. AMSOST - Association of Minority Shareholders of Sistema Shyam Teleservices Limited

Licences lost, telcos strive not to lose talent

2012-02-10T09:04:00.000+05:30

Licences lost, telcos strive not to lose talent

Surajeet Das Gupta / New Delhi Feb 10, 2012, 00:23 IST

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When Sistema Shyam CEO Vsevolod Rozanov saw the number of employees attending a ‘town hall’ meeting organised at the company headquarters in Gurgaon double this Monday, he was not surprised.
The heavy attendance was only to be expected, as employees were concerned after the Supreme Court cancelled the company’s licences in 21 circles. The company has four months to switch off and has nearly 3,500 employees directly on its rolls, the highest among new telecom operators.

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Rozanov tried his best to allay all their fears. He assured them increments and performance-linked incentives — a substantial portion of pay — would come on time. He said annual appraisals would begin in February and vacant positions would be up for grabs for internal candidates before outsiders. And, the company would continue aggressive marketing to launch four new tariff plans in 30 days. He made it clear advertising spends would not be curtailed.
The company may appear to be putting up a brave face to keep its flock together. But, top managements across many of the eight companies whose licences were cancelled are spending a substantial part of their time to ensure their 7,500-odd employees do not panic.
Idea Cellular won’t talk, but Managing Director Himanshu Kapania wrote to employees on February 3, assuring them the judgment would have no impact on the continuity of services in the seven circles. However, he also warned them to be careful that the judgment had led to aggression from some competitors spreading misinformation to acquire their customers.
Some telcos have complained to the government that competing operators are creating panic among their subscribers.
At Uninor, which has 2,000 direct employees, Managing Director Sigve Brekke sent an email to all employees, giving a critical assurance: they would not close shop. The emotional email said “we are not closing down” and “Telenor group” did not come to India to “quit” and just “walk away”. Over the weekend, around 1,000 Uninor employees have hit shops and distribution points, registering their presence in the market to comfort distributors and retailers. So that employees are assured directly by the top management, Uninor has run live interviews on its intranet, where employees’ questions have been taken up. Senior executives have conducted town hall-type meetings at virtually all its offices. “We are flashing tickers on the internal network, detailing daily business achievements. The message is clear. Uninor is here to stay,” said a spokesperson.
The company says the efforts have worked. Uninor has secured 300,000 new customers, more than it ever has in a weekend since the start of operations. “We are a tightly knit team and we are right now very motivated to prove a point,” said the spokesperson.
Sistema’s Rozanov shared with his employees the shareholders’ decision to bid for 2G spectrum coming up for auction, and win back its licences. “Of course, there will be concerns in the 3,000 employees’ minds. But, our message is clear: it’s business as usual. We have told our employees they should not allow rivals to take their market share. They will all be given higher targets to achieve and we will push new tariff plans to woo new customers in the coming months,” says Rozanov.

“Except for one or two markets, we are not seeing any unusual trend in offtake after the judgment. I don’t see the churn going up, as we have limited competition in the CDMA space,” he says.
Sistema today launched a new tariff plan. MTS customers will be able to make unlimited MTS-to-MTS local and national calls at rates as low as zero paisa.
Everyone is not positive, though.
A senior executive of one of the smaller operators whose licences were cancelled says on the condition of anonymity, “We had 300 employees; 200 have already left after a lack of bank funding forced us to reduce manpower. I am sure most of the 100 who remain will look for jobs voluntarily.”
Analysts say the cancellation comes at a time the job market is not buoyant, especially in telecom.

MTS offers unlimited calls

2012-02-10T09:02:00.002+05:30

MTS offers unlimited calls

Press Trust Of India
New Delhi, February 09, 2012

First Published: 20:59 IST(9/2/2012)
Last Updated: 21:14 IST(9/2/2012)

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Sistema Shyam TeleServices, which operates under the brand MTS, on Thursday launched a new tariff plan allowing subscribers to make unlimited local and national calls within the network.
“This is a first of its kind initiative for both for its new and existing prepaid voice customers

across India. MTS customers will now be able to make unlimited MTS to MTS local and national calls at a rate as low as zero paisa,” SSTL said.

Exiting India not an option, says Sistema Shyam

2012-02-10T09:01:00.004+05:30

New Delhi, Feb. 9:

Russian major Sistema wants to stay invested in India and is not considering exiting the telecom venture as of now.

The company, one of the players affected by the Supreme Court ruling last week on licence cancellation, is now looking forward to fair auction rules so that it can buy back spectrum.

“Exiting is not an option being considered as of now. We have long-term plans for India and we are working with the Government to see how best we can move ahead. The rules of the auction will be crucial and we hope that the Government policy will create some differentiation between new and incumbent players,” Mr Vsevolod Rozanov, Chief Executive Officer, Sistema Shyam Ltd, told Business Line.

GSM spectrum

The operator offers services to about 15 million subscribers in 22 circles under the MTS brand on CDMA platform.

Mr Rozanov said that his team is thinking about bidding for GSM spectrum also along with CDMA to get dual technology status but the final decision will be based on the business case.

“We have the opportunity to get into the GSM space but it is not an obvious decision. It will depend on the business case which in turn is impacted by the auction rules,” Mr Rozanov said.

Apart from Sistema, other foreign players affected by the 2G ruling include Norway's Telenor, Bahrain-based Batelco and UAE-based Etisalat. While Batelco has already announced its decision to exit, Telenor is keeping that option open in case the auction rules are not conducive enough for it to win spectrum.

Sistema Shyam's confidence may be borne from the fact that it basically needs CDMA spectrum for which there may not be too many bidders. The only other player which may bid for CDMA spectrum is Reliance Communications that too for incremental airwaves. If the Russian company bids for GSM spectrum and wins, it will only be a bonus.

Separately, Sistema is also filing a review petition against the apex court's verdict. According to sources it is also invoking provisions of an international treaty signed between Russia and India which essentially protects investments from each others countries. (Russian Government has invested nearly $600 million in Sistema Shyam).

New tariff plan

A clear indication of its intention in India is the new aggressive tariff plan the company announced on Thursday offering free calls and SMS between its subscribers for a flat rate of Rs 147 a month.

“Our team is charged up even more post the recent developments. The next few weeks will be crucial but at the operational level its business as usual,” said Mr Rozanov.

tkt@thehindu.co.in

Exiting India not an option, says Sistema Shyam

2012-02-10T09:01:00.002+05:30

New Delhi, Feb. 9:

Russian major Sistema wants to stay invested in India and is not considering exiting the telecom venture as of now.

The company, one of the players affected by the Supreme Court ruling last week on licence cancellation, is now looking forward to fair auction rules so that it can buy back spectrum.

GSM spectrum

The operator offers services to about 15 million subscribers in 22 circles under the MTS brand on CDMA platform.

Mr Rozanov said that his team is thinking about bidding for GSM spectrum also along with CDMA to get dual technology status but the final decision will be based on the business case.

“We have the opportunity to get into the GSM space but it is not an obvious decision. It will depend on the business case which in turn is impacted by the auction rules,” Mr Rozanov said.

New tariff plan

A clear indication of its intention in India is the new aggressive tariff plan the company announced on Thursday offering free calls and SMS between its subscribers for a flat rate of Rs 147 a month.

“Our team is charged up even more post the recent developments. The next few weeks will be crucial but at the operational level its business as usual,” said Mr Rozanov.

tkt@thehindu.co.in

Russia steps in to help AFK Sistema in India

2012-02-09T19:28:00.002+05:30

Russia steps in to help AFK Sistema in India

February 9, 2012
Alexei Baev, Vladimir Zykov, Izvestia

India’s Supreme Court has revoked telecom licenses from AFK’s Indian division. The Russian authorities have intervened to settle Sistema Shyam Teleservices scandal.

An Indian court revoked 21 of the company’s 22 telecommunications licenses.

Statement from Sistema JSFC

“The Russian Embassy is concerned about the situation with SSTL. Russian legal experts are scrutinizing the 400-page ruling of India’s Supreme Court, seeking lawful ways to solve the problem in accordance with Indian legislation. Our primary goal is to settle the problem and protect the interests of Russian investors,” Sergei Karmalito, Senior Counselor at the Russian Embassy in India, told Izvestia. Russia’s Federal Agency for State Property Management invested a hefty $600 million in SSTL––something Indian officials should take into account.

It is no surprise that Russia’s government agency is intervening in the conflict: last year, the Federal Agency for State Property Management acquired a 17.4% stake in SSTL. Rather, it is the agency’s speedy reaction that is surprising: the Supreme Court passed its decision on Thursday of last week. According to the Indian court, the licenses – the court revoked a total of 122 licenses from 11 companies – were granted to operators in violation of the procedures and requirements of India’s Department of Telecommunications.

In February 2011, India’s Central Bureau of Investigation arrested ex-Telecom Minister Andimuthu Raja on charges of miss-selling mobile phone frequency licences. Raja is accused of failing to hold a tender for the licenses, despite the government’s recommendations, and instead selling them at 2001 prices. Indian government experts estimate the loss to the budget at up to $40 billion. The minister’s unlawful behavior provided grounds for the court’s decision to revoke the licenses.
All companies affected by the decision of India’s Supreme Court, including SSTL, will continue to provide services for four months. During this period, the Indian regulator promises to decide how to proceed.

“The hottest heads suggest holding a tender for the resale of frequencies and licenses where the affected companies would bid on par with new contenders. We think that would be unfair,” Karmalito said. “Over the past few years, the company has acted in strict accordance with India’s existing laws. In fact, during this period it was SSTL that shaped India’s market for CDMA services, as there were no other bidders when the company submitted its application for these frequencies.
SSTL says it will not surrender without a fight. “Our company reserves the right to use all lawful means to protect its interests,” SSTL Corporate Communications Director Viraj Chouhan told Izvestia. “We are not going to leave the Indian market, and we remain a nationwide operator servicing over 15 million customers across the country,” he stressed.

Sistema has not yet announced its response. Speaking on condition of anonymity, a source with AFK suggested that operators could be asked to pay more to keep their frequencies. “All this arm-twisting is aimed at getting more cash out of the operators’ pockets, thus compensating for the alleged loss of $40 billion caused by the ex-minister’s unlawful behavior. This amounts to blackmail at the government level. Such situations have never occurred on other countries’ markets,” he emphasized.

Yet, analysts don’t doubt the advisability of Russia’s investment in the Indian telecom market. “AFK Sistema hoped to bring its Indian subsidiary to a breakeven EBITDA margin by 2014, which is a long-term goal,” said Ilya Rachenkov, an analyst with Investcafe. “Investing in the Indian company is very promising business, as this market is gaining momentum,” he added. If the companies face a choice between losing business and paying more, they will pay, according to Leonid Delitsyn, an analyst at Finam.

“This is a quick solution for the companies. They could start a legal battle but it would take a long time. It is more expedient for the companies to pay again and settle the conflict quickly,” Delitsyn suggests.

According to Mr. Rachenkov, the Indian authorities hugely inflated the presumed loss by putting it at $40 billion.

MTS willing to bid at any price to stay

2012-02-08T11:33:00.000+05:30

Rates will double due to higher price of spectrum, Rozanov

Surajeet Das Gupta / New Delhi Feb 08, 2012, 00:20 IST

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Sistema Shyam Teleser-vices boss Vsevolod Rozanov predicts rates in the mobile space will double because of the higher price of spectrum to be paid through an auction process by operators.
Sistema Shyam TeleServices Ltd is a venture involving equity participation by Sistema of Russia, the Russian Federation and the Shyam Group of India. The company brought the MTS brand into India under a brand license agreement with Mobile TeleSystems (MTS).
Breaking his silence after the Supreme Court cancelled all its licences, Rozanov, president and CEO of Sistema Shyam told Business Standard: “One has to be ready with the consequences of the judgment. Rates will surely double. Not what some have said, that it will be only 20 per cent. I think rates will hit at Rs 2 per minute, as companies now have to pay higher price for spectrum in auction. Earlier, the new operators were not making money from low spectrum price but passing on the benefit to consumers. That is over now.”

Rozanov said the decision of the court had serious consequences for not only operators but tower operators, network operators and other vendors who depend on them for business.
On Sistema’s plan, Rozanov said it would follow a dual policy. It will continue to look at legal options while participate in the auction. The company is in the process of filing a review petition against the judgment. However, he said, the key concern was on abruptly stopping services after four months or wind-down operations. “Our main concern is, if we have to wind down operations, its impact on customers and our vendors. We can’t switch on and switch off networks; it takes many months for networks to stabiles. So, something has to be done for serious players who want to stay,” said Rozanov.
The Sistema chief also added they had invested $ 3.1 billion in India operations.
“As far as I know, our shareholders have no intention of writing off any investment,” added Rozanov.
However, the Sistema boss said the company was eager to bid for the auction and also for getting additional spectrum, already due in many circles. “We would like to bid. However, it will depend on the rules of the auction. We will bid at whatever price,” he said.

Russian President may take up the issue in his March visit..

2012-02-08T07:49:00.000+05:30

CANCELLATION OF 122 TELECOM LICENCES

Russia to Take Up Sistema’s Cause with Indian Govt

KALYAN PARBAT KOLKATA

Russia is set to join Norway in mounting diplomatic pressure on India to protect foreign investors who have pumped in billions of dollars in telecom firms whose licences were scrapped by the Supreme Court last week.
Norway’s minister for IT and Government Administration Rigmor Aasrud met telecom minister Kapil Sibal on Tuesday to express her government’s concern over Telenor’s . 14,000 crore investment in its Indian operation, Uninor.
Russia’s communications minister Igor Shchyogolev is likely to follow suit and communicate concern over the cancellation of Sistema’s pan-India mobile permit by the apex court.
Indian operations of Telenor, Sistema, Dubai’s Etisalat and Bahrain’s Batelco are among the 122 licences that have been scrapped.
The Russian Federation, which owns a shade over 17% in Sistema Shyam, is likely to depute Shchyogolev to take up the matter with his Indian counterpart Kapil Sibal, a top official in the Russian embassy told ET. Shchyogolev is expected to drive home the point that Sistema did not break Indian laws and is being unfairly penalised. Sistema Shyam, a joint venture between Russian conglomerate Sistema and India’s Shyam group which retails mobile services under the MTS brand, is also likely to file a review petition in the Supreme Court. Its mobile permits in all regions except Rajasthan were quashed by the apex court.
Russia, an official who did not wish to be named said, does not favour immediate international arbitration proceedings because it believes its long-term economic ties with India can help break the ice within the next two months.
“Arbitration in any international court of law is both time consuming and costly. The outcome can also never be predicted,” the official quoted above said, adding that the meeting of the two ministers should yield a resolution. Sistema has not formally enlisted the support of the Russian government yet, the official said.
If the Russian minister fails to make headway, the issue may figure during Russian Federation president Dmitry Medvedev’s upcoming meetings with the Indian leadership during his Delhi visit in late-March for the Bric summit.
“President Medvedev’s intervention on the Sistema case may be sought only if all bilateral initiatives, including talks at the level of the communication ministers of both countries fail to resolve matters,” said a top official in the Russian embassy.
Meanwhile,
the Russian Federation is about to nominate a director on the Sistema Shyam board. “SSTL has decided for induction of a Russian Federation representative as director on its board. However, a formal nomination of the director is awaited from the Russian Federal agency,” said a Sistema Shyam spokesman.
According to The Wall Street Journal, Sistema has said it will not lay off its India staff nor renegotiate deals with equipment vendors, about 50% of whom are Chinese. Like Telenor, it has reportedly indicated that its Indian JV, SSTL will bid for the 2G airwaves provided the base price is reasonable once the new auction rules are notified. Sistema and the Russian government collectively own nearly 74% in SSTL, while the Shyam group and others hold 24% and 2.8%, respectively.

Sistema Shyam Plans Plea Against License Cancellation

2012-02-07T16:20:00.002+05:30

Sistema Shyam Plans Plea Against License Cancellation

NEW DELHI -- The Indian unit of Russia's Sistema JSFC is preparing to file an appeal asking the Supreme Court to review its order cancelling the company's telecommunications licenses along with those of several others.
"We think there are good reasons to believe that we can be successful [in the review petition]," Vsevolod Rozanov, president and chief executive at Sistema Shyam Teleservices Ltd., said Tuesday. "Our overall management is finalizing the steps."
In case the review petition is unsuccessful, Sistema Shyam plans to file a curative petition.
According to Indian law, an individual or company can apply for a review of a Supreme Court ruling within 30 days of the judgment. If that is dismissed, another plea--termed a curative petition--for reconsidering a judgment can be filed.
Sistema Shyam Teleservices is 17.14%-owned by the Russian government, 56.68% by Sistema and the rest by India's Shyam Group.
The company has invested more than $3 billion and provides services on the Code Division Multiple Access, or CDMA, technology, in all of India's 22 service areas under the MTS brand. It has 15 million users.
India's Supreme Court last week ordered the cancellation of 122 mobile telecom service licenses--including 21 of Sistema Shyam--issued without auction after January 2008. The ruling, which will be operative after four months, came on complaints of corruption in the allotment of the licenses.
Sistema Shyam follows Tata Teleservices Ltd. in stating that it will file a review petition. Tata Teleservices' three licenses are affected due to the court order.
Mr. Rozanov said the Russian government is "concerned," and is being apprised on the developments.
Russian government officials couldn't be reached for comments. They may get involved in discussions with Indian authorities to protect Russian investments.
Norway's information technology minister has already met India's communications minister to discuss the license cancellation of the Indian unit of Norwegian company Telenor ASA.
Sistema Shyam still has faith in the potential of the Indian telecom market, which is the second biggest and the fastest growing in the world. It plans to participate in the auctions that India's telecom department has to conduct within four months to real lot the licenses and bandwidth, Mr. Rozanov said.
"We have invested huge money, we do believe in India and we do believe in the opportunity," Mr. Rozanov said.
For now, its business usual for Sistema Shyam. It isn't planning any layoffs or cutting its contracts with vendors, he said.

Sistema Shyam Teleservices Signs Agreement With Vodafone India

2012-01-17T17:02:00.002+05:30

Sistema Shyam Teleservices Signs Agreement With Vodafone India

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MOSCOW -(Dow Jones)- Sistema Shyam Teleservices Ltd., majority owned by Russian conglomerate AFK Sistema (AFKS.RS), has signed a franchising agreement with Vodafone India, Russian daily Vedomosti reports Tuesday, citing Vsevolod Rozanov, Sistema Shyam's general director.
According to the agreement, Vodafone sells modems under the NetCruise brand that run on Sistema Shyam's network. Sistema Shyam will share the revenue for servicing clients with Vodafone. Modem users will be considered Sistema Shyam subscribers but will be billed by Vodafone, Rozanov says.

Sistema Shyam Teleservices Ltd raises Rs 1280 cr loan from banks through NCDs

2012-01-12T13:39:00.002+05:30

Sistema Shyam Teleservices Ltd raises Rs 1280 cr loan from banks through NCDs

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ICICI Bank Ltd.

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Vol:313345 shares traded

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The Indian arm of Russian conglomerate Sistema, that offers mobile services under the MTS brand has raised Rs 1280 crore loan from a consortium of banks through Non Convertible Debentures (NCD).

Deutsche Bank is the lead banker of the issue. This issue has been partially secured by guarantee of one of Russia's leading bank, Sberbank.

This is the second time in the last six months the company has raised money to fund its expansion plans. In September 2011, it has raised a Rs 920 crore loan from Barclays Bank and ICICI Bank. The telco has also said that it currently had several other facilities in pipe-line.

The entire amount of INR 1280 Crore has been received by SSTL. The 8 year Debt is payable by 2019, the company said in a statement.

"It was quite challenging to raise such significant funds with such long tenor under current uncertain regulatory environment in India, but business has to continue and grow. We are planning to utilize the proceeds to further scale up our telecom operations and repayment of maturing loan," Sergey Savchenko, chief financial Officer of Sistema Shyam Teleservices Ltd said.

The company also got about $600 million when the Russian government bought under 20% stake in it in December 2010.

Post this deal, Sistema's stake in the JV has declined to about 54%. There are no changes in the Shyam group's shareholding and it has about 24% in the JV. Other minority shareholders own the residual 2% in the telco.

MTS goes 'unlimited' for traders

2012-01-11T15:54:00.002+05:30

MTS goes 'unlimited' for traders

India Blooms News Service

Mumbai, Jan 11 (IBNS): Sistema Shyam TeleServices Limited (SSTL) that nationally operates its telecom services under the MTS brand, on Wednersday announced the launch of ‘MBiz’ for its existing and new prepaid voice customers in Gujarat, Mumbai, Kerala, Karnataka, Andhra Pradesh and Tamil Nadu.

"Given the ever increasing economic activity in the region, MTS has specially designed its New Year initiative to suit the needs of the business community. Customers availing the offerings will get freedom to speak a lot more without worrying about huge mobile bills," said an official spokesperson.

According to Cheenu Seshadri, Chief Operating Officer, South & West Regions, MTS India, “The latest in our list of firsts is MBiz to provide unlimited local calling for our customers in Gujarat, Mumbai, Karnataka, Tamil Nadu, Andhra Pradesh and Kerala. This proposition has been specially designed to address the needs of high usage customers including the business community.”

Research shows, business community are heavy users of local calls made to customers, associates and employees.

Sistema holds back IPO,may look at it after new telecom policy

2012-01-06T05:48:00.002+05:30

Sistema holds back IPO,may look at it after new telecom policy

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NEW DELHI: Volatile market conditions and uncertain regulatory framework in the telecom sector has forced new telecom operator Sistema-Shyam to postpone its proposal to enter the capital market through an IPO, but would consider the plan after the new telecom policy is announced.

"Given the present regulatory environment and unproductive market conditions, especially in the telecom sector, known to everyone, an IPO might not result in good valuations... One is looking forward to introduction of the new telecom policy which should in turn enable liberal merger and acquisition norms," Sistema-Shyam Teleservices (SSTL) President and CEO Vsevolod Rozanov said.

Such policy issues would go a long way in consolidation of the sector and thereby improve the operating environment for the entire telecom industry, he said.

SSTL offers mobile services under MTS brand and claims to be one of the fastest growing telecom companies in India in the telecom space.

The current economic environment has dampened the spirit of unlocking value of a range of infrastructure companies. The impact is felt even more so within the telecom sector given the range of issues being faced by the sector, he added.

Industry observers believe that such sentiments are a reflection of the current mood in the telecom industry.

In October last year, Telecom Minister Kapil Sibal had unveiled draft National Telecom Policy-2011 that paves the way for mobile telephone users to make calls without paying roaming charges and change operator outside their circle while retaining the same number.

Declaring an agenda of 'One Nation-One Licence' across services, the NTP endeavours to create an investor-friendly environment by attracting additional investments in the sector, which has been marred by controversies relating to 2G scam in the recent past.

SSTL has invested over USD 2.5 billion in India, focusing on its data centric and voice enabled strategy.

The company nationally provides telecom services to over 15 million wireless subscribers, including more than 1,200,000 high speed mobile broadband customers in over 200 cities across the country.

The company is a joint venture, involving equity participation by Russia based-Sistema, the Russian Government and the Shyam Group of India.

The Russian government holds a 17.14 per cent stake in the company. Sistema is the majority shareholder with a 56.68 per cent stake, Shyam Group holding a 23.98 per cent stake and others 2.2 per cent.

Government to charge for spectrum beyond 4.4 MHz from new players

2012-01-02T10:56:00.000+05:30

Government to charge for spectrum beyond 4.4 MHz from new players

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NEW DELHI: In a move that will provide a huge advantage to old GSM operators and impact the valuation of new entrants in the telecom sector, spectrum allotment beyond 4.4 MHz will now be done through an auction, though older players were spared such additional charges till they had 6.2 MHz.

"Telecom commission has decided to charge new operators. For additional spectrum beyond 4.4 MHz, telcos have to buy additional airwaves through auction," according a person with direct knowledge of the matter.

Recently, new telecom operators such as Tatas, RCOM (for foray into GSM services), Sistema-Shyam, Uninor and others have written a letter to telecom minister Kapil Sibal terming the proposal to charge new telcos for additional spectrum beyond 4.4 MHz as discriminatory, saying it will impact their sustainability and scalability.

Trai has been mulling charging operators for additional 1.8 MHz (GSM)/2.5 MHz (CDMA) spectrum, beyond the start-up spectrum of 4.4 MHz/2.5 MHz, respectively. Any change to the already existing contractual arrangements with regard to allocation of additional 1.8 MHz/2.5 MHz will be highly discriminatory, against the level playing field and likely to derail business plans, the new operators had said.

Citing various TDSAT rulings and views of DoT and Trai at various times, the operators said 6.2/5 MHz is considered the contractual minimum and the optimal quantity of spectrum for pan-India GSM operations.

The telcos had said that such changes would be in violation of the present licence conditions. Further, saying that any changes to the contract were not legally tenable, the operators have asked the government to re-consider the proposal and seek legal opinion on the same, before passing any final decision.

According to new players, they should be given more concessions in view of limited market as the old players have already cornered maximum spectrum as well as subscriber base.

Any move to charge for spectrum beyond 4.4 MHz from new telco would send a wrong signal to the investors as they have entered Indian market based on licence conditions and business models of incumbent players.

Imran Khan to endorse MTS in Rs 10-crore deal

2011-12-26T15:30:00.002+05:30

Imran Khan to endorse MTS in Rs 10-crore deal

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Imran Khan to endorse MTS in Rs 10-crore deal

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

2011-12-21T16:29:00.000+05:30

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

2011-12-19T18:43:00.002+05:30

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

2011-12-15T22:14:00.002+05:30

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

2011-12-12T14:09:00.002+05:30

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%

2011-12-12T13:37:00.000+05:30

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.

MTS adds nearly 800,000 customers with Android smartphones (India)

2011-11-23T16:37:00.002+05:30

MTS adds nearly 800,000 customers with Android smartphones (India)

MTS, a unit of Sistema Syam TeleServices Limited (SSTL), has reportedly added around 800,000 customers in the month of October alone, with the launch of two low cost Android smartphones – MTS MTag 3.1 and MTS Livewire priced under US$ 100.

According to reports, a spokesperson for MTS has said that they were able to get 7,95,523 customers in the festive month of October because they gave the CDMA consumers the option to choose from a variety of Android phones at different price points and they also initiated a lot of awareness campaign across the country. He added that the launch of the two smartphones in the festive season helped propel their growth.

As per sources, pre-paid users received 150 minutes of calls, 150 SMSs and 150 MB of data free every month for 12 months, with the smartphone. Whereas postpaid users were offered a 12 month contract during which users had to pay Rs 250 each month, against which they received 250 minutes of calls, 250 SMSs and 250 MB of data free each month.

India's broadband plans hit by lack of spectrum, says MTS's Vsevolod Rozanov

2011-11-11T08:55:00.000+05:30

India's broadband plans hit by lack of spectrum, says MTS's Vsevolod Rozanov

10 November 2011

Sistema Shyam's MTS India competes in the market by offering high-speed wireless broadband, but government broadband targets cannot be achieved unless it makes more spectrum available, says the CEO
Read more: India MTS Sistema Shyam wireless broadband Qualcomm


Vsevolod Rozanov: India is the most competitive market in the
world. You have to reinvent yourself every moment to outperform
your competitors


The Indian government wants 160 million wireless broadband customers in the next few years — a relatively modest target in a country of 1.2 billion people. But the CEO of one of the most innovative mobile broadband providers in the country believes the government has not made enough spectrum available to achieve even that challenge.
“We have only 2.5 megahertz of spectrum and we are one of the data leaders,” says Vsevolod Rozanov, the CEO of MTS India, a Russian-backed operator in India’s highly competitive mobile market.
The government’s department of telecommunications is trying to persuade other parts of the government to release more spectrum for commercial use. “There is a significant business development opportunity,” says Rozanov, a Russian economist and management consultant who has led the Russian-Indian joint venture since it was set up in 2008.
“The government’s target is 160 million on broadband, but we have to get the spectrum, otherwise it’s impossible to realise the target.”
The official name of MTS India is Sistema Shyam Teleservices, but it uses the MTS brand that parent company Sistema also uses for the operator it controls in Russia.
Sistema’s holding in MTS India is just over 56%, and there is a small amount belonging to public shareholders, but there are two other main shareholders: Shyam Group, an Indian industrial company, with 24%, and the Russian government’s Federal Agency for State Property Management, which put in 17% in March 2011.
Sistema is the biggest shareholder in MTS in Russia, the NYSE-quoted company that is one of the three big Russian nationwide operators. It competes with VimpelCom, which uses the Beeline brand, and Megafon, as well as some smaller players.
India is a fiercely competitive market and it has become even more so in the past few years. As many as 14 operators are trying to win customers in India, of which nine have virtual nationwide coverage. “It’s probably the most competitive market in the world,” says Rozanov. “Some companies are less active but nine are very aggressive in the key markets.”
That compares with a usual total of three or four nationwide operators in most countries in the developed economies of Europe, North America and the richer areas of the Asia-Pacific region.
Even among the fast-growing poor nations — the four so-called BRIC countries of Brazil, Russia, India and China — conditions for Indian operators are tough. Average revenue per minute is $0.01 in India, says MTS India, half that of the more regulated Chinese market. By comparison, Russian operators can charge $0.05 a minute and Brazilian companies $0.13.
“This is a very, very tough market. The pricing is one of the lowest in the world and the number of operators per state is one of the highest.”
So what is the upside? Why does anyone bother? “Huge growth opportunities,” says Rozanov. “India has hundreds of millions of people.”
The number of subscribers has gone up 45% a year in the past three years, but there are still 700 or 800 million people without mobile connections. Those with mobile phones, however, may have two, three or four SIM cards — so customer loyalty is not high, something that Rozanov and his colleagues are also addressing in their strategies.
Tariffs dropped to their current levels after 2008, when the number of nationwide operators increased. MTS India was one such. At first it had a licence covering one region — or circle, in Indian terminology — and “we rolled out across the country from March 2009”.
“After the price wars, operators have stabilised prices, and now they are starting to increase them,” says Rozanov.


Cheaper handsets needed

But he wants to see one price in particular lower than it is at the moment: the retail cost of an entry-level handset. “The cheapest handset is $15, and that’s still not affordable to many people,” he says. That limits growth in the basic voice and text market so MTS India is looking for alternative growth opportunities in data. “We have to find a niche to distinguish ourselves among the 14 players, and we have started a data-focused, voice-enabled strategy,” he says.”
MTS benefits, he says, from a decision taken in the early days of the Indian operation, to choose Qualcomm’s CDMA technology in preference to GSM for its operations, which use spectrum in the 800 megahertz band. The company uses the EV-DO revision A standard, allowing it to transmit data at speeds from 500 kilobits a second to 1.8 or 2 megabits “depending on the particular situation”, says Rozanov cautiously.
The company is upgrading to the so-called phase II of Qualcomm’s standard, which should push the speed to 4.5 megabits, “and that gives us very significant differentiation”, he says. Data “is something that allows us to be differentiated in a very crowded market. Our brand is considered one of the most data-friendly brands.”
The “focus on CDMA proved right”, he says. If MTS had wanted to use GSM it would have needed to use the 1,800 megahertz band, with poorer coverage in buildings and in rural areas. “Our spectrum means lower costs because we need fewer base stations. Most of our new customers are from semi-urban or rural areas and it would be suicidal for us to go for 1,800 megahertz spectrum.”
But wireless broadband in India is not a route to riches: it is still a tough market, says Rozanov. Of MTS’s 14 million customers in India, only 1.2 million are data customers. The price of smartphones is one of the barriers: “We sell a $100 Android device and we are the price leader in India,” he says. “We need a $50-$60 device to significantly increase the penetration of data.”
But there’s an education challenge too, he adds. Even when customers are buying smartphones, they are not making the most of them. He estimates that “even if we launched a super data device”, 90% of its usage would still be for voice.
And, he notes, even those on unlimited data plans do not make the most of them. “Customers don’t know what to do with the data. We require a huge education programme to use this data opportunity.”
It varies from region to region across the country, he notes. “Our analysis of every state in terms of potential voice and data revenue shows that some states are very voice-heavy.” Key places for data include the big cities of Delhi, Bangalore, Mumbai, Chennai and Kolkata, he notes.
There is “natural growth” in the broadband data market, but “it’s no hockey stick market”, he warns. But in urban markets where voice has reached 100% penetration, data is important in differentiating MTS from its many rivals.


Market consolidation

Will there always be as many rivals? In the past few weeks, the Indian government has started to show signs that it recognises the need for consolidation. “The market is very crowded and customers are suffering because the networks are very limited,” says Rozanov.
If the rules are relaxed he hopes that “there will be certain consolidation in the market”, which will allow spectrum to be consolidated and used more effectively. “At the moment spectrum is distributed very narrowly among the operators,” he says. He compares the overall allocation to Austria’s, “a very different market”.
Before coming to India Rozanov was chief financial officer of the MTS group, having joined in 2006 when MTS merged with Comstar-UTS, another Russian operator, of which he was deputy CEO and CFO. He came into the industry after eight years with the management consultants Bain & Company, working in Moscow, London and Stockholm.
How does India compare with the Russian market? “It’s definitely much more competitive,” says Rozanov. “You have to be extremely innovative in driving costs down. But that’s something that creates excitement and challenge,” he adds.
MTS recently asked its staff in Russia and Ukraine if they would like to work in the Indian operation. “We had 200 applications for 15 positions,” says Rozanov. “The business really excites people. You have to reinvent yourself every moment to outperform your competitors. If you can make it in India, you can make it anywhere.”
One of the challenges, as he explained earlier, is the cost of handsets. “We’re working very closely with Qualcomm and the vendors to reduce this barrier,” he says. “Prices are going down. That is absolutely critical for [India’s] broadband plan.”
Price cuts are needed not just on smartphones, but on basic phones too, he says. “A 10-20% price reduction is something we can realistically expect. Operators have to work with vendors to drive the prices down.”
Despite the challenges, MTS India is adding from 800,000 to one million customers a month, he says — a number that means it is the second-fastest growing CDMA operator in the world, behind China Telecom’s two to three million a month increase.
The two big US CDMA operators, Verizon Wireless and Sprint, are both planning moves to LTE; meanwhile China Telecom is also likely to adopt something in the LTE family. How does MTS India see its long-term strategy?
“We’re not at this stage limited by the technology,” says Rozanov, “but we have questions to Qualcomm, given the spectrum situation in India.” The next step in the EV-DO family is revision B, “and if we get more spectrum, rev B will satisfy us for many years ahead”.
But he’s looking further ahead, to five or seven years, “and we do have time to address the roadmap for CDMA operators”, he says. First he needs to know how much spectrum the Indian authorities will license by 2016-17.
There are huge opportunities for operators in India in the coming years, but those operators have to consolidate to make the most of them — and they have to persuade the government to release spectrum if they are to work together to realise India’s broadband potential. GTB

Sistema wants MTS to go global

2011-10-26T17:18:00.000+05:30

Sistema wants MTS to go global

26 Oct 2011

Russia

According to Dow Jones, Moscow-based conglomerate AFK Sistema has announced that it wants to turn its Russian wireless unit Mobile TeleSystems (MTS) into a global telecoms player, with plans to move into a number of new markets. Sistema owner Vladimir Yevtushenkov commented: ‘We have made a decision to build MTS into a global player, and this means 200 million to 300 million subscribers and several dozen countries’. Although Yevtushenkov was not drawn on any potential acquisition targets, he did indicate that he views the conglomerate’s Indian telecoms operator Sistema Shyam TeleServices Ltd (SSTL, also known as MTS India) as an integral part of his plans; Yevtushenkov claimed that he expects the Indian cellco to sign up one million new subscribers every month.
As at end-June 2011 MTS was the largest wireless network operator by subscribers in Russia and the CIS, with operations covering all 83 Russian subjects (administrative subdivisions), both directly and via ownership of local concessionaires. In addition it has subsidiaries in Armenia, Belarus, Turkmenistan, Ukraine and Uzbekistan, which when counted alongside its domestic operations gives it a footprint covering more than 230 million people. In 2008, in a move outside of its familiar Eastern European territory, Sistema entered the Indian wireless market via SSTL (now MTS India). As at June 2011 MTS India reported 11.725 million subscribers, up from 5.138 million one year earlier. Despite strong annual gains MTS India has struggled to meet its previously-stated targets; it predicted 20 million subscribers by 2010, 35 million by 2012 and 56 million by 2014.

Russia, Mobile TeleSystems (MTS) (inc. Comstar), Sistema Shyam TeleServices (MTS India), Sistema, Corporate/Financial

MTS offers international roaming

2011-10-17T14:40:00.000+05:30

17 Oct, 2011, 02.04PM IST, PTI

Sistema Shyam TeleServices Limited offers international roaming in 231 countries

NEW DELHI: Pre-paid customers of Sistema Shyam TeleServices Limited (SSTL), which offers mobile phone services under the MTS brand, can now roam across networks in 231 countries on their existing sim cards.

MTS today launched international roaming services for its pre-paid subscribers, enabling them to roam across 433 GSM networks in 231 countries, SSTL said in a statement.

MTS customers will be able to avail services in countries like the United States of America, Canada, Brazil, Chile, UK, France, Germany, China, Singapore, United Arab Emirates, Bahrain, Australia and New-Zealand, among others.

The company has also launched a dual mode SIM card which would work both on GSM handsets while abroad and on CDMA handsets while in India.

The company will use MACH telecom software to facilitate roaming by its pre-paid customers across 433 GSM networks in 231 countries.

The company claims that with this announcement, MTS becomes the first telecom operator in the country to provide international data roaming for CDMA pre-paid customers.

"With a view to enhance connectivity and convenience, we have now introduced international roaming services for our customers. This would enable our customers to stay connected while travelling abroad without changing their phone numbers and also enjoy seamless data connectivity on the go internationally," MTS India Chief Marketing and Sales Officer Leonid Musatov said.

MTS customers on international roaming would have access to GPRS services in 206 countries on 322 telecom networks.

Additionally, MTS customers will be able to enjoy high-speed downlink packet access (HSDPA) services in 114 countries on 145 roaming networks.

"We are delighted that MTS India selected our market-leading, inter-standard roaming solution to be the first in India to provide its pre-paid customers with seamless access to international roaming on GSM networks across the world," MACH India Regional Vice-President (Sales) Raghunatha Chary said.

SSTL is a joint venture between Sistema of Russia, the Russian government and the Shyam Group of India. Sistema is the majority shareholder in the joint venture company.

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MTS India launches data coverage on National Highway 4 ‎

2011-10-13T09:12:00.000+05:30

MTS plans Rs 130 cr capex in state, TN

BS Reporter / Chennai Oct 13, 2011, 01:00

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Provides high speed mobile broadband in 40 towns across Tamil Nadu and 35 towns across Karnataka.
Sistema Shyam TeleServices, a joint venture between Russia’s Sistema and Indian firm Shyam Group, which is into telecom services under the brand MTS, plans to expand in Karnataka and Tamil Nadu for an investment of around Rs 130 crore during 2011.

The company on Wednesday announced launch of its second seamless high speed data (HSD) connectivity in India, on the highway connecting Chennai and Bangalore. It added it is planning to expand data coverage between other regions, including small towns.

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Cheenu Seshadri, chief strategy officer and COO, south and west regions, MTS India, said, The service would cater to data connectivity needs of industrial hubs between the two cities and the travellers on the go. We are planning to cover more areas, including highways and smaller towns with seamless HSD services in future. MTS India presently has around 13 million wireless subscribers.
It has also announced new tariff plans for customers tra-veling everyday between the two cities. Presently, MTS provides High Speed Mobile Broadband services in around 40 towns across Tamil Nadu and 35 towns across Karnataka.
The company has so far invested around $3 billion in India and would continue to invest to expand data connectivity services, he added.
It is planning to launch two to five phones in India every quarter in future, in the price range of Rs 3,000 to Rs 20,000 a handset, as part of expanding its data connectivity service. It has recently announced launch of two affordable android phones in India.
While the manufacturing of phones would be outsourced, the company plans to leverage the products as a strategy to increase the reach of its services to the customers.
The company earlier launched the HSD connectivity services in the 265 km long Delhi-Jaipur highway.

MTS india welcomes NTP 2011

2011-10-11T09:43:00.000+05:30

More discussions needed before finalising telecom policy: Operators

Our Bureau

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‘Proposal to give infrastructure status will provide much-needed relief to the sector'

New Delhi, Oct. 10:

Telecom operators have said that the draft telecom policy unveiled on Monday was good on intent but required more discussions before it is implemented.

“The draft NTP 2011 is expected to take the country into the next stage of inclusive growth. We understand that the Government will now initiate the consultative process across multiple stakeholders, including the telecom operators.

“Idea Cellular will actively participate in this consultation as the country formulates its new telecom policy. There are several areas that are included in the proposals and we will need to review each of them with our experts, before reverting to the policy maker, with our comments,” said Mr Rajat Mukarji, Chief Corporate Affairs Officer, Idea Cellular.

Shyam Sistema, which operates mobile services under the MTS brand, said the policy has to look at the interest of the CDMA operators. Mr Vsevolod Rozanov, President and CEO, MTS India, said, “We at MTS welcome the spirit of the new telecom policy. The strong focus to make affordable and reliable broadband available on demand by 2015 along with one nation, one licence regime is a welcome move. To make all this happen, we look forward to the formulation of supporting policies so that more spectrum can be released.”

“Equally significant would be the release of policy details specific to a range of issues, including delinking of spectrum and telecom licence, allowing of spectrum trading, pooling and sharing and also new M&A guidelines. One also needs to understand, how NTP 2011 seeks to look after the interest of the CDMA operators and their customers,” he added.

Bharti Airtel said that though the policy is in the right direction and signals the government's strong focus on future growth areas, final policy should provide level playing field and encourage more investments.

“The proposal to give infrastructure status to the telecom sector and rationalisation of taxes and levies will provide much-needed relief to the sector. This will help in further expansion of networks thus realising the Government's vision of providing connectivity and affordable telecom services to all. We look forward to constructive deliberations on the draft policy proposals and hope that the final policy will provide level playing field, encourage more investment in the sector - particularly in rural areas and for broadband and ensure the long-term sustainability and viability of the sector,” said a Bharti Airtel spokesperson.

The Association of Unified Service Providers of India (AUSPI), the industry body representing the CDMA operators, said that it supported move to abolish roaming charges, full mobile number portability.

“Emphasis on affordability of services is welcome step and AUSPI is confident that DoT will make available at affordable price optimum quantity of spectrum, rationalise levies to bring them down to those in other countries. AUSPI welcomes projects to create further capacities but urges that capacities already created in public and private sector be gainfully utilised first,” said Mr S.C. Khanna, Secretary General, AUSPI.

“Delinking of spectrum from licences — the cost of spectrum will go up which will, in turn, increase customer servicing costs. There appears to be no clarity on M&A guidelines which industry badly needs to rationalise and consolidate,” said Mr Hemant Joshi, Partner, Deloitte Haskins & Sells.

Keywords: draft telecom policy 2011,

Sistema Shyam won't hold IPO in 'foreseeable future'!!!!!!!!!!

2011-09-14T19:39:00.000+05:30

Sistema Shyam won't hold IPO in 'foreseeable future'
By Olga Razumovskaya, Dow Jones Newswires Wednesday 14 September 2011
Official announcement from Indian mobile operator follows talk of possible IPO in 2012.
Sistema Shyam TeleServices Ltd., the Indian mobile phone unit of Russian conglomerate AFK Sistema, won't hold an initial public offering in India "in the foreseeable future," Sistema's president and chief executive said Wednesday. "There is no IPO planned in the foreseeable future," Mikhail Shamolin said at a press conference. The announcement comes despite comments from Sistema Shyam President Vsevolod Rozanov on Sept. 8 that the company could float in India in 2012. He said that if the Indian government's new telecommunications policy, expected to come into effect in October, is more favorable to the market than the current one, the company may set a date for an IPO as soon as six to nine months after the policy is issued.

Sistema Shyam: India IPO Possible In 2012 If Policy Favorable

2011-09-09T10:30:00.000+05:30

MOSCOW -(Dow Jones)- Sistema Shyam TeleServices Ltd.'s (SSTL) President Vsevolod Rozanov said Thursday that the Indian government's new telecommunications policy expected in October would influence its decision on whether to hold an initial public offering in the country.

If the policy is more favorable to the Indian telecoms market than the current policy, the company may set a date for an IPO as soon as six to nine months after the policy is issued, Rozanov said.

Sistema Shyam, an Indian unit of Russia's OAO AFK Sistema (AFKS.RS), now has a market share of 1.38%, which is expected to grow by 0.5 percentage point annually, taking it to just under 4% within five years, he said.

The company's net profit in the second quarter of 2011 was practically unchanged at 6.575 billion Indian rupees ($142 million) compared with a year earlier. Its operating income before taxes, depreciation and amortization margin fell from -627% to -236% over the same period, in line with the company's plans, Rozanov said.

Sistema Shyam plans to be in the black in the last quarter of 2013.

AFK Sistema owns 56.68% of Sistema Shyam, India's Shyam Telecom owns 24%, the Russian government's Federal Agency for State Property Management of the Russian Federation, or Rosimushchestvo, owns 17.14%, and other shareholders own 2.18%.

India's largest phone providers include Bharti Airtel Ltd. (532454.BY), Bharat Sanchar Nigam Ltd. (BSNL), Vodafone Essar Ltd. and Reliance Communications Ltd. (532712.BY).

Sistema Q2 loss at Rs 657.6 cr ; Debt now at Rs 5736 crores !

2011-09-08T08:40:00.000+05:30

New Delhi: Sistema Shyam TeleServices Ltd (SSTL), which operates telecom services under the MTS brand, today reported a net loss of Rs 657.6 crore for the second quarter ended June 30, 2011.

The company had posted a net loss of Rs 661.3 crore for the same quarter of the previous fiscal, SSTL said in a statement.

SSTL's revenues rose to Rs 278.2 crore in the April-June quarter of FY'12, up 164 per cent from Rs 105.5 crore in the same quarter last fiscal.

The company said overall revenues have continuously grown by over Rs 40 crore per quarter over the last four quarters.

"In spite of the continued challenges faced by the telecom industry in India, SSTL is on track to successfully execute its data-centric, voice-enabled strategy," SSTL President and Chief Executive Officer Vsevolod Rozanov said.

Non-voice revenues from both data and mobile value-added services for the quarter were up 36 per cent quarter-on-quarter at Rs 79.69 crore, contributing 29 per cent of the company's total revenue.

Blended mobile average revenue per user (ARPU) for the last three quarters remained consistent at Rs 82, the company said.

SSTL's data card subscriber base for the quarter rose by 40 per cent to 820,000 subscribers. SSTL added 236,000 data card subscribers during the quarter, the highest number of additions it has registered in a single quarter till date, the company said.

Mobile subscribers' minutes of usage (MoU) declined to 295 minutes in Q2, 2011, from 305 minutes in Q1, 2011. The decline in the MoU was mainly because of the reduced quantity of free on-net minutes offered by the company to its subscribers.

SSTL's mobile subscriber base stood at 11.7 million customers as of June 30, 2011. By the end of the second quarter of FY'12, SSTL had expanded its high-speed mobile data services to more than 200 cities in India, including all five metros. The number of data subscribers increased by 40 per cent vis-a-vis Q1, 2011, to 820,000.

"Our revenue growth continues to be faster than our growth in wireless subscribers. In the current quarter, our blended mobile ARPU remained consistent, as against a declining trend in the market. This is a strong reflection of our continued efforts to target quality customers," SSTL Chief Financial Officer Sergey Savchenko said.

The capital expenditure made by SSTL in India by the end of Q2, 2011, stood at Rs 6,080 crore, including an investment of Rs 252.7 crore during Q2, 2011.

The company's consolidated debt liability at the end of Q2, 2011, stood at Rs 5,736.7 crore.

Vodafone to market Sistema Shyam's CDMA-based data service

2011-09-01T10:06:00.002+05:30

Vodafone to market Sistema Shyam's CDMA-based data services

Thomas K. Thomas

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New Delhi, Aug. 31:

Vodafone has signed a franchisee agreement with Sistema Shyam to sell CDMA-based data services on a revenue-sharing basis.

According to the agreement, Vodafone will market CDMA dongles under a new brand, Netcruise. The service will ride on Sistema Shyam's spectrum and network infrastructure. While billing and collection is to be done by Sistema Shyam, Vodafone will get a share of the revenue generated from Netcruise subscribers.

The service, which was launched as a pilot in few areas a month ago, is now being extended across the country.

Sistema Shyam offers mobile services under the MTS brand and has a network suited for data services based on EVDO technology. When contacted, an official spokesperson of Vodafone confirmed the agreement. “The partnership leverages core strength of both business groups i.e. the EVDO network of MTS and the branding and distribution experience of Vodafone,” the spokesperson said.

However, Netcruise tariffs are higher than the data plans under MTS's own brand mBlaze. “Vodafone is merely distributing an MTS product, which is differentiated by the brand and distribution strengths that Vodafone provides. MTS have chosen to differentiate the tariffs on this basis,” Vodafone said.

Vodafone, which until now has been offering GSM-based services in India, added that the CDMA dongles would help it to address a wider customer base.

“The Netcruise product is positioned quite differently in the market from Vodafone's 3G products and provides more options at varied price points to the customer. This helps meet all customer segments and needs,” the spokesperson said.

Market analysts said that with spectrum being scarce, this type of deal will be on the rise in the telecom space. Earlier, Tata Teleservices and Virgin Mobile had inked a similar deal.

MTS Android 2.3 tablet - coming soon

2011-09-01T09:34:00.000+05:30

MTS Android 2.3 tablet

By Sandeep Budki, The Mobile Indian, New Delhi, September 01, 2011

Mobile operator MTS will soon launch an Android 2.3 tablet. In the past five months it has released high end and sub-Rs 5,000 Android handsets bundled with its network services.

MTS, a mobile operator that is part of Sistema Shyam TeleServices Limited (SSTL), will launch an Android 2.3 based tablet for Indian consumers in the next three months.
Vsevolod Rozanov, president and chief executive officer of MTS India said to The Mobile Indian, "We will be launching an Android 2.3 based tablet by year end for the Indian market."
He didn't elaborate on the tablet's specifications or its manufacturer but said, "We will have tablets for both premium and price sensitive customers."
While there are many GSM tablets in the market there are not many that run on CDMA.
It may be recalled that around five months ago MTS started focusing on offering its subscribers high end smartphones bundled with its network. It started with HTC Pulse, a CDMA Android smartphone bundled with free calls, data and SMSes in India.
The smartphone, worth Rs 18,000, is available almost free for its existing as well as new customers, who just need to sign up for a monthly rental of Rs 1,500 with a commitment of 12 months to get the device.
Users get 1,500 minutes of talk time along with 1,500 free SMSes and free data usage of 1,500 MB every month for twelve months.
Apart from that MTS, a couple of days ago, unveiled two Android smartphones - MTS MTAG 3.1 manufactured by Huawei and MTS Livewire manufactured by ZTE, both in the sub-Rs 5,000 category.
Both phones incorporate Snapdragon S1 processors. Running on CDMA EV-DO Rev A technology, MTS MTAG 3.1 and MTS Livewire support high quality voice and net enabled data services. These phones will be available in the market from the third week of September.
During the unveiling of these devices, Rozanov said, "I am immensely pleased to announce the launch of MTS MTAG 3.1 and MTS Livewire smartphones, incorporating Qualcomm's Snapdragon S1 processors. This initiative has been designed to take the power of Android to the masses. Launched in the sub-Rs 5,000 category, these are the most affordable Android smartphones in India."
MTS is also gearing up to attract high end mobile and tablet users on its CDMA network, which is a better choice for data users.
Let's have a look at the possible CDMA devices in India that might come bundled with an MTS connection:

MTS launches cheapest Android smartphones

2011-09-01T09:33:00.000+05:30

MTS launches cheapest Android smartphones

Karishma Saurabh Kalita, NDTV, August 30, 2011,

MTS has launched two Android Smartphones for just Rs.5000 for its subscribers in India. The MTS mTag 3.1 and MTS Livewire will feature Android 2.2 Froyo with Qualcomms S1 Snapdragon processors.

The MTS mTag 3.1 will feature a 2.8 inch capacitive touchscreen along with a 3.2 Megapixel camera. Both the smartphones have direct access to Google, YouTube, Google Maps and Google Talk. Both the devices have an additional feature of Voice Search which will enable the user to find anything without having to type.

The MTS mTag 3.1 and MTS Livewire comes bundled with services like free talktime, free SMS's and free data usages. It also gives access to the Android Market which will give the users more than 200,000 applications. Both these handsets get access to Live TV and on-demand video playback services as well.

MTS ties up with Vodaphone for data services

2011-07-22T09:02:00.000+05:30

Mobile service operator Vodafone has launched USB internet dongles under a new service line, NetCruise which essentially offers internet access through CDMA operator MTS‘ EVDO network. This was first reported by Telecom Talk, which also mentioned that the service is being run as a pilot in the selected cities of Pune (Maharastra), Mysore (Karnataka), Jaipur (Rajasthan) and Coimbatore (Tamilnadu). The NetCruise website also mentions the same in fine print : ” Vodafone Mobile’ branded services are being offered by MTS through a brand franchise with Mobile Commerce Solutions Limited (MCSL). MCSL will provide MTS with designing, marketing and servicing of ‘Vodafone Mobile’ branded products being powered by MTS.”
Similar to MTS’ MBlaze, the service offers prepaid and postpaid data plans with speeds of upto 3.2 Mbps. It also free browsing on Yahoo and Wikipedia websites.
Paying a Premium just for a Brand?
While the arrangement made by MTS is to leverage Vodafone’s premium brand equity, we fail to understand why the service is priced at a premium compared to MTS’ own data plans on the same network. For example, the Unlimited 799 plan on NetCruise has a fair usage policy cap of 3.5GB, after which speeds are throttled to 144 Kbps or 64 Kbps from upto 3.2 Mbps. MTS’ MBlaze offers a similar plan with a monthly rental of Rs 750 and the usage cap is 5GB. Clearly, the NetCruise service is charging a premium for the Vodafone branding.

This is not the first time that such tie-ups have been inked. A similar partnership, close on the lines of an MVNO (Mobile Virtual Network Operators), was established between Tata Teleservices and Virgin, to brand, market and support a separate service on the same network under the Virgin brand name, targeted at the youth.
Also, Future Group and Tata Teleservices run a GSM service under the brand name T24 Mobile in Karnataka, Gujarat, West Bengal, Jharkhand, Chhatisgarh, Orissa, Punjab, Haryana, Rajasthan, Uttar Pradesh, Tamil Nadu, Kerala, Madhya Pradesh, Mumbai and Maharashtra,which offers rewards to customers who shop at Future Group’s retail stores.
However, this tie-up doesn’t offer any value addition to the service except for the premium branding. Also, wouldn’t it confuse Vodafone’s existing and potential customers, since the service runs on a completely different technology standard, and might even affect the sale of its own 3G WCDMA/HSDPA based dongles? This is probably one reason why Vodafone does not even make a mention of the service on its own website.

MTS to decide on IPO after the introduction of NTP

2011-07-08T20:19:00.001+05:30

Sistema Shyam TeleServices Ltd (SSTL), which operates its telecom services under the MTS brand in India, today said it would decide on the ways and means to raise funds, including the IPO, after the introduction of the new telecom policy.
"We are waiting for the the telecom policy to come before we can decide on our fund raising plans including IPO," SSTL President and CEO Vsevolod Rozanov said here today on the sidelines of celebration for MTS crossing two million customer base in West Bengal.
The new National Telecom Policy (NTP) is likely to come in October and the company expects it will provide a clear direction for its long term planning.
He further said the company is looking at ways other than IPO as well, to raise money for investments next year.
"There are various options before us and IPO is one of them. We are working towards it like having adequate independent directors, scaling up operations. However, work and investment will not stop if IPO does not come soon as there are alternate means of financing," Rozanov said.
The investment for 2011, was funded by capital raised from 17.14% stake sold to the Russian Federation.
Rozanov did not elaborated on investment plan for 2012, however he said the company is working to introduce Version B of CDMA technology for faster data movement by modems.
"By September (Q3) we will launch this new technology for trial in Rajasthan," he said.
This technology is nothing but EVDO-B which can offer faster speed to the users as compared to GSM 3G. MTS garners 28% of its revenue from non-voice, of which about 20% comes from data services.

Have an opinion on this new

Interview: Sistema Shyam Keen to Acquire or Merge in India

2011-06-21T12:14:00.002+05:30

NEW DELHI --Sistema Shyam Teleservices, which controls about 1.29% of India's 826.93 million-user telecom market, is looking to buy or merge with another operator in an effort to boost business.

"Sistema is definitely eager to take a step" but it has to wait for the government to finalize new regulations, said Chief Executive Vsevolod Rozanov.

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Sistema Shyam Teleservices

Chief executive of Systema Shyam Teleservices Vsevolod Rozanov.

He didn't sound very optimistic, saying that "I think we are very far from this," but this is the first time in recent months that a telecom operator has said it is interested in buying out or merging with another.
"Consolidation" is a key word these days, with intense competition hurting profits in the world's fastest-growing telecom market.
The competition grew due to the entry of new players in 2009, which led to call tariffs plunging to as low as half a cent a minute.
India now has up to 14 operators in most telecom service areas, and analysts say consolidation is inevitable.
Federal Telecommunications Minister Kapil Sibal, while unveiling the broad contours of a new telecom policy earlier this year, said the new rules expected later in 2011 will pave the way for consolidation, leaving about five-six operators in the country.
Mr. Rozanov thinks this will be difficult, but he too feels that India will be left with six operators--five private and one state-owned.
He said Sistema Shyam is open to buying or merging with an operator which offers services under the more popular global system for mobile communications, or GSM, technology. More than two-thirds of India's mobile subscribers use GSM phone services.
Sistema Shyam--which is 56.68% owned by Russia's Sistema JSFC (SSA.LN), 17.14% by the Russian Federation and the rest by India's Shyam Group--provides services on the less popular Code Division Multiple Access, or CDMA, technology, competing directly with Tata Teleservices and Reliance Communications.
Sistema Shyam has licenses to provide services in all of India's 22 service areas and offers telecommunications services under the MTS brand.
Commenting on a recent company decision to delay a planned initial public offering, Mr. Rozanov said "there is limited opportunity for us to realize value for our shareholders."
Apart from volatile market conditions, Mr. Rozanov also cited ongoing federal investigations into the alleged rigged sale of licenses and bandwidth in 2008, which have dampened sentiment in the sector.
IPO aside, Sistema Shyam has enough cash to meet its capital expenditure target of over $200 million to expand its business in 2011, hesaid.
The expansion plan includes a contract to ZTE Corp. for upgrading its networks to a newer technology.
The new technology, called Evolution-Data Optimized Revision B, offers better connectivity for data services such as multimedia.
The company plans to start offering services on this new technology in the July-September period.
Sistema Shyam's plans to expand its wireless broadband capability come after initial success for its high revenue data services, which now contribute about 25% of its overall revenue. The company, which follows a January-December financial year, reported revenue of 2.36 billion rupees in 2010.
Its average revenue per user--a key gauge of profitability for wireless telecom companies--for its mobile internet services was 250 rupees and 600 rupees per month for its prepaid and post-paid users, respectively. Its voice average revenue per user was 82 rupees a month.
Market leader Bharti Airtl's revenue per user is 194 rupees for the January-March period, with 15% coming from data services.
To push up its mobile internet revenue, Sistema Shyam is in talks with global computer makers to introduce tablet computers in the country later this year, Mr. Rozanov said.
And, despite the regulatory overhang and the intense competition, the company is still bullish on the sector, given that the country is adding more than 15 million new users every month, and that only about 33 of every 100 people living in rural India use mobile phones so far.
Sistema Shyam added about 800,000 new users in May, with about 88,000 being wireless broadband subscribers.
Combined with the expectation that call rates won't drop further, Sistema Shyam's plans to break even at the operating level by 2013 remain "on track," Mr. Rozanov said.
"We are on a risky track, a very harsh track... but on track," he said.

Sistema’s India operations losses widen Rs 663 crore

2011-06-07T15:35:00.002+05:30

Sistema’s India operations losses widen Rs 663 crore

DELHI: Mobile phone company Sistema said losses from its Indian arm widened by 63% to Rs 666 crore for the three months ended March 31 and attributed the fall to rising cost of operations and additional capital expenditure to expand services to new regions in the country.

"The decrease in margin is on account of increase in operational costs due to further scale up operations across all circles. Additionally, the circles of UP East, West and Gujarat, were launched in the latter part of 2010, hence the impact of their launch was felt in Q1 2011," the telco, in which the Russian government recently picked up close to 20% stake,said in a statement. India's Shyam group has a minority 26% stake in the teleco.

Sistema Shyam's results are a pointer that expansion costs, interest payouts for thousands of crores in loans for putting up networks in new areas and lower usage by new additions outside metros and big cities will continue to squeeze its profits and margins of all new entrants that are struggling to make in mark in the ultra competitive 14-player market.

The company's consolidated debt stands at Rs 5,584 crore.The telco's losses widened despite its sales jumping three-folds to Rs 236.2 crore during January-March quarter of FY'11, as against Rs 78.6 crore in the same period last year.

For the first time, our revenue growth during the quarter was faster than our growth in wireless (voice and data) subscribers, the company said.The company's results however have two key pointer that indicate that underlying trends are still positive.

First, its blended Average Revenue Per mobile User (ARPU) for the quarter remained consistent at Rs 82, as against a declining trend in the market. But, this is still low when compared to incumbent GSM operators such as Bharti, Idea and Vodafone, whose ARPUs are close to the Rs 200 mark.

Next, against an industry average of 10-15%, Sistema said its data services offerings accounted for a quarter of its revenues. "Non voice revenues from both data and mobile value added services for the quarter (was) up by 33% Q-o-Q to INR 588 million (Rs 58.5 crore) which contributes 25% of total revenue and the same has increased by 2 percentage points for the quarter," the company added.

It also said that at the end of Q1 2011, the company had expanded its mobile data services to 130 cities in India, including all five metros. The number of data subscribers increased by 36% over Q4 '10 to 580,000. Currently, MTS' HSD services are present in over 150 cities, its statement added.

Sistema defers listing

2011-06-06T11:56:00.002+05:30

Sistema defers India listing on bourses till 2G probe is over

Sistema Shyam TeleServices (SSTL), a joint venture (JV) of Russia-based Sistema and the Russian Federation, and India's Shyam Group that offers telecom services under the MTS brand, has deferred plans for listing the company on the bourses till the completion of the 2G probe .

"The company wants to go public by listing on the Indian bourses. But in this kind of environment, I would say we would definitely have to see what the outcome would be of the various investigations," SSTL president and chief executive officer (CEO) Vsevolod Rozanov said. "One has to see the rules of the game. We have to look at the outcome of these investigations, the rules of the proposed new telecom policy and the spectrum issue. We definitely need to wait until regulatory clearance arrives," he added.

In 2010, the Russian government invested Rs 2,698.8 crore in SSTL with additional finance to help it to rapidly expand its highspeed data network across India. The Russian Federation holds a 17.14 per cent stake in the firm, while Sistema holds majority stake with 56 per cent participating interest and the remaining stake rests with its Indian promoters.

The firm will complete three years of Indian operations in October with a total investment of $3 billion by the end of this year. Sistema has arranged $3 billion for overall commitment from the group on various operations, out of which around $2.5 billion has already been invested and the rest will be realised by the end of this year, Rozanov said.

"Our network is present in 20 circles out of total 22 circles in the country. We will launch the last two in a few days in J&K and North East," Rozanov added. The firm has over seven lakh data subscribers. Including voice services, it has more than 11 million customers. India's telecom sector that majorly contributes to the country's gross domestic product (GDP) has come under a probe late last year after it found a presumptive loss of over Rs 1.76 lakh crore due to the sale of 2G spectrum in 2008 by former telecom minister A. Raja at 2001 rates.

The matter is being investigated by various agencies, which led to the arrest of Raja last year, along with his party and ministerial colleague Kanimozhi besides other corporate honchos involved in the scam.

India Moves to Revamp Telecom : WSJ

2011-06-01T09:56:00.000+05:30

NEW DELHI—India is finalizing an overhaul of its telecommunications policies to address criticism that regulations are wrecking one of the nation's hottest industries by fostering price wars, degrading service quality and blocking much-needed consolidation.

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Bloomberg News

'India's cellphone rates have plunged in the past several years. Above, a mobile phone shop in Mumbai.

Kapil Sibal, India's minister of communications and information technology, said in an interview that the new policies, which will be in place by September, will relax restrictions that have prevented mergers and will aim to consolidate the wireless industry to only six carriers per market within India, down from 12 or 13 in many markets now. He also promised to free up radio spectrum, the airwaves that carry wireless signals, and allow companies to share spectrum.

In an interview with The Wall Street Journal, Kapil Sibal, India's telecom minister, gave the outlines of a major revamp in telecommunications policy expected to be unveiled by September. WSJ's Paul Beckett and Amol Sharma discuss what's at stake.

India's cellphone rates have plunged in the past several years in a hypercompetitive environment. Averaging about seven-tenths of a U.S. cent per minute, the rates are among the world's lowest. That has helped to bring mobile phones to the masses and turn India into the world's second-largest wireless market, after China, with more than 800 million subscribers.
The industry's rapid growth over the past decade is frequently cited as one of modern India's greatest success stories and has attracted billions in foreign investment.
But the setup has battered cellphone companies, whose revenue and earnings have declined sharply.Average revenue per user per month at Bharti Airtel Ltd., the nation's largest wireless carrier, dropped to just over $4 in the quarter ended March 31 from about $10 four years ago. Other carriers have reported similar drops.

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Carriers have pulled back on capital investment, which dropped 42% from 2008 to 2010 to $7.2 billion, according to Prashant Singhal, head of the India telecom practice at consulting firm Ernst and Young. That has raised fears that operators aren't nurturing their networks for the next phase of telecom development, the rollout of wireless Internet services. While India is in the early stages of introducing such third-generation services, the U.S. and many other developed markets are upgrading to 4G.
The government's new rules will go a long way toward determining whether India's telecom revolution sparks anew or fizzles over the next few years.
Mr. Sibal, a Harvard-trained lawyer who was appointed telecom minister in November when his predecessor resigned amid a corruption scandal, is trying to strike a balance in the telecom rules. Current call rates are unsustainable, he said, but the new policies must not put telecom services out of reach of India's poor.
"Ultimately, technology is meant to serve a public purpose, so that objective cannot be lost," Mr. Sibal said. "At the same time, the operator must get a return on his investment that is attractive, and the industry must prosper."
Telecom firms complain that strict merger rules, such as a stipulation that a carrier can't have more than 40% of the revenue or subscribers in any market, have headed off deals between midsize and large carriers and left the industry with far too many players, fueling price wars.

Operators also say they are desperate for the government to make more airwaves available. A sluggish bureaucracy and the reluctance of government ministries to give up airwaves have meant that Indian carriers have a small fraction of the spectrum that their counterparts have in the U.S. and Europe.
"There is an artificial scarcity of spectrum in India, which is holding back Indians from getting world class telecom service," said Nick Read, chief executive for Africa, the Mideast and Asia Pacific for Vodafone Group PLC, a major player in India.
Kunal Bajaj, a telecom consultant with Analysys Mason in New Delhi, estimated that under current levels of spectrum, carriers will be able to provide reliable broadband service to only 117 million users in 2015, even though there will be demand for a further 65 million connections.The amount of lost potential revenue to the industry would be equivalent to 0.7% of gross domestic product, he said.
Mr. Sibal said the government will move swiftly to sell more spectrum through a "market-based" mechanism that will ensure that prices are fair to carriers. He said the sale wouldn't necessarily be through an auction but wasn't more specific. Prices skyrocketed in last year's 3G auction, forcing companies to shell out several billion dollars apiece to cover just a portion of the country. "The big companies who have deep pockets only want an auction because they can snuff out everybody else," Mr. Sibal said.
In a shift, operators that aren't using all of their spectrum also will be allowed to rent portions to other companies, who could then offer wireless service. A common practice in many developed markets, including the U.S., this would put spectrum to more efficient use, Mr. Sibal said. "We want the regime to be far more flexible than it's ever been before," he said.
Still, there will be some major constraints. Mr. Sibal said companies will have to pay a one-time fee for any spectrum they hold over a specified limit, a move big carriers like Vodafone and Airtel oppose because it could cost them billions of dollars.
Mr. Sibal said spectrum availability and the number of players in the market also could be affected by a lawsuit that alleges that the government sale of 2G frequencies in 2008 was corrupt. The case, which is being heard by the Supreme Court, could result in some companies having their licenses revoked or having to return spectrum to the government.
Shifting and unpredictable regulations have put further stress on operators. After several companies finalized offerings of video calling on their nascent 3G networks late last year, the government said they would need a special security clearance.
"You can't launch a service and then be told after the fact that you need some new permission," said Srinivasa Addepalli, senior vice president for corporate strategy at Tata Communications Ltd. "It leads to uncertainty in the market and a waste of resources."
Regardless of what regulators do, Mr. Sibal said, operators and their investors shouldn't be concerned about a meltdown. "India is a market that cannot be snuffed out. There's no way in the world that will happen."
Write to Amol Sharma at amol.sharma@wsj.com

MTS is optimistic about prospects in India

2011-05-31T08:48:00.000+05:30

In March of this year the Russian government made its first investment in telecommunications abroad. True the business in question, India’s Sistema, is a subsidiary of Russia’s AFK. Since 2008 Sistema Shyam Teleservices Ltd. (SSTL) has operated under the brand MTS India. How will SSTL use Russia’s $600 million investment? How does Indian business differ from Russian business? Will SSTL’s acquisition of Indian frequencies cause a scandal? Vsevolod Rozanov, president and CEO of Sistema Shyam Teleservices Ltd., spoke to Oleg Salmanov of Vedomosti about these and other questions.

Vsevolod Rozanov, president and CEO of Sistema Shyam Teleservices Ltd (left). Source: AP

Sistema is the only Russian company to date to have successfully exported its consumer business to India. How did you do it?

It’s true. Inside of two and a half years we were able to create virtually from scratch a cell network that encompasses almost all of India and serves more than 10 million subscribers. Going into India was definitely the right step because it is one of the few countries in the world where enormous goodwill towards Russia has always existed. The people we hire want to associate themselves with MTS, one of the world’s top 100 brands. And although few people believed that a Russian company could be successful in the consumer sector outside Russian-speaking territories, we managed to make a real breakthrough.

How does the Indian market differ from the Russian?

In the level of competition, certainly. India has 14 [mobile phone] operators. Not all of them serve all of India, but in any one region there are at least nine operators, and 10 to 12 on average.

Has that led to price wars?

The height of the price wars was in late 2009 and, thank God, in 2010 the situation more or less stabilized. ARPU (average revenue per user) is still going down, but smoothly and predictably. The situation does not look the way it did in 2009 when new operators — Sistema, Tata DoCoMo, Uninor (a subsidiary of Telenor), and others — all launched and a price war began between the top two players. During that period tariffs fell by 40% in one quarter alone.

Both for voice and data transfer services?

No, in data transfer the situation is different. Until recently there were only three players and the market was more or less stable because the two players who were there before us — Tata and Reliance — focused mainly on post-paid and the corporate sector. The market for mobile broadband access for mass consumers practically did not exist. MTS India is essentially creating that market. Now the ordinary person can walk into one of our stores and buy an affordable pre-paid product. We control around 60% of the mobile broadband market. We have more than 600,000 Internet subscribers. The market is still small, but it has huge prospects.

Why are you so sure of that?

Several years ago the Indian government set itself the task of substantially broadening the penetration of voice communications. Today India, with a population of more that 1.2 billion people, has around 800 million subscribers. Now the government has set itself the task of reaching some 140 million broadband subscribers within three years. And it’s absolutely clear that in a country like India where penetration of fixed communications is very low, it’s unlikely that broadband access will develop along the same lines as fixed communications. Except perhaps in large cities like Mumbai, Delhi or Bangalore. But overall we are absolutely certain that broadband access will be primarily mobile, and in that market we are now in third place. We expect to remain in the top three in future because, as one of the first to enter this market, we are the only ones focusing our efforts just on it.

Originally we were aiming at mass coverage with voice services so as to become OIBDA (operating income before depreciation and amortisation) positive as soon as possible. In 2009 we corrected our strategy to emphasize broadband access since it had become clear that it would be very hard to achieve a large cash flow with only voice services. Data transfer and additional services played a positive role: ARPU in data transfer is fairly high, and our brand has been effectively differentiated from the competition.

Now our revenue share from data transfer and additional services is more than 25%, that’s the highest index on the Indian market. For us, mobile broadband access is a steadily growing business. Every month we sell from 60,000 to 70,000 modems, and we launch services in new cities and regions where there’s gradually appearing a demand.

It seems that data is the CDMA operator’s karma. But SSTL didn’t initially plan to focus on data. Why did you choose a CDMA-based technology? South America, for instance, has rejected CDMA.

South America, or rather, countries in the Caribbean basin, is the only market to have rejected CDMA (code division multiple access). In all other markets CDMA is developing fairly rapidly. Verizon in the United States is one of the leaders in the number of hook-ups. The world’s leading CDMA operator is China Telecom with 3 million hook-ups every month. And many of them already have Rev.A technology, rather than 1x. So I wouldn’t say that it’s karma. It’s a matter of markets that have a strong GSM segment, and CDMA as a second technology — in Russia, for example, in India, in Ukraine, in Poland where the CDMA operators focus mainly on data transfer. But in markets where the scale of business is large — in China, Korea, the United States, and to a certain degree in Indonesia — CDMA exists in all segments and is successfully developing.

Our decision to build a CDMA-standard network was a function of the fact that when the conditions for acquiring licenses were announced, it was clear that the affordable technologies were either GSM-1800 or CDMA-850. A GSM-1800 network is very expensive to build, since for construction in India you would need roughly three times as many base stations. Also GSM-1800 is mainly voice services.

Even now, even though 3G services have appeared on the market, we feel that our business will develop steadily because most Indian subscribers are convinced that in the current conditions data transfer using CDMA networks provides better quality than GSM networks or even 3G. In the near future, most likely of all, the market will not be re-divided in any major way, it will simply expand.

Is it true that in India there is a completely different attitude toward the use of mobile communications and that people manage to relay information to each other without paying?

Yes. For example, a shop owner wants some tea. He calls the little boy who brings it and lets the phone ring four times. The little boy doesn’t pick up, but he knows to deliver four cups of tea. People agree on certain code signals. For example, a man is leaving to see a doctor in another city and tells his family: if I call and let the phone ring three times, that means “come and get me”, four rings means “I’ll be home today”, five means “I’ll be home tomorrow”. Indians are exceptionally resourceful people.

In late March 2011 the Russian government concluded a deal giving it a 17.4% stake in SSTL. This is the government’s first such deal abroad. How will it change the way the company is managed?

We assume that representatives of Russian state organs will join our board of directors. And we will expand the board to comply with Indian law, which says that a majority of the board members must be Indian citizens. It doesn’t matter who nominates them (in our case they may be proposed by Sistema), they must be Indian citizens.

To what use will the $600 million received from the deal with the Russian government be put?

First of all, it will go to implement a business plan. We aren’t planning any radical changes — we’ll continue to focus on broadband access, expanding our presence in cities where we aren’t yet operating with EV-DO (Rev.A) technologies. We’re already offering mobile broadband services in more than 130 cities (where some 250 million people live) and are planning to substantially increase our presence in the near future. We also plan to develop our mono-brand store chain. It’s a very successful project — we already have around 1,000 stores. I think that by the end of the year we should have as many as 1,500. The money will also go to support operations.

At one point the possibility of an IPO (initial public offer) was under active discussion. What are the prospects?

I estimate that we will complete the preparations for an IPO by the end of the year. But to be honest, although we are sure of our business model and its prospects, the general impression among India’s telecom-market investors today is not the best. The stocks of the three public operators are low, and many investors refuse to invest in India’s telecom market on principle. It will be very difficult for us to combat that bias. In order to receive a fair offer at an IPO, the sense of the Indian telecom market has to change among investors. That will happen only when the regulatory system has stabilized and the rules for consolidation have become more flexible. We won’t put together an IPO for the sake of an IPO. We are in agreement about this with our minority shareholders. The necessary documents should be ready by the end of the year. After that we’ll decide [how to proceed] depending on the state of the market.

Is there a minimum share that one must sell for an IPO?

Indian law requires that the share of new stockholders be no less than 25%.

In Russia many people are talking about fourth generation (4G) mobile communications called LTE. Is there any talk in India of switching to 4G?

Let me remind you that in India there was a 3G auction only last year. The government is currently developing a new telecommunications policy. In India it is the custom for the minister of communications to hold a sort of round table once a quarter with the heads of operators to discuss various tasks. Now at these meetings there is more and more discussion about the vagueness of India’s telecom policy. Everyone says that the current policy is obsolescent, while a new one has yet to be worked out. In the last three years not one operator has acquired additional frequencies, despite the fact that the subscriber base has swelled to hundreds of millions. We are in line to acquire additional frequencies in a number of regions where we’re successfully developing, but we don’t know how to acquire them since according to the old rules the regulator doesn’t issue frequencies, and there are still no new rules.

The new minister of communications has promised that a new policy will be drafted by the end of the year and then presented for discussion to the government. I imagine that it will also mention the matter of 4G.

Is the situation different in Russia?

I actually am always holding up the Russian market as an example to my Indian colleagues because it is fairly balanced and substantially more transparent. On the one hand, the level of margin is fairly high, investments are being made and dividends paid; on the other hand, there is a lot of competition, consumer tariffs are among the lowest in the world, services are affordable for broad swathes of the population. The coverage and quality are constantly improving. In short, the communications ecosystem in Russia is healthy.

This is not true in India. In India, operators are constantly being pressed to lower their prices. On the one hand, the Indian government rightly says that we need to go into the villages where there is no infrastructure, that this is a social mission; on the other hand, they support such fierce competition that there are no resources left over for development in regions where solvent demand is relatively small.
Now this situation has changed. The Indian leadership realizes that serious investments need to be made in communications, while no investments will stimulate the current ecosystem with its 14 operators, except perhaps in the richest regions. That is why new operators begin building their networks from the south — from Tamilnad, Karnatak, Andra-Pradesh, and megapolises like Delhi and Mumbai — and no one is focusing on the less developed regions. In certain districts today we are the only ones offering mobile broadband access. At the same time, we can’t lease passive infrastructure from other operators because in remote regions there is no infrastructure. We have to build it ourselves. And again we are helped out by CDMA technology: a GSM operator would have a very hard time developing given the situation now with tariffs.

We expect that the new telecom policy will cover (in addition to plans and aims for the future) the subject of a soft regulatory system of consolidation.

Are M&A deals forbidden now in India?

They’re technically possible, but in case of consolidation the operator must return the frequency band. What’s more you can’t own more than two operators in one region.

One of the problems with the Indian market is the narrowness of a band: it’s very difficult to acquire a broadband frequency for data transfer. Voice services also suffer — the quality of connections in India is not very high. Therefore we are actively raising the question of issuing new frequency waves.

The question of using the existing waves more effectively is also on the agenda. The Finance Ministry, which possesses great authority in India, also has a keen interest in the proposals of operators: the revenue which the government received from the 3G auction exceeded all expectations.

But didn’t the issuance of frequencies in 2008 cause a scandal that led to the minister’s replacement?

Those frequencies could probably have been sold for a higher price, but the government had an entirely different aim which it clearly articulated at all levels: to drive prices down. To make prices fall sharply, the government decided to increase the competition and issue frequencies to new players. Any questions should be addressed to the organs that made those decisions because the operators were simply playing by the rules they had been offered. Now the change in those rules is being reviewed after the fact. But we and many other players have already invested billions of dollars in developing networks!

How did that scandal affect SSTL?

In his report the general auditor and controller had no complaints about SSTL. Instead he referred to the shortcomings of the process and to the fact that it had been violated by a number of the players. This primarily concerned the so-called new operators, whereas Shyam Telelink (SSTL) was operating on the Indian market before it acquired a pan-India license.

I should also say that we were the only operator to bid for the one package of CDMA frequencies. Some thirty operators wanted to acquire GSM, whereas no one but us was interested in CDMA, so there was no competition.

What complaints are there about SSTL now? Have you received any letters from the regulator?

The situation right now is this: in all regions we have complied with all requirements, but in some regions our compliance came into force a little after the prescribed deadline. This largely resembles the Russian situation. Not one cell operator has ever managed to fulfill all the requirements of his license on time.

We have paid all the fines imposed on us, but we are currently disputing the size of those fines since we do not agree in every case with how they were calculated. Nevertheless, the question, in our view, is settled, so long as it does return to the political plane.

Is there any danger of the licenses being revoked?

We have been notified that we must explain our delay in launching networks in three districts; if we don’t, our licenses may be recalled. We are preparing the answer on the basis of which the Indian regulator will make his decision. We are counting on a positive outcome: in those three districts we have more than 1.7 million subscribers.

How may the situation turn out for the market?

The new minister of communications is taking steps to regularize the issuance of frequencies and to clarify the circumstances of their issuance ahead of time. I hope that there will be no actions entailing serious consequences for our business. Especially since they may shake foreign investors’ faith in India. And India is very sensitive about its investment climate.

We're in for long haul and not for quick buck : Mikhail Shamolin, Sistema

2011-05-31T08:44:00.000+05:30

by Samidha Sharma & Shubham Mukherjee, Times of India

Mikhail Shamolin, 41, stepped into the president's role at one of Russia's biggest business conglomerates, the Sistema Group, just a couple of months ago but has already charted out big plans for the diversified group. Right on top of his list of 'things to do' is to make India a key market for the $28-billion group with interests in sectors as varied as oil and gas, telecommunications, retail among others.
The group's presence in India is currently limited to its mobile services joint venture, Sistema Shyam Teleservices (SSTL), which runs the MTS brand, but Shamolin is ready to take the next step.
The LSE-listed group has identified the oil and gas space as one such area of interest. It signed an agreement with ONGC Videsh, the foreign arm of the state-owned energy explorer last year and is now looking at ways to take this relationship beyond the Russian market. ONGC and Sistema have agreed to jointly explore and invest in oil and gas in key countries. Other areas like infrastructure and entertainment are also on the radar for the group, which generates 47% of its overall revenue from oil and gas while the telecom business contributes about 41%.
Before coming on board at the group, Shamolin served as the MTS Group president and CEO for three years till March this year as he spearheaded many significant developments at the mobile services company.
Credited with transforming MTS-the largest mobile services operator in Russia-from being a mobile-only access provider to a fully integrated telecom company, Shamolin drove MTS's entry into fixed-line services through the acquisition of Comstar-UTS, a provider of integrated telecommunication solutions in Russia. Even though the Sistema chief admits that he is not an India expert just as yet, the group's vision is to make India a lucrative market-only next to Russia-in the long term despite all the challenges that it throws up.
Tell us about what the Sistema Group is expecting from India as a market considering you are now looking to grow beyond telecom here?
India will grow at about 9-10% annually with consumption levels rising and a stable political system in place. It is one of the toughest markets to compete in but the potential is great as well. We came to India understanding the potential of the country. It is clearly the big focus area for us after Russia.

We entered India through our telecommunications business and it has been a tough industry to be in considering the number of players, regulatory issues, which do not allow for consolidation, and the price competitiveness. There are too many players and therefore there is too much strain on the industry and the quality of services has suffered on the voice and needless to say on the data side. But we are here for the long haul and not to make a quick buck and exit.
What are the new business ideas you are exploring here?
Sectors like infrastructure and energy where we are partnering with ONGC are the big growth areas. We are also evaluating the entertainment business as back home we are into movie production. We have the money; it's about the returns we can generate and in how much time. Talks are on with many parties but no final decision has been made yet.
What exactly will you explore with ONGC Videsh?
The agreement with ONGC Videsh enables us to consider opportunities for a potential transaction involving our majority stake in JSC Bashneft and 49% stake in RussNeft, each of which owns and operates numerous fields and refining assets, and ONGC Videsh's 100% stake in Imperial Energy Corp, which owns and operates fields in Russia. Along with this, any other oil and gas asset, which ONGC may acquire before definitive agreements are signed, plus possible cash investments are also part of the agreement. We have also agreed to consider joint investments in each other's existing and future exploratory assets in key markets as well.
As far as India goes, what are the plans here considering the group has its biggest play in the oil and gas sector back home?
We see there is huge opportunity as far as energy needs go for India. We may buy a coal mine or build an LNG terminal and import gas from other markets. Be it an electrical power plant, new field development, liquid gas terminals-we are considering all these opportunities seriously. There are many options and we are talking to a lot of players here in India. Most of these ventures will be through joint ventures as the capital expenditure is huge and therefore we will like to share the risks.
You spoke about the potential of the infrastructure sector in India, what sort of options are you weighing in this space?

We are looking at Glonass, a system of navigational satellites for location-based services just like the GPS as a big project which has been introduced in Russia. It is something that we can bring to India as there is a huge market for transport applications to develop intelligent traffic management systems. We want to develop a product jointly. In fact, we are holding talks with an Indian company which is designing a traffic development system for Delhi. This technology can be embedded in our mobile phones as chipsets along with GPS for higher accuracy.

What about MTS? What is the way ahead for it considering you have spoken about looking at merging operations with bigger players? Also, does it hurt your growth in India that you are only a CDMA technology player?

We will look at both acquisitions and mergers to gain scale in the market. But we want to maintain the MTS brand in whatever consolidation that takes place as it is very strong globally. MTS India currently has about 11 million subscribers. But we will like to add scale to our operations and consolidation is the way forward. We expect the new telecom policy will help address this issue.

Reshuffle at top to help MTS expand

2011-05-25T08:36:00.002+05:30

Reshuffle at top to help MTS expand

OUR SPECIAL CORRESPONDENT

New Delhi, May 24: Mobile operator Sistema Shyam Teleservices (SSTL), which operates under the MTS brand, has realigned its top management. The company is a joint venture between Russia’s Sistema and the Shyam group.

Under the new structure, chief marketing officer Leonid Musatov has been given the additional responsibility of the chief sales officer for MTS India.

In his two years as the chief marketing officer, Leonid is credited with launching the MTS brand.

“The change in organisational structure and subsequent realignment in key leadership positions has been designed to enable faster decision making and ensuring flawless execution of our data-focused, voice-enabled strategy,” said Vsevolod Rozanov, president and CEO, SSTL.

A regional structure has also been introduced to lend support to its fast-growing operations.

Atul Joshi, currently the chief sales officer, will now become the chief operating officer for the north and east.

Cheenu Seshadri will take on the responsibility of the chief operating officer for the southern and western regions.

At present, Seshadri is the chief strategy officer.

“MTS India has reached a significant scale during the last two years and plans to further grow both its voice business along with a special focus on the data business. Our future plans involve rapid scale up of our operations and strengthening of new lines of business,” said Rozanov.

Sistema Shyam, first in the world to opt for Rev B

2011-05-21T09:21:00.000+05:30

Sistema Shyam, first in the world to opt for Rev B

Sistema Shyam Teleservices (SSTL) is the first operator in the world to go for CDMA EV-DO Rev B Phase 2 commercial contract. The EV-Do Rev B Phase 2 commercial launch will commence from Rajasthan circle.
The commercial use of EV-DO Rev B technology will greatly enhance the existing service speeds of mobile broadband for SSTL. Compared to EV-DO Rev B Phase 1, Phase 2 technology will further enhance the BTS cell capacity, spectrum efficiency and peak rate, achieving high speed rate as high as 4.9 Mbps in single frequency carrier and 14.7 Mbps in three frequency carriers bundle.
SSTL has given Rev B order and CDMA expansion contract to ZTE and according to industry analysts, Rev B order is to the tune of US $6 million. ZTE's solution is based on SDR Uni-RAN technology can realize the system upgrade by just changing the channel card and software, which would protect the investment of SSTL to the fullest.
“We are excited to partner with ZTE for further upgradation of our telecom network including the CDMA EV-DO Rev B Phase 2 roll-out. This would enable us to cater to the fast growing demand for high speed mobile broadband in the country. SSTL currently provides high speed mobile broadband services in over 150 towns across India”, said Vsevolod Rozanov, president & chief executive officer, Sistema Shyam TeleServices.
“We are very proud that we have won the world's first CDMA EV-DO Rev B Phase 2 commercial contract from SSTL and it serves to showcase our global leadership. This contract will serve to further enhance SSTL's service offerings and strengthen the strategic partnership between the two companies. We will continue to provide world-class products and services to the Indian market and focus on enhancing our leadership position”, said Cui Liangjun, CEO, ZTE India.
SSTL operates its telecom services across India under MTS brand and has over 11 million wireless customers and provides high speed mobile broadband services in over 150 towns across India.

MTS ups digital spends to 15 pc; rolls out new campaign

2011-05-21T09:08:00.003+05:30

MTS ups digital spends to 15 pc; rolls out new campaign
May 20, 11
Gopal Sathe

'We will clear our accumulated losses by 2016' : MTS INDIA CEO

2011-05-06T08:32:00.002+05:30

Q&A: Vsevolod Rozanov, President & CEO, SSTL

'We will clear our accumulated losses by 2016'

K Rajani Kanth / May 6, 2011, 0:39 IST

CDMA telecom player Sistema Shyam Tele Services Ltd (SSTL), a joint venture between Sistema of Russia and the Shyam Group of India, has been reeling under losses and has close to '5,570-crore consolidated debt from banks and financial institutions. The company, which operates under the MTS brand, says it is confident of clearing the accumulated losses by 2015. In an interview, SSTL president and Chief Executive Officer Vsevolod Rozanov shares with K Rajani Kanth the company's strategy to become OIBDA (operating income before depreciation and amortisation) positive and issues such as the showcause notice served by the telecom regulator and investment plans. Edited excerpts:
Your OIBDA loss for 2009-10 was '1,503.7 crore. How much is your accumulated losses now and how will you clear these?
It would be difficult to throw any number now. I think we should be able to clear these by 2015 or 2016. Our focus on providing smartphones and dongles to our customers and gradually moving from this so-called cheap voice position is something which will enable us to get to positive OIBDA, and then to offset the accumulated losses.

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What strategies are you adopting to become OIBDA-positive?
Our strategy is purely data-focused and device-enabled. The key focus of the company is around data business – dongles and smartphones. Clearly, this is something which is successful in the field and will bring us a positive OIBDA. Our target is to become OIBDA-positive by 2013. This, we internally believe, is an extremely ambitious target. Your consolidated debt stands at '5,570 crore. How do you plan to write it off?
This is mostly long-term debt, and we believe these could possibly be re-financed in 2012. From that perspective, I see fewer risks. In fact, bankers realised that MTS has a differentiated strategy among all operators. Also, last year we saw a significant growth in average revenue per user (ARPUs) than over the last five to six years. So, clearly, I would say banks would start to see the sector more and more positively.
When do you plan to issue an initial public offer (IPO)?
Unless there is a clarity on the overall regulatory system, I don't think any operator will go for IPOs. Our IPO plans are not on the back-burner and we are doing all the back-end preparations and other activities, which basically is to make sure we are ready for that. We are already complying with corporate governance by releasing our financials. Maybe there will be a clear picture on this by next year.
Has the process of the $600-million investment by the Russian government for a stake of 17.14 per cent been completed? How are you deploying that?
It is complete. This is basically for business — extending our high-speed data network across circles of operation, expanding it to new circles and to roll our mono-brand retail store chain in various circles. We currently have just about 1,000 mono-brand stores and are planning to open 400 more by the end of this year.
How do you propose to raise funds?
It would be from more loans and more equity investments. Banks are once again interested as the business model is becoming clearer. From the shareholders' perspective, equity financing would make more sense than debt financing because the interest rate might also somehow jeopardise the net income. The two common sources of funding will be debt and equity. I assume these funds ($600 million from the Russian government) would be enough for this year. Next year, it might be a combination of various sources of financing.
Have you responded to the showcause notices of the telecom regulator to cancel your licences in certain circles (West Bengal, Kerala and Assam)?
No, not yet. We were given 60 days to respond. We believe there is a certain misunderstanding because we have already reported 1.7 million customers in those circles. We are very confident that we did not violate any rule. We will clarify our position in due course.
Can you give a break-up of revenues?
At this stage, non-voice business contributes around 25 per cent to the revenues, which is probably the highest in the industry, while dongles and smartphones together account for 12 per cent. I see this becoming 25 per cent from dongles. This year, it is still not going to be a major differentiator in terms of revenues from smartphones. But gradually, we are going to see that MTS-branded smartphones will create a significant line of business. I would say 20 per cent of our revenues in the next couple of years.

Sistema Shyam TeleServices Ltd Announces Financial Results for the Fourth Quarter and Full Year Ended December 31, 2010

2011-04-21T16:01:00.002+05:30

Sistema Shyam TeleServices Ltd Announces Financial Results for the Fourth Quarter and
Full Year Ended December 31, 2010
Gurgaon, India, 21st April 2011 – Sistema Shyam TeleServices Ltd. (SSTL), a joint venture between Sistema {LSE: SSA} of Russia, the Russian Federation and the Shyam Group of India, today announces its unaudited consolidated US GAAP financial results for the three months and full year ended December 31, 2010.
Key Financial Highlights for the Fourth Quarter and for the FY 2010 Consolidated revenues for the quarter and year, up by 25% and 198%, to INR 1,937 million and 5,239 million, respectively. Consolidated OIBDA loss for the quarter and year, down by 9% and up by 39%, to INR 3,647 million and 15,037 million, respectively. Consolidated debt for Banks and Financial Institutions now stands at INR 55,702 million.
In December 2010, the Government of the Russian Federation made an equity investment in SSTL by paying the rupee equivalent of INR 26,988 million for a stake of 17.14% in SSTL’s share capital.
Key Corporate and Industry Highlights for the Fourth Quarter and for the FY 2010 Mobile subscriber base for the quarter and year up by 27% and 190%, respectively to 8.4 million. Data card subscriber base for the quarter and year up by 65% and 61.9 times, respectively to 0.43 million. Blended mobile ARPU for the quarter was up by 5% and flat for year, translating to INR 82 and INR 77, respectively. Non-voice revenues from both data and mobile VAS for the quarter and year up by 66% and 21.6 times, to INR 442 million and INR 872 million, respectively. Share of non-voice revenue as a percentage of total revenue increased by 5% for the quarter and 14% for the year. High speed data services expanded to 100 largest cities of India by the end of 2010. Currently SSTL is present in 130 cities.
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Vsevolod Rozanov, President and Chief Executive Officer of Sistema Shyam Teleservices Ltd., commented, “We are pleased to report our financial results for the full year and quarter ended 31st December 2010. The results are a reflection of our improving performance in one of the world’s most competitive telecom market. SSTL continues to deliver on its key strategic goals based on its “Data centric- Voice enabled” strategy. We have increased our revenues by 198% year-on-year and by 25% quarter-on-quarter as a result of a growing subscriber base especially in data cards and also due to an improvement in blended ARPU. I am also pleased to say that the Russian government’s investment of INR 26,988 million in the company at the end of the year provided us with additional financing that will help us to rapidly expand our high speed data network across India during 2011.”
Financial Summary INR million Q4 ‘10 Q4’09 y-o-y Q3’10 q-o-q 2010 2009 y-o-y
Revenues
1,937
663 192%
1,461 25%
5,239
1,761 198%
OBIDA
-3,647
-3,779 3%
-3,982 9%
-15,037
-10,783 -39%
-margin
-188%
-570% 382 p.p.
-273% 84 p.p.
-287%
-612% 325 p.p.
Net Income
-6,051
-3,839 -58%
-4,940 -18%
-21,686
-12,565 -73%
-margin
-312%
-579% 267 p.p.
-338% 26p.p.
-414%
-714% 299 p.p.
The CAPEX investments made by SSTL in India to date stand at INR 56 billion, this includes the investment of INR 5,710 million made for the FY 2010. SSTL’s mobile subscriber base increased by 27% quarter-on-quarter and crossed 8.4 million customers as of December 31, 2010. The growth in subscriber base of the company was largely driven by further strengthening of the distribution network and an increase in its retail universe across India. Mobile subscribers’ MOU stayed approximately at the same level on a QoQ basis and amounted to 309 min for FY 2010. Though the data ARPU in Q4 was down by 1% and was up for FY 2010 by 625% to INR 274 and INR 261, respectively. However, blended mobile ARPU increased by 5.1% QoQ from INR 78 to INR 82. It is important to note, blended mobile ARPU has grown for 3 consecutive quarters for the company in a declining market. The pan-India revenue market share of MTS India almost tripled from 0.25 % in Q4 2009 to 0.64% in Q4 2010 and for FY 2010, increased by 0.39 p.p. to 0.64%.
The October to December 2010 quarter witnessed an improvement in the health and competitive scenario for the telecom market overall. Subscriber additions accelerated from the previous quarter to approximately 64.5M connections overall, ARPU for the industry declined by about 3% QoQ and wireless industry revenues grew by about 5% sequentially, marking the 5th consecutive quarter of industry revenue growth. The high-speed data market also witnessed acceleration in subscriber growth along with new players entering the market.
SSTL reported an OIBDA loss of INR 15,037 million for the year ended December 31st, 2010, reflecting an improvement in OIBDA margin of 84 p.p. on QoQ basis and 325 p.p. on a year-on-year basis. One of the drivers of improvement in OIBDA was on account of substantial growth in revenue. OIBDA in Q4 ‘10 Vs Q4 ’09 improved by 3% as a result of +192% growth in revenue around the same time. The revenue growth in turn was driven by increase in customer base +190% in Q4 ’10 Vs Q4 ’09. During 2010, SSTL launched its mobile data services in almost 90 new cities with total number of cities covered by high speed data services increasing to over 100 cities in India, including all the five Metros. The number of mobile broadband subscribers of the company more than doubled QoQ to 0.43 million as of December 31, 2010.
-3-
Russian Government Investment
In December 2010, the Government of the Russian Federation (RF) made an equity investment in SSTL. Russian Government paid INR 26,988 million for a stake of 17.14% in SSTL’s share capital. In March 2011 the equity shares have been issued to the Russian Federation along with completion of SSTL’s Rights Issue of INR 1906 million. After aforesaid issue of shares, Sistema continues to be the majority shareholder with 56.68% stake. The RF Stake is 17.14% and the total FDI in SSTL owned by Russian parties (Sistema and the Russian Government) is well within FDI limit of 74%.
SSTL plans to utilize all the funds from the RF to finance the continued development of the company, and in particular to strengthen its leading position in wireless broadband. The funds will be used firstly to extend our market leading high-speed data network across circles of operation, secondly to expand high-speed data services to new circles and finally to increase the branded retail network across the various telecommunication circles.
About Sistema Shyam TeleServices Ltd.
Sistema Shyam TeleServices Ltd. (SSTL) is a joint venture between Sistema {LSE: SSA} of Russia, the Russian Federation and the Shyam Group of India. The Russian Federation holds a 17.14% stake in the company. Sistema is the majority shareholder with a 56.68% stake. SSTL provides its services under the MTS brand through a commercial agreement with Mobile TeleSystems OJSC, the leading telecommunications provider in Russia and the CIS. . In a short span of time, SSTL has secured over 10 million wireless subscribers and provides mobile broadband services under the MBlaze brand to more than 600,000 customers in over 130 cities in the country. For more information please visit http://www.mtsindia.in
For more information please contact:
Viraj Chouhan
Corporate Communications- Director
Sistema Shyam TeleServices Ltd
Viraj.chouhan@mtsindia.in
+91 9136404000

Listed or not, Sistema Shyam wants to declare results

2011-04-20T19:59:00.000+05:30

Listed or not, Sistema Shyam wants to declare results

Submitted by Prashant Duggal on Wed, 04/20/2011 - 15:44

In an extraordinary move, Sistema Shyam Teleservices, the majority owned Indian subsidiary of Russia's AFK Sistema and the owner of MTS brand, has said it will reveal its quarterly and full-year financial result on Friday.
The company is not listed on any stock exchange and is under no legal obligation to make its financial details public.
"Sistema Shyam Teleservices is credited to be the first telecom operator amongs the new entrants.. to disclose results," a message from a public relations representative of the Indian firm said.
Almost no unlisted Indian firm makes its financial details public, partly because it helps in remaining competitive. Publication of financial results helps give the competition ideas about the strengths and weaknesses of the company.
According to the message, the Sistema Shyam will announce its full year as well as fourth quarter results tomorrow.
The $19 billion Russian parent is listed on the London Stock Exchange and is headed by business oligarch Vladimir Yevtushenkov.
Many new and old telecom operators in India are currently facing scrutiny for misrepresenting their credentials while applying for and acquiring telecom licenses three years ago, or failing to roll out the services in time.
Government has issued close to 200 show cause notices against the operators across the country in an effort to force operators to pay up or cancel their licenses.
It has said a decision on canceling around 70 licenses for misrepresenting credentials will be taken in two weeks.

Sistema Shyam's Net dongles will allow CDMA-to-GSM international roaming

2011-04-19T15:32:00.000+05:30

Sistema Shyam's Net dongles will allow CDMA-to-GSM roaming

Adith Charlie

Recently in Orlando (US):

Sistema Shyam TeleServices is planning to launch Internet dongles for international travellers. The dongles will enable CDMA subscribers to roam on GSM networks when they travel abroad.

“We are launching special dongles for international travellers which would connect with partner GSM networks across the world and at the same time have an MTS India number...We will continue adding to our list of partner networks all over the over the world,” Mr Leonid Musatov, Chief Marketing Officer, SSTL, told Business Line.

SSTL, which operates mobile services under the MTS brand and broadband services under the Mblaze brand, is a joint venture between Russia-based Sistema and Mr Rajeev Mehrotra-promoted Shyam Telecom. It is one of the few operators providing services on the Code Division Multiple Access (CDMA) platform in India. Industry analysts feel that the dongles provided by MTS could have dual-SIM capability thereby enabling it to switch services to the GSM platform while roaming abroad. Mr Musatov said it already has 443 network partners in 231 countries.

The company is internally testing its international roaming offering currently and plans to do a full-fledged launch over the next two months. The pricing would be “competitive,” the company said, without getting into further details.

Separately, an MTS India spokesperson said that the company is offering the lowest calling rates to Russia and the CIS countries.

Call to CIS countries – Armenia, Russia, Tajikistan, Ukraine and Uzbekistan – are priced at Rs 5.99 a minute. Calls to Russia, as part of a special Russia calling card, are priced at Rs 4.99 a minute.

While MTS has 10 million customers in India, it has over 100 million in Russia and other CIS countries. SSTL, which now offers services in 18 circles of India, is targeting 30 million customers by 2013.

This correspondent's trip to the US was sponsored by SSTL.

MTS sets up data centre in Noida for Rs 35 cr

2011-04-19T08:24:00.002+05:30

MTS sets up data centre in Noida for Rs 35 cr

New Delhi, Apr 18 (PTI) Sistema Shyam TeleServices Ltd (SSTL), which operates under MTS brand, today said it has set up a data centre in Noida for Rs 35 crore that will help in cost effective energy utilisation and data security.
"The data centre has been built by technology giant IBM.
It is MTS'' third data centre in the country after similar set ups in Chennai and Jaipur. The company has invested over Rs 35 crore in its latest data centre," the company said in a statement.
"This latest set up would provide impetus to the MTS data focused strategy and is in line with our plans to foray into cloud computing services segment," MTS India Chief Information Officer Rajeev Batra said in the statement.
The applications in the centre would be in shared and fall-back mode between Chennai and Noida for enhanced customer experience, it said.
The data centre has intelligent BMS (building management system) for round the clock monitoring and surveillance in order to have effective energy utilisation and security, it added.

Sistema is under obliagation to buy back from Russian Govt at minimum $777 million in 5 years.

2011-03-31T19:47:00.000+05:30

THE RUSSIAN GOVERNMENT MAKES EQUITY INVESTMENT INTO SISTEMA SHYAM TELESERVICES

Moscow, Russia – March 31, 2011 – Sistema (LSE: SSA), the largest diversified public financial corporation in Russia and the CIS, today announces an increase in the share capital of Sistema Shyam TeleServices Ltd. (SSTL), Sistema’s subsidiary in India which provides telecommunications services under the MTS brand, by means of an additional share issue.

Following the placement of additional shares with the Russian government and investors in India, SSTL increased its share capital by INR 28,894.5 million (approximately US$ 647 million). The Russian government, represented by Rosimushchestvo (the Federal Agency for State Property Management), acquired a 17.14% stake in SSTL for INR 26,988 million (approximately US$ 600 million). The Russian Federation’s portion of the transaction was financed with funds held in Indian rupees, which represented Indian government debt to the Russian Federation.

Following the completion of the secondary share issue, Sistema’s stake in SSTL amounts to 56.68%, while Indian investors own 26.05%.

In accordance with the agreement between Rosimushchestvo and Sistema, Rosimushchestvo has a put option to sell its stake in SSTL to Sistema during a one year period beginning five years after the purchase of shares in SSTL. Sistema has an obligation to purchase SSTL shares from the Russian government for the higher of US$ 777 million or market value determined by an independent valuator. Under the terms of the agreement, until the put has been exercised or expires, Sistema has agreed not to reduce its stake in MTS below 50%+1 share. The agreement does not provide for any specific consequences in connection with this provision (i.e., no accelerated exercise of the put, etc.), and the parties could agree to revisit and revise this provision.

SSTL plans to use the proceeds from the secondary offering to further strengthen its position in the mobile broadband market, to expand its mono-brand retail network in existing telecommunications circles, and to launch services in new circles.

Sistema Shyam TeleServices Ltd. (previously Shyam Telelink Ltd.), established in 1998, launched its full operations in the State of Rajasthan in 2000. The company received the pan-Indian licence for mobile network operations in March 2008, and presently owns right to use frequencies for provision of mobile telephony services in 22 circles across the country. The company provides telecommunication services to more than 10 million subscribers in 19 circles. The company provides mobile broadband services under MBlaze brand to nearly 500,000 people in more than 130 largest cities in India. Sistema owns 56.68% of Shyam TeleServices Ltd. For further information please visit www.mtsindia.in.

SISTEMA SHYAM TELESERVICES LTD (SSTL) COMPLETES ALLOTMENT OF SHARES TO THE RUSSIAN FEDERATION (RF) : Press Release

2011-03-30T22:37:00.000+05:30

SISTEMA SHYAM TELESERVICES LTD (SSTL) COMPLETES ALLOTMENT OF SHARES TO THE RUSSIAN FEDERATION (RF)
~Also receives overwhelming response to its Rights Issue of INR 194 crores from all Its existing shareholders ~
Gurgaon, India – March 30, 2011 – Sistema Shyam TeleServices Ltd (SSTL) today announced the allotment of shares to the Russian Federation. The company issued 54,73,12,918 equity shares to the Federal Agency for State Property Management of the Russian Federation ("Rosimushchestvo") against the funds equivalent of INR 26,988 million (i.e. US$ 600 million approx) received in December 2010.
All formalities relating to the allotment of shares were however completed on 25th March, 2011. Prior to this share allotment, SSTL also issued 19,06,49,582 equity shares to its existing shareholders including the Indian promoters i.e. the Shyam Group. The rights issue, launched in middle of February, 2011 and closed on 8th March, 2011 was done to accommodate the foreign direct investment by the Russian Federation (RF) into SSTL. The rights issue was open to all existing share holders of SSTL excluding Sistema (LSE: SSA). The objective of opting for the rights issue was to provide equal opportunity to all the existing shareholders in the new proposed equity structure of the company. With all formalities relating to the rights issue complete and with the allotment of shares to RF also getting closed, the paid up capital of SSTL now stands at INR 3193.92 crores.
According to Vsevolod Rozanov, President and CEO, Sistema Shyam TeleServices Ltd “ We at SSTL are delighted to have received an over whelming response from all our existing shareholders to the rights issue. Additionally, with formalities relating to the allotment of equity shares to the Russian federation also getting completed, it truly represents a major milestone. Both these developments are a testament to the faith reposed by all the shareholders in our company, which now has over 10 million customers. Going forward, the challenge is to further accelerate the proliferation of our telecom services nationally, in sync with our data centric, voice enabled strategy. ”
The revised holding structure of SSTL is as follows:
-Russian Federation : 17.14%
-*Sistema (LSSE: SSA) : 56.68%
-Shyam Group : 23.98%
-Public : 2.2%
*Prior to the allotment of shares to RF, equity held by Sistema (LSSE:SSA) in SSTL was 73.71%.
The new capital structure has been registered with the Registrar of Companies and has also been updated in company’s data available on the Ministry of Corporate Affairs portal of The Government of India. It may be recalled that SSTL had long back obtained FIPB approval for the Russian Federation’s investment. Additionally, SSTL had also secured all other approvals to appropriately accept the RF investment.
SSTL plans to utilize all the funds to finance the continued development of the company, and in particular to strengthen its leading position in wireless broadband. The funds will also be used to expand the branded retail network across the various telecommunication circles and to further accelerate the proliferation of the company’s telecom services in a number of new circles.
About Sistema Shyam TeleServices Ltd
Sistema Shyam TeleServices Ltd. (SSTL) is a joint venture between Sistema {LSE: SSA} of Russia, the Russian Federation and the Shyam Group of India. Sistema is the majority shareholder in the joint venture company which operates its telecom services under the MTS brand. MTS is well recognized in India and worldwide for its commitment to high quality and innovative telecom solutions. MTS has recently been ranked by Millward Brown as 72nd out of the top 100 brands in the world. In a short span of time, MTS in India has secured over 10 million wireless subscribers and under the MBlaze brand provides mobile broadband services to more than 500,000 customers in over 130 towns across the country.
For further information, please contact:
Viraj Chouhan
Corporate Communications- Director
Sistema Shyam TeleServices Ltd
Viraj.Chouhan@mtsindia.in
+91 9136404000

Rights shares recieved in accounts

2011-03-29T16:09:00.000+05:30

AMSOST would like to thank Mr Rashid Malik, CS, SSTL for efficinently coordinating the entire rights process and ensuring completion of the process before Mar 31st 2011

We now hope that the managment will follow up on the promised path of the appointment of the Merchant Banker by May 2011 and will subsequently go for the DRHP filing and be technically ready for the IPO by the third quarter of the year.

IPO dependant on market conditions : says CEO Rozanov

2011-03-29T08:55:00.000+05:30

Despite unclear spectrum road map, there's no risk to our expansion plan: Vsevolod Rozanov, CEO, SSTL

Vsevolod Rozanov, president & CEO, SSTL

Sistema Shyam TeleServices Ltd (SSTL), a joint venture between Sistema of Russia and Shyam Group of India, has invested over $2.2 billion (around 9,900 crore) in India so far, but accounts for a mere 10 million of the country's 750 million mobile connections. A new entrant, SSTL which retails its services under the MTS brand, is betting big on being a data-centric operator since current broadband penetration level is less than 1% compared with 55% in voice services, but lack of clarity on additional spectrum allotment may derail its plans. SSTL president and CEO Vsevolod Rozanov said his management has asked the promoters and investors to keep their funding plans on hold until there is clarity on the regulatory and policy framework. In an interaction with Joji Thomas Philip, Rozanov talks about the challenges the CDMA operator faces in India and its expansion and IPO plans. Edited excerpts:

As per the direction of the courts, are you not supposed to carry out the listing of Sistema Shyam this fiscal? When will the IPO happen?

The court has only ordered that we do an IPO. It has not directed a specific timeframe for it. The process has already been initiated and we will specify its status by the end of this financial year. We will soon appoint bankers for the proposed listing. But, at the current market conditions, we will not command valuations at which the Russian government had picked up stake in Sistema Shyam-the stake sale valued us at over $3 billion. We understand that the minority shareholders want to exit, but they will not benefit if we go in for an immediate listing. While there is a legal case, an IPO must also have a financial case too, else it will lead to value destruction for all shareholders. I am sure that minority shareholders will understand this.

The Russian government picked up less than 20% in Sistema Shyam. Has the money come into the company? There have also been reports of the company raising funds for expansion.

The investment of $600 million from the Russian government has already come into the company. This will take care of our funding requirements for this calendar year and also some part of next year. The funds will be used to finance the development of the company, particularly to strengthen its position in the wireless broadband market. The funds will also be used to expand the branded retail network in existing circles and accelerate the launch of operations in new ones.

New entrants, including Sistema Shyam that were given mobile permits under controversial circumstances by former telecoms minister A Raja, have all been issued show-cause notices seeking cancellation of those permits? What is your response to these notices?

We were required to pay only 11 crore as liquidated damages for failure to roll out services in some circles and we have done so. Sistema Shyam was not among companies that were sent notices for allegedly submitting doctored documents the 2G scam.

Is Sistema worried about the lack of clarity and road map for spectrum allocation? Is the current regulatory and policy framework a concern for your shareholders and investors? Will this impact your expansion plans?

While the spectrum road map is not clear, there is no immediate risk to our expansion plans for this year and the next. Yes, there is no clarity on how and when the new entrants will be given additional airwaves. We have just 2.5 MHz of airwaves across the country, the lowest amongst all mobile phone companies. We will need additional airwaves, especially to service our wireless data customers. We are committed to the government's vision of a national broadband plan and already have over 0.5 million wireless broadband customers. As the spectrum crunch increases, we can increase the number of towers, but that is not a cost-efficient way to offer mobile telephony services.

Your strength lies in data card business. But, with GSM operators now having 3G spectrum, they can easily challenge MTS in the wireless broadband space. So, going forward, you stand to lose out in this space too.

My opinion is that GSM operators will be spectrum-constrained. Their smartphone customers will use data services that will use up their 3G spectrum. India apart, there's only one country (Austria) in the world, where telcos have less than 10 MHz of 3G spectrum. Besides, none of the GSM operators here has pan-India airwaves. Hence, they will have to share this resource to have a national 3G footprint. So, the congestion will come in faster in the 3G space. Their (GSM telcos') focus, therefore, may not be on the data card segment.

But we hope that new M&A rules will allow operators to have more spectrum. Currently, with so many players, the airwaves are divided into narrow bands and, therefore, cannot be used efficiently.

The price wars in the telecom space have sent revenues and profits of all operators plunging. Can Sistema Shyam meet its targets for profitability under the current scenario?

We stand by our earlier guidance that we will be EBIDTA positive by 2013 and cash positive by 2015. These are extremely aggressive ambitions considering the current telecoms market in India.

Being a CDMA operator, are you not at a disadvantage. The GSM ecosystem is better and offers more choice of operators and handsets. Besides, the initial results of mobile number portability indicate that customers are opting out of CDMA. If the M&A rules change, will you buy a GSM-based telco to become a dual-technology operator like Reliance Communications and Tatas?

I don't think we are disadvantaged because CDMA has a narrow ecosystem. MTS is the only operator that is focusing on CDMA in India. In the handset space, a lot more models are coming in. The challenge in India is that our competitors who offer CDMA-based mobile services may be focusing more on their GSM operations as they offer services on the dual-technology platform. This may have had an impact on the CDMA ecosystem here. Yes, our competitors may have lost CDMA customers after mobile number portability has been introduced, but this does not apply to MTS. We are net positive in terms of customer additions under MNP. Even under a new M&A regime, it is unlikely that we may buy a GSM operator. But that is for the shareholders to decide. At Sistema Shyam, we made a conscious decision to be a CDMA player and we stand by that.

Your average revenue per user (ARPU) is far below the industry average. Will you break even in India with such low revenues per customer?

Our ARPU is 80 per month, and while this is below the national average, you must take into account that most of our customers are new users. We are doing okay if one were to consider the national average for incremental ARPUs. Our data card customers are giving us about 700 per month. We are counting on the data ARPU, not voice. Our ARPU is increasing by 4-5 every quarter, led by increased data offtake and we are happy with that.

GSM operators are all advertising their 3G offerings. While CDMA can offer the same speeds, how do you get the message across? Besides, CDMA has a problem on the handset side too? Will bundling help?

It took us about nine months after the launch of our data cards to get the business model right. Moving to 3G will not be smooth for any operator. I don't think GSM operators are in a position to offer 3G dongles. They will rather concentrate on moving their high-end mobile customers to the 3G platform. Therefore, our position in the data card segment will not be impacted much.

Most CDMA users have low-end phones. Convincing customers to move to smartphones is a huge challenge. Actually, for us the smartphone segment began only after September 2010. We have been successful in selling data cards and we will use this expertise to sell smartphones. We started with a low-end base, and earlier there were not many handset models for our customers to upgrade to. But this is changing. The open market initiative where CDMA customers can use the same handset across operators on the same technology platform is helping. While bundling may not have taken off in India, on the global stage most of the high-end handsets are sold like this. While there are risks associated with bundling in India, we feel that by controlling the channel, we can minimize them. We have introduced a Android-based HTC touch screen handset, called MTS Pulse, which costs about 18,000. Customers need to pay 1,500 a month for which they are given a host of freebies, including SMS, data downloads and free minutes. Our target is to have 30 million customers.

Indian telcos traditionally have outsourced most of their core functions. What about MTS?

Our outsroucing strategy is different from that of other telcos.

For instance, we have outsourced the management of our networks to Ericsson, ZTE and Huawei, while for IT, we have about five different partners. We feel that this is a more efficient model.

MTS to get blessings of Lord Venkateswara as it becomes first operator to start broadband at Tirupati

2011-03-24T07:04:00.000+05:30

MTS India offers mobile broadband service in Andhra Pradesh

Wednesday 23 March 2011 | 13:41 CET

Indian mobile operator MTS has launched its high-speed mobile broadband service MBlaze in Andhra Pradesh. MTS has rolled out its high speed mobile internet services in Hyderabad, Vijayawada, Vishakhapatnam, Tirupati, Warangal, Rajahmundry and Kakinada. MTS becomes the first telecommunication service operator to provide high-speed mobile broadband services at Tirumala Hills in Tirupati. MTS has earmarked INR 300 million to roll out data services across the state. MBlaze services in Andhra Pradesh are supported by a network of 3000 retail outlets and 40 company flagship stores. With MBlaze World Cup Pack, on recharging with INR 798, MBlaze customers will get 5GB data usage free. Additionally, for every Indian victory in the world cup, MBlaze customers will get 250MB data usage free. If India wins all its matches including the world cup final, the customers will get over 2GB data usage free. MTS' data usage plans starts from INR 198. Customers also have the option to access unlimited data usage with Unlimited MBlazer priced at INR 999 with 30 day validity. On purchase of an HP laptop, customers can get MBlaze for INR 999, made available through prepaid plans.

"We did not recieve 2G notice " says MTS

2011-03-24T07:01:00.002+05:30

MTS bets big on data services

BS Reporter / Chennai/ Hyderabad March 24, 2011, 0:12 IST

Sistema Shyam TeleServices Ltd (SSTL), which offers MTS brand mobile services in 18 circles at present with a licence for 22, plans to be an essentially data-centric operator and sees large potential in the internet services segment given the current broadband penetration level of 0.8 percent compared with 55 percent in voice services.
The CDMA operator, a joint venture between the Russian conglomerate Sistema and Shyam group, today launched its data services in the Andhra Pradesh market, its 13th in the segment, and expects to complete the roll out in the rest of the circles by the end of 2011. It plans to invest Rs 30 crore in the state roll-out.

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Speaking to the media here, Atul Joshi, chief sales officer, SSTL, said, “We have a 30 percent share in the data market. The data business is at an inflection point. We believe the internet market is going to see explosive growth.” The company has invested over Rs 9,000 crore in its Indian operations since its launch in 2008, and has raised $ 600 million (around Rs 2,700 crore) from the Russian government by offloading 17 percent stake from Sistema's holding.
Its holding structure at present is 57:24:17:2 with Sistema, Shyam, Russian government, and minority stakeholders, respectively.
Joshi confirmed SSTL’s plans to go public saying it was a growing company expanding in new circles and fund deployment was not an issue. But the size and timing of the IPO have not been decided yet, he said. The company expects to breakeven by 2013.
In Andhra Pradesh, the company has 300,000 customers in the voice segment and expects to add 100,000 for its USB internet service by the end of 2011, according to Suresh S Kumar, chief operating officer (AP & Karnataka), SSTL.
The internet USB costs Rs 1,555 and comes with pre-paid plans starting from Rs 198 to Rs 999 for unlimited usage. It also offers 60 live television channels.
‘We did not receive 2G notice’
SSTL’s chief sales officer Atul Joshi said the company had not received any notice from the Supreme Court or the Telecom Regulatory Authority of India regarding the controversy around 2G spectrum allocation in 2008. It was reported in January that SSTL, apart from the Trai and 10 other operators, has been issued notice by the apex court for allegedly not meeting their roll-out obligations.

DoT plans to relax M&A guidelines

2011-03-18T08:42:00.002+05:30

MUMBAI: Kapil Sibal-led Department of Telecom is planning to relax merger and acquisition norms for the Indian telecom sector so significantly that it will leave only around six operators in any service area. At a recent conference organised by Goldman Sachs , the minister was heard saying each operator would have at least 10 MHz of spectrum, or radio airwaves, at its disposal, according to several industry participants who didn't want to be named. The DoT will release these proposals as part of the first phase of the New Telecom Policy 2011 consultation in April. A DoT official said, the Department was on schedule to release a progress report on the agenda Sibal had set out by the end of this month.

However, some members of the telecom industry are sceptical about how much of merger and acquisition norms' relaxation the government will be able to deliver. Sibal became Minister of Telecom under trying circumstances. In November, the then telecom minister , A Raja, was forced to resign on account of the 2G spectrum allocation scam. Raja is currently under arrest as the Central Bureau of Investigation is trying to establish the scale of the scam. Sibal was assigned the portfolio to implement change and ensure that regulations became fair, transparent and conducive for the telecom industry.

At the conference, Sibal also said that the DoT was working on a structure to ensure investments made by a company would be protected in case of an acquisition. While this is a positive for small or new operators like Uninor, Videocon's Datacom and Sistema Shyam , it is confusing for potential buyers. Large existing operators that include Bharti Airtel and Vodafone already have sufficient infrastructure, and would not be willing to reimburse companies with capital expenses as part of the acquisition. An analyst tracking the sector said, "It will make acquisitions too expensive, which is the case at present also."

In October, ET had reported that once norms are relaxed, Vodafone, NTT DoCoMo - through Tata Teleservices - and new international operators waiting for entry into the Indian telecom market were key potential acquirers. The telecom scam may have deterred new entrants, but the other two may still buyout smaller players for the sake of spectrum, an investment banker said. Earlier this year, Kumar Mangalam Birla, chairman of Aditya Birla group that owns Idea Cellular , had said that Idea may also turn into an acquirer in the long run, as it certainly isn't up for sale. Stringent M&A restrictions had been imposed on the telcos a few years ago to prevent new players, who had got pan-India licences and spectrum at a flat fee of Rs 1,651 crore, from selling out at huge profits.

Last year, the telecom regulator issued a new set ofM&A guidelines that were criticised by some of the big telcos as these recommendations effectively shut them out of theconsolidation process. At the start of his tenure as telecom minister, Sibal set out a 100-day plan in which he said the government would come up with a New Telecom Policy. He said it would address 15 key issues, including spectrum fees, licence renewals, licence conditions and M&A norms. The Telecom Regulatory Authority of India recently published a recommendation to charge incumbent operators for airwaves over 6.2 MHz.

The recommendation drew dramatic opposition from telecom players. Attendees of the conference said Sibal assured he would not accept the fees proposed by the Trai but would discuss with industry leaders and arrive at a suitable price for the spectrum. Earlier Sibal also moved to cancel licences of certain operators who were reportedly given licences out of turn or did not meet network rollout conditions. The process is still on.

NBFC credit to tower cos classified as infra loan: Reserve Bank

Telecom towers firms will now be able to raise funds from non-banking finance companies or NBFCs with the RBI granting "infrastructure status" to loans extended by NBFCs to these companies. This will allow NBFCs that lend to tower companies to raise tax-free bonds, borrow from overseas through the external commercial route, raise long-term finance from banks and issue long-term debentures to insurance companies.

In a circular issued late Friday, the RBI has included 'telecom towers' also as an infrastructure facility for availing credit facilities. In telecom sector, earlier, loans given to service providers alone were treated as infrastructure loans.

Sistema's India unit says to hire investment banks for IPO

2011-03-15T15:30:00.000+05:30

Sistema's India unit says to hire investment banks for IPO

Tue, 15th Mar 2011 08:57

NEW DELHI, March 15 (Reuters) - Russian oil-to-telecoms group Sistema's Indian mobile phone unit will appoint investment banks in couple of months for a planned initial public offering, a top official said on Tuesday.

'As we have said, we will be ready by the end of this calendar year,' Vsevolod Rozanov, chief executive officer of Sistema Shyam TeleServices, told reporters, adding the launch of the IPO would depend on regulatory approvals and market conditions.

Sistema owns a 73.7 percent stake in Sistema Shyam, while India's Shyam group owns 23.8 percent.

(Reporting by Devidutta Tripathy; Editing by Tony Munroe)

((sumeet.chatterjee@thomsonreuters.com; +91-22-6636 9068; Reuters Messaging: sumeet.chatterjee.reuters.com@reuters.net)) Keywords: SISTEMA INDIA/IPO

(If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com)

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Reminder for Sistema Shyam Rights Issue

2011-03-04T19:50:00.000+05:30

We would like to remind shareholders that the Rights issue is open till Mar 8th only. Forms can be deposited at participating ICICI bank counters.

MTS partners Meru Cabs to offer free internet to travellers

2011-02-15T11:26:00.000+05:30

MTS partners Meru Cabs to offer free internet to travellers

NEW DELHI Sistema Shyam Teleservices Ltd (SSTL), which offers telephony services under the MTS brand name, today said it has partnered with Meru Cabs to offer free internet services to its passengers in New Delhi and Mumbai.

The customer needs to ask the cab driver for an MBlaze dongle to get free internet surfing along with unlimited data download, SSTL said in a statement.

The company plans to launch similar services in other major towns including Chennai, Kolkata, Bangalore and Hyderabad, it added.

"Our partnership with Meru Cabs has been specially designed to offer seamless data connectivity to users on the go, both in Delhi and Mumbai," SSTL Chief Marketing Officer Leonid Musatov said.

MTS claims to have over 9 million voice subscribers in India and under the MBlaze brand provides mobile broadband services to over 4.8 lakh customers in more than 100 cities across the country.

The second wave : MTS India focus on Data...will it pay off ?

2011-02-07T09:13:00.002+05:30

The second wave

Surajeet Das Gupta / New Delhi February 7, 2011, 0:45 IST

The question telecom experts are debating today is at what speed will the Indian consumer move from voice to data
All telecom experts today agree that Indians will increasingly start using mobile broadband services — on their smart phones, their netbooks, and their tablets. The question to which the telecom titans do not have any answer is which technological route the majority of Indian consumers will take to access mobile broadband. Will it be the 3G services being offered by the big GSM boys like Bharti Airtel, Vodafone or Idea? Or will they adopt evolution video data only (EVDO), the high speed data being offered by CDMA networks like MTS or Tata Teleservices? Or will they completely switch over to long-term evolution (LTE) technology — the 4G technology through which Mukesh Ambani wants to re-enter telecom.

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That is the multi-billion dollar question. Multi-billion dollar because different players in the Indian telecom arena are betting those amounts on their chosen technologies — and hoping that they will be able to persuade the Indian consumer to choose their technology over the ones their rivals are offering. This story actually started a good 15 years ago. In July 1995, when the first mobile phone call was made in the country from Kolkata, no one had dreamt that this would alter the communication landscape in the country forever.
At over Rs 40,000 for a handset and equally expensive talk time, mobile communication was a privilege that only a select few enjoyed and many aspired to. But as service tariffs crashed and phones became affordable within a few years, a wave of consumers, tired of waiting in queues to get a fixed line phone connection, embraced mobile communication with great alacrity. And a communication revolution was well on its way.

MATCH POINT
PLATFORM	SPEED
GSM	9.6 Kbits/sec
GPRS	40 Kbits/sec
3G	1.8-14.4 Mbps
EVDO	3.1 Mbps
LTE	50-300 Mbps
Note: Actual speed could be much less depending on towers and number of customers

Eight years on, in 2003 to be precise, Mukesh Ambani tried to change the rules of the game by urging customers to shift from just making voice calls on the mobile phone to using data and internet on his CDMA platform. And he tried to do so through aggressive pricing. As part of his much vaunted “Monsoon Hungama” scheme, customers had to pay Rs 500 to lay their hands on a mobile phone bundled with data freebies like streaming television programmes, downloads of movie video clips and music and games to name a few.
The magic worked, but in part. Ambani did manage to rope in millions of customers. But his strategy to bring about a data revolution on the CDMA mobile platform, which would give him 30-40 per cent of his revenues, failed to take off as he gave away his telecom venture to his brother Anil after a bitter family battle.
As it turned out, for the bulk of the customers it was voice that reigned supreme. And despite over a dozen-odd mobile players in the market, real data services (excluding SMSs and caller tunes) currently contribute a mere 3 per cent to a telecom company’s revenue.
Game for more So did Mukesh Ambani misread the market? Or was he ahead of his times? In 2011, no one is asking those questions or doubting that a second revolution in telecom is well under way — with mobile broadband data ready to sweep customers off their feet. Telecom companies realise that voice is just a commodity in which margins will be under pressure. In such a scenario, the only way to arrest the decline in average revenue per user (ARPU) is to hook consumers on to data. Given that, the debate today is largely about the speed at which Indian customers will move from voice to using data on the mobile.
The change could be dramatic. Customers will soon be spoiled for choice with as many as eight operators offering them an array of technological options — 3G, 4G, LTE or EVDO — to get high speed broadband on their laptops and phones. At average speeds well above 2 mbps — nearly four times faster than what you are used to — consumers can watch live TV, make video calls, download music, make bank transactions and commercial deals, get online education lessons or discuss their problems with doctors sitting in another part of the country. Says Kanwalinder Singh, president of Qualcomm India, a key player offering technology for mobile broadband, “A data revolution, just like the voice revolution some years ago, is set to break out in India.”
More importantly, for the first time the gap in mobile technology offered by Indian companies and those abroad will be bridged completely. While customers in the country are at least four to five years behind in savouring 3G services, Indian telcos are expected to roll out 4G operations within a year of its global launch.
There are worries nonetheless. One, that the 3G services would be expensive as operators have paid staggering amounts for the spectrum — a total of Rs 67,000 crore. But if the tariffs offered by Reliance Communications and Tata DocoMo — players that have started offering services — are anything to go by, the fear seems misplaced. In fact, data tariffs that have been bundled with voice are highly affordable and even cheaper than 2G offerings for those who have higher ARPUs. The two operators have been able to rope in over two and a half lakh 3G customers in the first month of their operations despite that some killer services like video calling had not been activated for weeks due to security issues.
By October/November some of the broadband wireless access services (BWA) licensees are expected to offer 4G services through LTE technology which promises even faster data speed to many more consumers.
With Mukesh Ambani back in the game with a pan-India licence and spectrum for BWA, observers say he just might kick off another price war in the mobile data space like he did in voice in 2003. He will be at an advantage over his 3G rivals — he has got more spectrum (20 MHz) than his GSM 3G rivals (5 MHz) and at a cost that is fraction of what his rivals have paid. But he has a problem as well: The technology that he proposes to use is still under commercial deployment in some parts of the globe and its efficacy is yet to be tested unlike 3G, which is well established and has a large consumer base.
Still, to add to the good news for the consumer, if the telecom regulator and the government are able to push through things, there will be more spectrum available for auction next year for 4G services and another three to four operators can easily jump on to the speed bandwagon. Last but not the least, CDMA players like MTS are dramatically shifting their strategies by moving out of mobile voice services and pushing for data by offering EVDO dongles at high speeds that match those of the 3G players.
To make the data revolution a reality companies are together investing over Rs 1,50,000 crore. And they are doing so because they are sure there is a large market waiting to be tapped. Says Ericsson India Vice-president P Balaji, “In the next three to five years there will be a data market of 300 to 350 million subscribers. And we will see revenues from value-added services, which stand at 10 per cent currently, go up to between 25 and 30 per cent.”
Supporting the effort are device makers offering larger screens to push mobile data at affordable prices. So as Apple’s iPad made an official launch in the country last week, Samsung dropped the price of its Galaxy Tab to an attractive Rs 29,000 from a steep Rs 38,000 earlier.
Falling prices Will broadband wireless be dominated by GSM players like Bharti, Vodafone, Idea or Tata Teleservices that already have a large subscriber base? Or will the market be led by Mukesh Ambani who has no legacy issues or subscribers but a new technology that offers more speed than 3G but needs to be tested across the world? Or will it be won by incumbent CDMA players like MTS, which have the advantage of a pan-India network that others would take years to build?
LTE players have one key advantage — more spectrum at less price compared to their 3G rivals which helps keep costs lower. Says Kanwalinder Singh: “What this (more spectrum) means is that you can offer broadband to a larger number of people at speed similar to that of 3G but at a more affordable price because of the bigger volume of customers. Also it is possible for an LTE player to install a pan-India network with nearly half as many towers as would be required for 3G. And one can do that quickly by just leasing out capacity from large tower companies that have spare capacity rather than build it from the scratch.
But they also have many disadvantages — mobile devices on LTE are still not available around the world and most telcos are offering only dongles. Also consumers looking to use the device for voice won’t be able to do so. Until, of course, government changes policy and allows voice over internet protocol telephony between a PSTN (public switched telephone network) network and a LTE device. Currently, only device to device internet calls are allowed.
More importantly, prices of LTE devices, unlike 3G phones, will be steep — as high as Rs 25,000 which would be out of reach for most customers. In contrast prices of 3G devices are falling. Qualcomm, which makes 3G chipsets, is already working on smart phones below Rs 5,000. For sub-Rs 5,000 3G feature phones with speed of 3.2 mbps, Qualcomm has joined hands with companies like Micromax and Spice Mobile that offer such products.
Qualcomm’s Singh says that with more operators going in for LTE, the price of such devices should fall to, say, Rs 13,000. Also companies like Qualcomm are working on chipsets for mobile phones in which you can move seamlessly from 2G to 3G and LTE. The expectation is that the 5 MHZ spectrum with 3G operators is not enough and there will be congestion in such networks within a few years if not months. So 3G operators might have no option but to tie up with LTE operators especially in larger cities so that they can offer their customers high speed data services without a glitch.
Winners & losers But GSMA operators say they have at least a two-year head start over the BWA players. Says Samaresh Parida, strategy director at Vodafone-Essar, “BWA on LTE is still some distance away.” More importantly, they also believe that with more spectrum expected to be available in 2012 for auctioning in 4G, BWA players will cease to enjoy any special advantage.
3G operators are already honing their strategies to woo customers. Parida says that one large market which they will tap for 3G comprises PC users — over 35 million who use either laptops or desktops. It is also the market which Tata Teleservices is planning to concentrate on in the belief that at least 60-70 per cent of the initial revenue in 3G will come from dongles. Most of the dongle market is currently in the grips of CDMA players as GSM was not able to offer high speeds in 2G. But with 3G that has changed. To top it all, prices for dongles are sliding — it has crashed from Rs 5,000 to Rs 2,500 already.
Vodafone-Essar’s Parida says new markets will open up — one such comprises customers who want to use 3G devices but communicate in their regional language. With phone devices now available with virtual key boards on the screen, it’s easy to create key boards in different languages.
But 3G players are already facing a tough challenge from CDMA players who are increasingly shifting to data. Sistema Shyam which sells under the MTS brand, for instance, has dedicated half its spectrum to data and is pushing sales of EVDO dongles rather than just go for voice. The strategy is clear, says Vsevolod Rozanov, president and CEO of company. “Currently 10 per cent of our revenues come from data; we expect that to go up to 25 per cent by the year end. We have 4.5 lakh dongle customers already.”
Can he take on 3G operators? Rozanov says that he might not have the 3G spectrum but that does not bother customers because he ensures he offers them similar average speed. He also points out that he is well ahead of his 3G competitors in terms of network roll out. “We have four times the number of BTSs (base transceiver station or cell site) that 3G operators have. It will take competitors time to build a similar pan-India network.” Plus he is now coming up with MTS-branded smart phones which will be within Rs 5,000 for customers to do data on the move.
Surely, for mobile operators facing margin pressures, data revenues could change the game in 2011. And for Indian consumers the mobile data revolution could fundamentally alter the way they live and work.

Trai may recommend one-time fee for extra 2G :ET

2011-02-01T08:36:00.000+05:30

Trai may recommend one-time fee for extra 2G

NEW DELHI: Telecom regulator Trai may recommend a one-time fee ranging from Rs 50.98 crore to a maximum of Rs 707.28 crore for every unit of second generation (2G) airwaves that incumbent GSM-based mobile phone companies have beyond the 6.4 MHz limit.

The regulator may recommend that 2G airwaves in Uttar Pradesh (East) be priced the highest at Rs 707.28 crore as this region holds the maximum potential for future growth, while spectrum in Jammu and Kashmir be charged the least, according to a draft report, reviewed by ET.

Calculations by ET reveal that if an operator were to have one unit of airwaves beyond the 6.2 MHz mark across the country, it must shell out Rs 8380.55 crore, as per the Trai draft report.

The move will impact Airtel, Vodafone Essar, Idea Cellular, Loop (in Mumbai), Reliance Communications, and state-run telcos BSNL and MTNL. The government may also apply this one time fee for additional airwaves allocation for new entrants and dual tech companies.

Currently, these companies have been given only 4.4 MHz of start up GSM airwaves in most circles. If Trai’s draft pricing formula were to be considered, telcos such as Tatas and RCOM may have to pay about Rs 15,000 crore each for pan-India airwaves to take their total holdings to the 6.2 MHz. These companies have been vigorously arguing that that mobile permits entitle them to a minimum of 6.2 MHz of spectrum and only allocations beyond this amount can be linked to a market linked pricing mechanism.

Last week, telecoms minister Kapil Sibal had said that the country will charge mobile operators for additional spectrum at market-determined prices as specified by Trai. Sibal was appointed in November to clean up the sector and bring about reforms after former telecoms minister A Raja resigned facing allegations of selling airwaves for cheap, causing a loss of Rs 1.76 lakh crore to the exchequer according to the national auditor.

Last year, Trai had proposed that GSM telecom companies pay for 2G airwaves beyond the 6.2 MHz limit in every region at rates discovered during the third-generation spectrum auctions. However, due to stiff opposition from the GSM service providers, the regulator said it would revisit the issue.

Under the new pricing methodology, since incumbent GSM operators largely have airwaves beyond the 6.2 MHz mark in the metros and category A circles, their outgo is set to be lower. This is because the regulator is of the view that incremental 2G spectrum is less valuable in the metros , more valuable in category A regions and most valuable in category B areas. In parts designated as Category C regions, the regulator in its draft report said that the incremental 2G spectrum beyond the 6.2 MHz would be about 2.4 times the cost of 3G airwaves.

While a mobile permit allows a maximum of 6.2 MHz of airwaves per circle, GSM operators cite subsequent policy changes that entitle them up to 15 MHz or units of airwaves in each region, and add that the legality of this policy change has been upheld multiple times by the governments and the courts. This is hotly disputed by CDMA based and dual technology companies such as Reliance Communications and Tata Teleservices who content that a mobile permit entitles an operator a maximum of 6.2 MHz of airwaves per region.

India’s national auditor, in its report, submitted in Parliament in November 2010, said loss to the exchequer due to allocation of airwaves beyond the contracted amount to nine GSM players – Aircel, Bharti, BPL (Mumbai), BSNL, Idea, MTNL, Reliance, Spice (Punjab) and Vodafone is Rs 2,561 crore, ‘based on the amount charged from CDMA operators for grant of GSM spectrum in 2007’. The Comptroller and Auditor General of India in its report also added that going by Trai’s proposals, the loss to the exchequer was Rs 36,993 crore.

Sistema Shyam open to merger call in India : ET

2011-01-27T08:52:00.002+05:30

MUMBAI: A strategic merger with one of India's top seven telecom operators could be on the cards for Sistema Shyam Teleservices provided it gets a say at the management level, the company's chief executive told ET.

However, to take a step in that direction the company is awaiting clear merger and acquisition regulations from the government, Vsevolod Rozanov said in an interview. "We have business model tuned to organic growth. But if there is anything that can improve the business model by merger, I completely don't rule this out. I am ready if the rules get relaxed. We have the detailed information on all players. The situation is very different for every circle. We know what assets are there."

The company is a joint venture between Russian conglomerate Sistema and Shyam Teleservices of India. It is the only company in India that operates on only code division multiple access (CDMA) technology. Reliance Communications and Tata Teleservices also started with CDMA operations, but have now diversified into competing technology GSM and offer services in both the technology platform.

Sistema Shyam offers services under the brand MTS. So far, 85% of the company's revenue comes from voice, but its "game changer" has been data services, Rozanov said. The company has an average monthly revenue per user of 80, which is lower than what it spends per customer.

Yet, data customer revenue is typically several times that value. "We are adding 60,000 to 70,000 data customers every month, and I see trends of improving Arpu in the coming months," he said.

CDMA is traditionally known as a better technology for communication offering better speeds for web browsing, but its global uptake for voice calling has been slow because it locks users into specific handsets, and has emerged as less glamourous.

Like peers in his industry, Rozanov says the Indian telecom sector is begging for more spectrum, or air waves, that are not very efficiently utilized by public enterprise. "At this stage if I get all the spectrum I am entitled to, I will be happy for a couple of years."

As a CDMA operator Sistema Shyam is allowed 5 MHz of spectrum but has been allotted only 2.5, which would be increased given a threshold of minimum subscribers. In many of its service areas the company has crossed the requirement, he said.

Some chatter emanating out of the Department of Telecommunications suggests the government may impose a charge for additional spectrum to make up for allotting it too cheap initially. The talk comes in the wake of the alleged 2G scam which a government report says cost the exchequer up to 1.76 lakh crore.

Rozanov said any additional cost will take a toll on Sistema Shyam's business objectives. "The target is to be Ebitda (a measure of operating profit) positive by 2013 but that is already extremely stretched. If something (fees) else is imposed, the payback will be extended for many years. I don't think it will even be relevant for my generation of CEOs."

The company is also looking forward to stable, open telecom policies, that won't be changed as they have been in the past, he said. "We want to see stable regulations, to feel comfortable our investments in India are safe."

Given the amount of competition, Rozanov feels there is little need for defensive regulations. He cites the example of a limit set under existing norms on market share an operator can control.

MTS india adds 6.57 Lac voice customers in Dec 2010

2011-01-25T17:33:00.001+05:30

As per AUSPI data, MTS has continued to add customers at virtually the same pace for the month of Dec also. We expect that from next month onwards the pace will pick up dramatically due to the launch in UP circles.

Sistema loses out in MNP round I

2011-01-25T10:05:00.002+05:30

Trends indicate strong preference for incumbent GSM players.

Thomas K Thomas
New Delhi, Jan. 24
Bharat Sanchar Nigam Ltd and Reliance Communications have emerged the biggest losers as a result of Mobile Number Portability (MNP), introduced a month ago in Haryana. According to initial numbers, BSNL has lost a net of over 20,000 subscribers, while RCom has lost nearly 13,500 subscribers as on January 16.
Idea Cellular, which was the first to start an advertising campaign on MNP, has a net loss of 1,863 subscribers with 15,604 subscribers leaving its network and 13,741 coming in.
Even new players, including Sistema Shyam, Loop Telecom and Datacom (Videocon), have ended up with a net loss in numbers as a result of MNP.
Though these are initial numbers, the trends indicate a strong preference for incumbent GSM players.
Vodafone gained the most with 30,015 subscribers joining its network and only 9,267 leaving. Although Bharti Airtel lost 10,837 of its subscribers, it ended up in the positive as it managed to lure 18,271 subscribers from other operators' networks.
While these numbers are for Haryana, initial trends coming in from other parts of India are on similar lines.
While MNP was introduced in Haryana in November, the system was launched across the country on January 20.
Teething issues
Sources in the Department of Telecom said that there were teething problems in implementing the system, with complaints coming in from various quarters that porting was not being completed in some cases.
The DoT has written to all the operators to implement the scheme according to the rules set out by the TRAI and the Government.
“If a subscriber sends porting request to number 1900, operators have to respond back with the unique porting code. There should not be any exceptions or excuses for this. We have received some complaints of operators who are not processing porting requests. We are investigating these complaints,” said a top DoT official.
A Reliance Communications spokesperson said, “We believe that the customers who may have ported from one service provider to another are likely to port again on completion of the set time frame of three months. Our focus has been to provide a superior customer experience through better network quality, a wide array of applications at affordable tariffs to attract the high ARPU customers to the Reliance Network. We are satisfied with the initial experience and expect a significant shift in the trend on in the next 2-3 months.”
tkt@thehindu.co.in

Sistema issue likely in 2011, mkt outlook a concern

2011-01-21T13:12:00.002+05:30

Sistema issue likely in 2011, mkt outlook a concern

Sistema Shyam Teleservices (SSTL) is likely to come up with at an initial public offering (IPO) by the end of 2011. However, a not-so positive industry outlook in the current environment is a cause of concern for the IPO, the company said. “We are looking into this sooner. The market though is not very receptive to the telecom sector. If things go according to the plan we do this by year-end,” said Vsevolod Rozanov, president and chief executive officer, SSTL. Russia had picked up 17% in SSTL for $600 million.
SSTL is joint venture between Russia’s Sistema and India’s Shyam Group. It offers mobile voice and data services in the country under the MTS brand.

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