rule, the project is proposed by a portfolio manager. He found this deal, he likes it, he is ready to take the risk and buy. Naturally, he will not oppose himself, because he believes in his deal. So other people - from the financial complex and the strategy complex - are tasked with sorting it all out. An alternative case is built, a specific opponent is appointed, who has the opportunity to communicate with the management of the asset we are discussing, calculate the strategy, understand the industry, invite experts and hire consultants, if necessary, and review due diligence materials.

Does it happen that a major shareholder does not approve a deal that the investment committee has recommended?

I don't remember such a case. But it happened the other way around: the main shareholder Vladimir Yevtushenkov really liked some asset, and he wanted to invest money there, but the management said: no, this is wrong. And here very heated debates arose. But the shareholder himself built the investment committee as a system of checks and balances.

You previously worked at McKinsey. Was it easier there?

These areas cannot even be compared. A consulting firm that is owned by partners is one thing. There is no single leader or vertical management, all decisions are made collectively, everything is clear in a career. In terms of predictability, working in a consulting firm is comfortable. It's intense, but understandable. In an investment company, you deal with money and make specific decisions about investing it. Wrong decisions are immediately visible, and you can very clearly determine in numbers who is worth what. Everything here is based on numbers. Either you make money or you lose.

Have you ever made any serious mistakes while investing?

For us, the most difficult investment case was going to Indian telecom. We counted on a huge market: India's population exceeds a billion and more than half are still not covered by mobile services. The penetration rate is very low. But we - and not only us, but also other players - came across a number of local customs and legal restrictions. We are now preparing a deal with the Indian operator Reliance and see light at the end of the tunnel. But this is an example of how, when you step outside your comfort zone, you find too much discomfort.

Do you feel comfortable working here?

Not very much, but not as difficult as there. It's never comfortable anywhere. If you want comfort, don't do business. There is no country where you can work without risk. You can blame circumstances, talk about an unfriendly environment, but entrepreneurial and managerial risk is like a cross that you carry always and everywhere.