Sistema to scale back operations before auction, will participate in March bid process to secure spectrum
NEW DELHI: Sistema Shyam, which offers CDMA services under the MTS brand, says it will shut operations in 10 of its 22 circles as they have become unviable, a move that will affect about 300 employees and over 2.2 million customers.
According to a Sistema Shyam spokesperson, the circles from where the company will withdraw are Assam, Andhra Pradesh, Bihar, Himachal Pradesh, Haryana, Jammu & Kashmir, Madhya Pradesh, North East, Orissa and Punjab. Affected subscribers will be given 30 days' time to port out to other service providers, the spokesperson said. The company, a joint venture between Russia's Sistema and India's Shyam Telecom BSE -0.43 %, however, remains optimistic about its business in India.
"We are in the process of drawing an optimal strategy for the auctions based on several factors, including spectrum pricing and levels of competition," Sistema Shyam TeleServices Ltd's president and chief executive, Vsevolod Rozanov, said in a statement on Thursday.
Rozanov said Sistema Shyam will continue to focus on its data-centric voice-enabled strategy in select circles, adding that "the intent is to now look at life beyond all the uncertainties and build an even stronger MTS brand in India".
The March 11 auctions will cover GSM airwaves in the 1,800 MHz in the three metros as well as Rajasthan and Karnataka, CDMA airwaves in the 800 MHz band on a pan-India basis, and spectrum in the 900 MHz band in the metros.
Sistema Shyam, which has a customer base of over 14 million across 22 circles, had lost 21 of its mobile permits in the February 2012 Supreme Court order in the 2G-spectrum allocation case that impacted several operators.
The company, which is the sole telecom operator in the country that uses only 800 MHz for its services, had stayed away from the first round of spectrum auctions in November citing high reserve price.
It had so far refrained from announcing plans to participate in the March sale process as it was hopeful of a favourable verdict on its curative petition seeking exemption from the February ruling. But the top court dismissed it last week.
Meanwhile, the telecom department has extended the deadline till February 25 for mobile phone companies to indicate if they want to take part in the upcoming auctions.
The department has also announced that it will hold another round of airwaves sales in the remaining 18 regions immediately after the upcoming sale. The move comes after the Supreme Court recently directed the government to sell all airwaves vacated by companies whose permits were quashed last year.
Russian oil-to-telecom conglomerate Sistema JSFC has invested more than 15,000 crore in its India venture. Mid last year Sistema took a 3,668-crore write down on its earnings for the fourth quarter and the year ended December 2011, due to cancellation of mobile permits to its Indian arm.
Sistema Shyam did not give details of the losses it will incur in shutting down operations in 10 circles. Its spokesperson did not confirm whether the company will bid for 800 MHz or 1,800 MHz in the remaining 11 circles, or whether it will stop operations in any other circle.
If the company is successful in the next auction, it will have to pay for airwaves from December 19 - the date applicable to winners of the November auction.
On job losses, Sistema Shyam said it will try to absorb as many executives as possible in existing circles.