The Telegraph
Tuesday , March 12 , 2013
Since 1st March, 1999
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Sistema win fetches govt nothing for now

New Delhi, March 11: Russian telecom giant Sistema’s Indian arm today won back spectrum through an auction in eight circles where the Supreme Court cancelled its licences in February 2012.

Sistema Shyam Teleservices Ltd (SSTL), the sole participant in the auction, put in a bid of Rs 3,639 crore. However, the company will not have to pay anything till March 2016. Rules require the winning bidder to pay around 25 per cent of the bid amount upfront.

Sistema’s victory and the rules that allow the company to pay nothing now by setting off the amount against the licence fee it had paid earlier will help India to keep its promise to safeguard Russia’s interest in the Sistema case. However, this implies that no extra money will flow into the government coffers from the auction.

Officials said the Rs 1,626 crore paid by Sistema for licences in 22 circles that were scrapped by the apex court still remained with the government. The company’s initial payment this time will be adjusted against the licence fee paid earlier.

The remaining amount can be paid in 10 annual instalments after a moratorium of three years. “This works out to roughly Rs 200 crore a year,” officials said. The Russian government owns a 17 per cent stake in SSTL.

SSTL today won spectrum in the 800MHz band in Delhi, Calcutta, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (west) and Bengal circles. Operators offering services on the CDMA platform, use the 800MHz band. Sistema continues to operate in the Rajasthan circle, which was not affected by the licence cancellation order.

SSTL president Vsevolod Rozanov said, “Given the range of variables we have considered and the spectrum cost for 800MHz, it was a big challenge to arrive at a core list of eight circles and to bid accordingly. With Rajasthan circle also a part of MTS India’s footprint, we will be able to service 40 per cent of country’s population, address over 60 per cent of data business potential, safeguard 75 per cent of our current revenues.”

In February, Sistema had announced that it was closing down operations in 10 circles — Assam, Andhra Pradesh, Bihar, Himachal Pradesh, Haryana, Jammu and Kashmir, Madhya Pradesh, North East, Odisha and Punjab — and asked customers to switch to other operators.