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SSTL to look at low investment model if operations continue

Last Updated: Sunday, November 25, 2012 - 18:29

New Delhi: Sistema Shyam Teleservices Ltd (SSTL), whose 21 licences were cancelled by the Supreme Court in February, has said it will look at a business model that involves lower investments than those made in the past if its operations continue.

The licences of the joint venture company, controlled by Russian conglomerate Sistema, are valid till January 18 as per the order of the Supreme Court passed in August.

The company's licences were among the 122 permits that were cancelled by the apex court in the 2G spectrum allocation case. SSTL filed a Curative Petition before the apex court on May 4 seeking restoration of its licences but that has not been heard till date.

"If Curative Petition is upheld and cancellation annulled, Sistema will remain in India, but will see a different business model with significantly less cash out compared to previous periods," Sistema said in a recent presentation on its global third quarter earnings result.

Meanwhile, SSTL spokesperson clarified, "SSTL's future development largely depends on the outcome of the Curative Petition. Given that we have already invested over USD 3.2 billion, future cash investments are planned to be lower for the company."

The court had allowed telecom companies, whose licences were cancelled, to participate in the spectrum auction and purchase airwave frequencies by paying market determined price for continuing the operations.

SSTL, however, decided not to participate in the auction saying it has high hopes from the Curative Petition.

In the presentation, Sistema said: "SSTL decided not to take part in the CDMA auction: a) licences (were) cancelled unjustifiably; b) (govt) set (reserve) prices too high and (that) harms business case."

Government had set minimum price of pan-India spectrum in the 800 Mhz band at around 11 times higher than that the companies paid in 2008.

At this reserve price, each block of 800 Mhz band would have cost Rs 4,550 crore, or 1.3 times higher compared to GSM airwaves that were auctioned.

The CDMA auction, however, failed because there were no bidders for these airwaves.


First Published: Sunday, November 25, 2012 - 18:29
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