Sistema owner defends Indian telecom investments

MOSCOW Fri Feb 22, 2013 7:09pm IST

Related Topics

Stocks

   

MOSCOW (Reuters) - Russian conglomerate Sistema (SSAq.L) on Friday defended its bid to recover mobile phone licences in India as a strategic move giving it a launchpad for investment in southeast Asia.

"Imagine Sistema writes it (India) off today and exits, investors will presumably breathe a sigh of relief and the shares will rise (but) for us it is long-term," billionaire owner Vladimir Yevtushenkov told reporters.

"There is tactics and there is strategy. This is a strategy and not only for one company but for the entire country."

Sistema's Indian unit was stripped of all but one of its zonal permits after the Supreme Court last year revoked mobile licences awarded across the industry in a scandal-tainted 2008 auction.

Sistema said on Thursday it would join an auction re-run while ceasing operations in 10 out of 22 regions, sending its shares down more than 5 percent as investors fretted about the costs of regain the permits.

When asked how much Sistema's unit might have to pay to win back the licences, he said: "If (it goes) as we have agreed, then literally nothing. This is what we expect."

Sistema has said it could offset previous licence costs of around $300 million against the new auction prices.

Bidding for 11 zonal permits at the reserve price would cost Sistema around $700 million after deducting the $300 million paid in 2008, analysts at Sberbank-CIB said in a note.

"On our estimates, 25 percent of the potential price of licences is around $250 million, and the cost of previous licences is $300 million. As such, SSTL may not see any cash outflow related to licences this year, with payments beginning in 2016," the analysts wrote.

Analysts at VTB Capital said Sistema could scale back further in India.

"We do not rule out that Sistema will bid for fewer than 11 licences. If that is the case, then we would view it as a net positive scenario," said VTB's Ivan Kim.

"We think if Sistema stays in the 5-6 most profitable circles, it would be a reasonable outcome," he said.

Sistema's stock traded 1.8 percent higher by 1227 GMT.

(Reporting by Anastasia Teterevleva; Writing by Maria Kiselyova; Editing by David Cowell)

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

REUTERS SHOWCASE

Canada Shooting

Canada Shooting

Attack on parliament, killing of soldier stun Canada's capital.  Full Article 

Earnings Season

Earnings Season

Wipro sees rosier end to year as U.S. clients spend.  Full Article 

Business Climate

Business Climate

Fears for tough penalties grow as India cleans up business  Full Article 

New Email Service

New Email Service

Google launches new email service dubbed "Inbox".  Full Article 

DLF Appeals

DLF Appeals

DLF seeks interim relief from capital market ban  Full Article 

Falling Oil Prices

Falling Oil Prices

Indian consumers respond to softer oil, food prices  Full Article 

Book Keeping

Book Keeping

RBI fires warning shots on companies' lack of FX hedging.  Full Article 

Policy Repo Rate

Policy Repo Rate

Most external members suggested rate cut in RBI's Sept review.  Full Article 

Reuters India Mobile

Reuters India Mobile

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