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:

Reuters Showcase

IS Claim

IS Claim

Islamic State says beheads second Japanese hostage.  Full Article 

Ukraine Crisis

Ukraine Crisis

Death toll mounts in Ukraine fighting after peace talks fail.  Full Article 

Fifth Title

Fifth Title

Djokovic reigns supreme at Australian Open.  Full Article 

Journalist Freed

Journalist Freed

Jailed Al Jazeera journalist Peter Greste leaves Egypt for Australia.  Full Article 

Reuters Poll

Reuters Poll

RBI seen holding rates steady on Tuesday, minority of analysts expect cut.  Full Article 

Doubles Title

Doubles Title

Hingis wins Australian Open mixed doubles title with Paes.  Full Article 

Houston's Daughter

Houston's Daughter

Bobbi Kristina Brown revived after found unresponsive in tub  Full Article 

Supply Glut

Supply Glut

Sugar mills seek govt help to dispose of supply surplus.  Full Article 

Reuters India Mobile

Reuters India Mobile

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