Sistema says India investment plans on track
NEW DELHI, Dec 20 (Reuters) - Russian oil-to-telecoms group Sistema's (SSAq.L) Indian unit on Monday said an inquiry by the Indian government about its telecom licence in a case running parallel to one of the biggest corruption scams to hit India will not affect its investment plans in the country.
The Indian unit's Chief Executive Vsevolod Rozanov said the firm would reply to India's letter on not meeting network rollout obligations, and added that Russian government's planned investment of about $600 million in the company was expected to close in the first quarter of next year.
"All the principal clearances are received both from the Indian side and the Russian side. Now what is remaining is basically technicalities," Rozanov said of the Russian investment.
The Russian government will get a 20 percent stake in Sistema Shyam, which holds telecoms licences for all of India and currently operates in 13 of India's 22 telecoms zones.
India's telecoms ministry last week sent out notices to firms named by a government auditor as being ineligible for licences they were given in 2008, asking them to defend the permits.
The inquiry is part of a scandal that alleges the country's former telecom minister gave out licences too cheaply and to some companies that were ineligible, possibly costing the state $39 billion in revenue.
Separately, the ministry also sent out letters last week to firms that have not fulfilled network rollout obligations asking them to reply within 15 days or pay "liquidated damages."
Some of these licences could be cancelled, government officials have said.
Sistema's Indian mobile joint venture, Sistema Shyam Teleservices, has received a letter for not meeting rollout requirements, Rozanov said, but added the letter was for "liquidated damages" and not for cancellation of licences.
"This doesn't affect Sistema's plans in India because we haven't received any show cause notice and at this stage continue to rollout our network," he said, referring to notices which have been issued to companies asking them to defend their licences.
Rozanov said Sistema Shyam would reply to the government letter on not meeting rollout requirements "within the prescribed timeline."
India's telecoms regulator had earlier recommended cancelling some telecom licences, including 10 held by Sistema Shyam, for failing to meet rollout requirements. The regulator also wants another licence of Sistema Shyam cancelled after legal examination.
Sistema owns a 73.7 percent stake in Sistema Shyam, while India's Shyam group owns 23.8 percent. The issue of shares to the Russian government would dilute Sistema's holding to 54 percent.
Sistema Shyam has also said it is also looking to list the company in India.
"We expect that next year we should be ready for listing, Then the board will make a decision depending on the right market condition," Rozanov said.
Sistema Shyam earlier on Monday signed a mandate letter with Russian lender Gazprombank for a loan of $200 million. The rupee-denominated loan would be used on network building and on operational expenses, Rozanov said. (Reporting by Devidutta Tripathy, Writing by Bharghavi Nagaraju; Editing by Rosemary Arackaparambil and Jui Chakravorty)
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