Imran Khan to endorse MTS in Rs 10-crore deal

• Story
• Comments

Read more on »Red Energy|MTS India|Levi|KWAN Entertainment|Imran Khan|Bollywood|abhishek bachchan

Imran Khan to endorse MTS in Rs 10-crore deal

RELATED ARTICLES

• US PE fund GCA plans to invest $200 mn in India
• India can offset impact of global risk: Moody's
• India most uncharitable in South Asia
• India's government bond rating outlook stable, may be considered for upgrade: Moody's
• India-Japan-US partnership in transformational stage

NEW DELHI: Telecom service provider MTS India has roped in Bollywood actor Imran Khan as its brand ambassador for two years. The 10-crore deal makes the Delhi Belly star the latest one to join a long list of celebrities, including Shah Rukh Khan, Abhishek Bachchan and MS Dhoni, endorsing telecom service companies. While it's the first time that Sistema Shyam TeleServices' brand has taken the celebrity plunge, Imran already endorses Coke and Levi's jeans.

However, MTS India spokesman and celebrity management firm Kwan Entertainment, which doesn't manage Khan but helped him in striking this deal, declined to comment.

"Imran will promote MTS through mass media, online and below-the-line promotional activities. He will also be part of Red Energy, a youth-centric online activity for the brand," an official directly involved with the developments said.

While the 2G scam has not deterred telecom firms from wooing celebrity endorsers, it has impacted their ad spends. Eight of the country's top 10 TV advertisers during January-September this year were consumer goods makers. Idea Cellular was the only telecom firm in the ranking, according to the media research firm TAM.

The telecom sector has been facing tough times with raging controversy on 2G spectrum allocation, rock-bottom tariffs, sliding average revenue per user, thinning margins and falling profits. High interest costs, banks shying away from lending and 3G roaming agreements being disputed by the government add to the sector's problems.

Approval and introduction of the new telecom policy that would have allowed liberal merger and acquisition norms and helped in consolidation of the sector, has been pushed back by nearly half a year. This may further add to telcos' woes. 

Sistema keen on telecom acquisitions, awaiting M&A norms

 Moscow, Dec 21: 

Stuck with a meagre 2.5 MHz of spectrum, Indo-Russian telecom operator MTS-India is awaiting the new government policy on mergers and acquisitions (M&A) to expand its operations in India.

“We are waiting for the new M&A policy because we do believe that the Indian market should be consolidated. We want to participate in this consolidation,” Sistema JSFC CEO, Mr Mikhail Shamolin, told a group of visiting journalists here.

MTS-India is a joint venture between Shyam Telecom and Sistema JSFC. Sistema holds the majority stake in the joint venture.

At the same time, Mr Shamolin said MTS India was keen on having an additional 2.5 MHz of spectrum, as it has fulfilled its contractual obligations and has the required number of subscribers, making the company eligible for additional bandwidth.

“We have an agreement with the government which says that we get 2.5 MHz spectrum and if we fulfil our obligations, we get another 2.5 MHz at the price we have paid initially,” he said.

However, he said 5 MHz (2.5 MHz+2.5 MHz) was not a good quantity of spectrum to provide quality telecom services and pointed out that the global standard was 20 MHz.

“Five MHz is too thin and too little,” he said, indicating that the group was waiting for the M&A policy to improve the situation.

“We are interested in consolidation. In which form exactly and in what kind of combination remains to be seen.

Definitely, we want to be one of the players. We do not want to exit the market given how much we have invested there and how important it is for the business of MTS and Sistema,” Mr Shamolin said.

MTS CEO sends greetings for all shareholders

Dear Alok and shareholders at AMSOST,

Thank you very much for the nice message and wishes. Let me reciprocate the same, I do hope the upcoming year will be joyful and prosperous for you and your families!

All the very best,

V.Rozanov

Sistema Shyam may get NLD licence soon

Sistema Shyam may get NLD licence soon

Press Trust of India / New Delhi December 15, 2011, 20:30 IST

The Telecom Ministry is likely to grant National Long Distance (NLD) licence to new telecom operator Sistema Shyam TeleServices (SSTL), which offers mobile services under MTS brand.
"...The proposal may be considered along with the draft of Rs 15,000 as processing fee," according to a Department of Telecommunications (DoT) note.
The company has fulfilled almost all the criteria required for being eligible to have NLD licence.
The company has submitted the certified copy of memorandum of article of association (MAA) and it has also submitted a copy of the paid up capital as of March 21, 2011 is Rs 31,93,92,00,000, so the networth criteria has been fulfilled.
The applicant company (SSTL) has stated that they have 26.05% Indian equity and 73.95% foreign equity. The foreign equity of the applicant conforms to 74% ceiling for which they have acquired FIPB approval.
The company has submitted business plan with funding arrangement as required under NLD guidelines.
With this the DoT has said that a letter of intent to SSTL for NLD licence may be issued.
Sistema Shyam TeleServices provides telecom services under the brand MTS with over 14 million wireless subscribers and operates in all 22 circles.
At the end of September 30, 2011 (Q3), the total capex investment by the company in India stood at Rs 6,243 crore, including Rs 161.7 crore made during the quarter. Consolidated debt from banks and financial institutions at the end of Q3 stood at Rs 6,860 crore.
Similarly at the end of Q3, SSTL's data card subscriber base stood at 1.07 million subscribers. The company's mobile subscriber base reached 13.27 million.
SSTL is a joint venture in which Russian conglomerate Sistema holds 56.68% stake, while the Russian government holds 17.14%. India's Shyam Group holds 23.98% and the remaining 2.2% is held by others.

India readies new rules on telecoms M&A : FT

India readies new rules on telecoms M&A

“The Indian telecom juggernaut is slowing fast, and the sector is trying to move beyond its infancy and adolescence towards maturity,” says Mohammad Chowdhury, head of telecoms at PwC in Mumbai. “A shakeout and some form of consolidation is going to be a big part of this process.”

The new, more liberal mergers and acquisitions framework is understood to have been agreed in draft at a meeting of India’s Telecom Commission on Friday, and is set to be confirmed at a further meeting this week. It will provide some relief to a sector that has struggled to get more profit out of its more than 900m users.
Things have become so bad that a delegation of long-time rival chief executives – including Vodafone’s Vittorio Collao, Bharti Airtel’s Sunil Mittal and Reliance Communications’ Anil Ambani – earlier this month trooped in to see Manmohan Singh, India’s Prime Minister, to complain about the country’s changeable and often-contradictory telecoms rules.
In a private letter handed over during the meeting, a copy of which has been seen by the Financial Times, the CEOs claim that the sector has “been brought to crisis point to the extent that the future of the industry is under threat”. The letter pleads for a “stable regulatory and fiscal regime” with no further “midterm surprises” – a barbed reference to the habit of Indian regulators of dreaming up new and unexpected rule changes.
The meeting is understood to have been brokered by Mr Ambani, whose debt-laden Reliance Communications has lost close to half its market value this year, against a backdrop of persistent speculation that he will enter some form of tie-up with his estranged brother and fellow billionaire, Mukesh Ambani.
In common with other groups, Reliance faces a telecoms market that is among the world’s most competitive and confusing. It boasts 12 operators – about twice as many as the norm for a developing market – competing in 22 “circles”, or geographic areas defined by regulation.
Meteoric growth in users over the past 5 years has come despite a dizzyingly complex regulatory set-up and has resulted in an overcrowded and bad-tempered market characterised by weak profits, flat revenues and falling investment. Analysts suggest that before things can improve the half dozen or so smaller operators must either exit or be bought out by larger groups.
On Friday the Telecom Commission, a body bringing together the disparate parts of India’s government, is understood to have agreed draft rules that future mergers could be allowed if the market share of any newly combined company does not exceed 60 per cent, up from the current limit of 40 per cent.
Vodafone, India’s third-largest mobile operator by subscribers, said: “We welcome greater flexibility in M&A rules, although it is not yet clear how the authorities would ensure that these were applied consistently.” Other industry figures, who spoke on condition of anonymity, cautioned that this higher upper limit was subject to further negotiation and could come with complex subsidiary regulations that would limit or delay consolidation.
In a test of the industry’s new-found unity, a range of other issues remain. The regime for spectrum is especially sensitive, given that allegations about its improper allocation lie at the heart of India’s $39bn telecoms corruption scandal – the aftermath of which is still rumbling on inside India’s Supreme Court.
The industry remains firmly united on one issue, however: its frustration with the government. One senior telecoms executive, who asked not to be named, said that even with clarity on merger laws, the authorities were unlikely to avoid the temptation of new charges and fees. “The government does not see that the telecoms industry is struggling. They see it as a golden goose, whose golden eggs can be harvested again and again, until the goose is dead.”

SSTL consolidated revenues up by 18%

India Blooms News Service

Mumbai, Dec 12 (IBNS) Sistema Shyam TeleServices Ltd. (SSTL), which operates its telecom services under the MTS brand in India, on Monday announces its unaudited consolidated US GAAP financial results for the third quarter ended September 30, 2011.

Key Financial & Operational Highlights for the Third Quarter of 2011:

Consolidated revenues up by 18% Q-o-Q to INR 3,282 million (USD 72 million). Quarterly revenues continue to grow faster than wireless (Voice & Data) subscriber base, which was up by 13% to 13.27 million.

Non-voice revenues from both data and mobile VAS for the quarter up by 32% Q-o-Q to INR 1,052 million (USD 23 million), which now contributes 32% of total revenue and the contribution has increased by 3.4 p.p for the quarter.

Blended mobile ARPU for the quarter increased to INR 85 vs. INR 82. The increase in ARPU is in contrast to a declining trend in the market.

SSTL’s data card subscriber base for the quarter up by 30% to 1.07 million subscribers. SSTL added 0.25 million data card subscribers during the quarter, highest additions in a quarter till date.

Consolidated OIBDA loss for the quarter stands at INR 4,584 million (USD 100 million). OIBDA margins improved 7 p.p. Q-o-Q.

SSTL launched, MTS MTAG 3.1 and MTS Livewire, India’s most affordable Android powered Smartphones in the Sub INR 5,000 category. With the launch of affordable Smartphones, SSTL takes the power and appeal of Android to the masses.

According to Vsevolod Rozanov, President and Chief Executive Officer of Sistema Shyam Teleservices Ltd, “SSTL has once again demonstrated robust growth across its key business metrics. The market response to our data centric: voice enabled strategy continues to be extremely positive. In fact, Government’s intent to increase broadband penetration in the country, as outlined in the Draft National Telecom Policy 2011 also supports our business strategy.

"However, we are awaiting further clarity on issues, such as additional spectrum availability. Inspite of all these challenges, we are committed to further drive growth in data usage amongst the masses, with smartphones and tablets playing a major role in this process.”

SSTL’s mobile subscriber base increased by 13% quarter-on-quarter and reached 13.27 million customers as of 30th September, 2011.

The growth in subscriber base of the company was largely driven by further strengthening of the distribution network, an increase in its retail universe across India and increased contribution from newly launched circles, said the company.

Mobile subscribers’ MoU for Q3 2011 declined to 291 min vs. 294 min in Q2 2011; the decline in MoU was mainly because of the decreasing share of free on-net minutes and also due to seasonal dip in the subscriber’s activity.

Industry net subscriber addition in Q3 2011 dipped further to 22 million compared to 39.9 million in Q2 2011. Total subscriber base reached 874 million and wireless tele-density was 73% at the end of Q3 2011. SSTL’s subscriber market share increased to 1.52% in Q3 2011 (vs. 1.38% in Q2 2011).

SSTL reported an OIBDA loss of INR 4,584 million for Q3 2011, reflecting an improvement in OIBDA margin by 132 p.p. Y-o-Y, margins improved as a result of 125% revenue growth over Q3 2010, the revenue growth was driven by 100% increase in subscriber base over Q3 2010.

By the end of Q3 2011, SSTL’s high speed mobile data services cover more than 200 cities in India, including all five metros. The number of data subscribers increased by 30% over Q2 2011 to 1.07 million.

SSTL’s bottom line during the quarter was impacted by increased forex charges. The Rupee has depreciated considerably against Dollar and other foreign currencies thus resulting in increased forex charges on long term Foreign Currency denominated loans.

Sergey Savchenko, Chief Financial Officer of Sistema Shyam Teleservices Ltd., commented, “One of the key highlights of our Q3-2011 results is that our Non Voice Revenue growth continues to be higher than the industry.

"Contribution of Non Voice Revenues to overall revenues increased to 32% during the current quarter, an increase of 3.4 p.p. over the last quarter. During the quarter our blended mobile ARPU increased in contrast to a declining trend in the market, this is again a strong reflection of our continued efforts to target quality customers.”

The CAPEX investments made by SSTL in India at the end of Q3 2011 stands at INR 62.43 billion; this includes the investment of INR 1,617 million made during Q3 2011. Consolidated debt from banks and financial institutions at the end of Q3 2011 stands at INR 68.6 billion.

Sistema Shyam TeleServices Ltd. (SSTL) is a venture, involving equity participation by Sistema {LSE: SSA} of Russia, the Russian Federation and the Shyam Group of India.

Sistema is the majority shareholder in the company which operates its telecom services under the MTS brand.