But the government's need to create an easily saleable asset has led it to scrap that plan: the state's 38% shareholding in Rostelecom will now go into Svyazinvest.

ECONOMIST: Russian privatisation

Outside investors have taken advantage of low share prices in the past year to turn small stakes into big ones in a few firms, such as Rostelecom, a telecoms firm.

ECONOMIST: Russian shares

Svyazinvest was originally conceived both as a holding company for the state's interests in 86 local telephone firms across Russia and as a competitor for Rostelecom, a state-run near-monopoly in long-distance and international telephony.

ECONOMIST: Russian privatisation