Sistema scales back Indian mobile ops ahead of auction

NEW DELHI/MOSCOW Thu Feb 21, 2013 10:02pm IST

Sun rises over the telecommunication towers in New Delhi December 22, 2007. REUTERS/B Mathur/Files

Sun rises over the telecommunication towers in New Delhi December 22, 2007.

Credit: Reuters/B Mathur/Files

Related Topics

Stocks

   
Kishore Pandey, 82, lies on a bed as his daughter, Usha Tiwari, holds him and a priest stands by them (L) at Mukti Bhavan (Salvation House) in Varanasi, in the northern Indian state of Uttar Pradesh, June 19, 2014. REUTERS/Danish Siddiqui

Waiting to die at Salvation House

The city of Varanasi is Hinduism's holiest city and many Hindus believe that dying there and having their remains scattered in the Ganges allows their soul to escape a cycle of death and rebirth.  Slideshow 

NEW DELHI/MOSCOW (Reuters) - Russian conglomerate Sistema (SSAq.L) said on Thursday that its Indian mobile phone unit would cease operations in almost half its regions as it prepares to bid in a spectrum auctions re-run.

The company's London-listed shares fell after the statement and were down 5.2 percent by 1606 GMT, which an analyst said reflected investor discontent with potential extra costs Sistema would incur to regain licences.

All but one of 22 zonal permits held by Sistema Shyam TeleServices (SSTL) were ordered to be revoked by the Supreme Court last year. The company is required to win back airwaves in those zones to continue services.

Sistema confirmed on Thursday that Shyam would take part in the auctions starting on March 11, but it did not specify the number of zones it would bid for.

"There was a slender hope that Sistema would decide against bidding in the auctions. As an investment company they should have chosen projects with a more reasonable risk-reward profile," said Igor Semyonov at Deutsche Bank.

"Exiting India would not have amounted to an epic failure of Russian capital but would have, on the contrary, shown Sistema as a rational investor," he said.

Sistema said in a statement that it needs to conserve resources because of uncertainties resulting from the cancellations and that it will start to inform customers in 10 zones to shift to other carriers.

Its subscriber base, which stood at 14.88 million at the end of 2012, will decline by 15 percent, a company spokeswoman said.

Sistema added that it is allowed to set off previous licence costs - which stood at about $300 million - against the new auction prices.

Last month India approved a 50 percent cut in the auction reserve price for CDMA (code division multiple access) airwaves, used by Sistema, after an auction in November attracted no bidders, with Sistema saying at the time that the price was too high.

The auction followed a court order to revoke several cellular carriers' permits awarded in a scandal-tainted 2008 state grant process and redistribute airwaves through open bidding.

(Reporting by Devidutta Tripathy in New Delhi and Anastasia Tetereveleva in Moscow; Writing by Maria Kiselyova; Editing by David Goodman and Hans-Juergen Peters)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

India-Nepal Ties

REUTERS SHOWCASE

Tackling Food Prices

Tackling Food Prices

India to free up extra 10 million tonne wheat in open market  Full Article 

Facebook Results

Facebook Results

Facebook beats Wall Street targets, stock hits record high  Full Article 

GM Recall

GM Recall

GM recalls 717,950 vehicles in U.S., not for ignition switches  Full Article 

Hyundai Motor Results

Hyundai Motor Results

Hyundai Motor Q2 profit slips as firmer won, U.S. discounts hurt  Full Article 

Nokia Results

Nokia Results

Nokia raises networks outlook after Q2 profit beats estimates  Full Article 

Factory Sector

Factory Sector

China July HSBC flash PMI at 18-month high of 52.0   Full Article 

Breakingviews

Breakingviews

Apple winds up earnings hope for new gadgets  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage