'Sistema can now start legal proceedings against India'

'Sistema can now start legal proceedings against India' New Delhi: SSTL on Monday said its partner Russia's Sistema is now "technically" empowered to start legal proceedings against India under BIPA to protect its investment in its telecom JV which has lost its 21 licences.

"We are not (in a) position to give any deadline to government (of India) but if we don't have response in due time, we have to act. Legal constraint was one (reason) we couldn't start the proceedings against government earlier than six months after the notice. Now, technically we can start legal proceedings anytime," SSTL's President and CEO Vsevolod Rozanov said here.

Sistema, which holds around 56.68 percent stake in Sistema Shyam Teleservices Ltd (SSTL), had served legal notice under Bilateral Investment Promotion and Protection Agreement (BIPA) in February.

"It is our decision, we can start today, tomorrow or after five years. There is no legal restriction now," Rozanov said.

The Supreme Court had in February this year held that the process of allocating 122 2G licences, including 21 to SSTL, was 'arbitrary' and 'unconstitutional' and had canceled all the mobile permits.

In its notice, Sistema had said that in case the dispute (regarding 2G issue) is not settled amicably through conciliation by August 28, 2012, it reserves the right to commence proceedings against India on the basis of any applicable inter-governmental investment treaty.

Rozanov on Monday said the Indian government has expressed its willingness to resolve the issue amicably but SSTL is yet to see "specifics" of the proposed solution.

Meanwhile, SSTL today stuck to its demand of keeping the minimum price of airwaves for pan-India CDMA services at Rs 1,658 crore.

The Cabinet has already approved a minimum price of Rs 18,200 crore for 5 Mhz spectrum in 800 Mhz being used for CDMA services.

Rozanov reiterated that SSTL does not find any business case at the "high" price for 800 Mhz spectrum.

"We invested more than USD 3 billion and we are running cash out of USD 15 million approximately a month. We are yet to make any profit and in this respect (regulatory constraints) the prospect of profit is very very remote. Internally, we are struggling to justify this price," he said.

When asked if company would like to bid for airwaves in 1,800 Mhz frequency band which is being used for GSM services, Rozanov said "It will be even worse. To start greenfield operations from year and half from now, we will not create even remotely possible positive business case. Extremely unlikely."

SSTL, which nationally operates its telecom services under the MTS brand, earlier today said its loss has widended to Rs 1,180.1 crore for the April-June quarter, mainly due to fall in rupee against the US dollar.

"The forex loss during the quarter were around Rs 375 crore," SSTL Chief Financial Officer Sergey Savchenko said.

SSTL, however, reported 50 percent increase in its revenue during the quarter at Rs 417.7 crore against Rs 278.2 crore in the same period year ago.

Rozanov said the company saw an increase of 3.9 percent in its non-voice revenues on quarterly basis from both data and mobile value added services at Rs 148.4 crore, which forms 35.5 percent of its total revenue.

"Despite regulatory and tax challenges, SSTL has maintained its scale of operations and has also grown its business by further strengthening all its revenue lines. Our data card subscriber base continues to grow in double digits despite the recent tariff reduction by 3G operators," Rozanov said.

He added that SSTL data card subscriber base for the quarter stood 1.73 million.

During the reported quarter, SSTL registered a rise in mobile subscriber base by 4.9 percent quarter-on-quarter and reached 16.6 million customers as of June 30, 2012.

The licences of SSTL are valid till January 18, 2013. The company will need to re-purchase airwaves for telecom services through the auctions due in November.

PTI