Explaining the absurdity of very high reserve price fixed by the Telecom Regulatory Authority of India (TRAI) for the forthcoming auction of 2G spectrum, Sistema Shyam TeleServices Ltd (SSTL), on Friday, said that it will not invest a mammoth $6 billion (Rs 33,600 crore) if the regulator’s recommendation is accepted by the government.
SSTL, which offers its telecom services under the MTS brand in 22 telecom circles in India, is one of the 8 companies whose telecom licences were cancelled by a Supreme Court order on the ground of irregularity in the sanction process.
The government is now in the process of re-auctioning spectrum for which the TRAI has recommended a base price of Rs 3,622 crore for a megahertz (MHz) of spectrum for the 1800 MHz band. Since allotment will be a minimum of 5 megahertz, at a pan-India level, the total cost will be Rs 18,000 crore or ten times the price for 2G licences in 2008.
But for a CDMA operator, the total cost will be double as the TRAI wants them to pay twice more for the 800 MHz band.
“We have already invested $3.2 billion in India in the last three years for rolling out our services. We now have 16 million subscribers across 400 towns in India,” said SSTL President and CEO Vsevolod Rozanov. “We have requested the government to keep the reserve price at the 2008 level, or else it will be impossible for us to continue.” His concern stems from the fact that the company is making losses every year and in the January-March quarter alone, it lost Rs 527.80 crore.
SSTL is a joint venture between Shyam Telecom of India holding 24 per cent, Sistema of Russia holding 57 per cent and the Russian Government holding 17 per cent of the equity. The latter has now formed a high powered committee to talk to the Indian government in a bid to protect its interest in SSTL.
SSTL has recently filed a curative petition in the Supreme Court pointing out that being a pure play CDMA operator, its legal case is significantly different compared to other mobile operators.
“For example, there is no finding or suggestion by the CAG report that CDMA spectrum was equally or anywhere near in demand as GSM back in 2008,” the company said. If the company does not get a favourable decision, the option of going for an international arbitration cannot be ruled out, Rozanov said.
Given the current uncertainty in the spectrum auction, SSTL has put some of its investment in expansion and network upgradation on hold.
SSTL, which offers its telecom services under the MTS brand in 22 telecom circles in India, is one of the 8 companies whose telecom licences were cancelled by a Supreme Court order on the ground of irregularity in the sanction process.
The government is now in the process of re-auctioning spectrum for which the TRAI has recommended a base price of Rs 3,622 crore for a megahertz (MHz) of spectrum for the 1800 MHz band. Since allotment will be a minimum of 5 megahertz, at a pan-India level, the total cost will be Rs 18,000 crore or ten times the price for 2G licences in 2008.
But for a CDMA operator, the total cost will be double as the TRAI wants them to pay twice more for the 800 MHz band.
“We have already invested $3.2 billion in India in the last three years for rolling out our services. We now have 16 million subscribers across 400 towns in India,” said SSTL President and CEO Vsevolod Rozanov. “We have requested the government to keep the reserve price at the 2008 level, or else it will be impossible for us to continue.” His concern stems from the fact that the company is making losses every year and in the January-March quarter alone, it lost Rs 527.80 crore.
SSTL is a joint venture between Shyam Telecom of India holding 24 per cent, Sistema of Russia holding 57 per cent and the Russian Government holding 17 per cent of the equity. The latter has now formed a high powered committee to talk to the Indian government in a bid to protect its interest in SSTL.
SSTL has recently filed a curative petition in the Supreme Court pointing out that being a pure play CDMA operator, its legal case is significantly different compared to other mobile operators.
“For example, there is no finding or suggestion by the CAG report that CDMA spectrum was equally or anywhere near in demand as GSM back in 2008,” the company said. If the company does not get a favourable decision, the option of going for an international arbitration cannot be ruled out, Rozanov said.
Given the current uncertainty in the spectrum auction, SSTL has put some of its investment in expansion and network upgradation on hold.
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