Sistema Shyam sees breakeven by end-2014; reports Rs779-cr Q3-FY'13 loss

Russian telecom major Sistema's Indian unit Sistema Shyam TeleServices Ltd (SSTL) expects to achieve breakeven by end-2014, with fresh investments of up to RS4,000 crore in the business.

SSTL reported lower net loss of Rs778.7 crore for the quarter ended 31 December 2012, despite the uncertain business environment, following the cancellation of licences by the Supreme Court.

The company had reported a net loss of Rs1,197.7 crore during the same quarter a year ago.

Sistema Shyam reported a full-year operating income before depreciation and amortisation (OIBDA) loss of $271 million for 2012.

But, with fresh investments and licences in the latest round of spectrum auction, SSTL expects to break even with an operating profit across all nine circles in which it operates by the end of 2014 and the beginning of 2015.

At the end of the third round of auction of second-generation CDMA spectrum, Sistema Shyam TeleServices (SSTL) emerged the lone bidder for eight circles.

SSTL, which offers services under the MTS brand, submitted bids for the Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) and West Bengal circles, worth Rs3,639 crore.

Sistema, however, skipped the Mumbai, Maharashtra and UP (East) circles. The telco will now be able to provide services in nine circles, having retained the Rajasthan circle from the auction in 2012.

In a press call, the company said it would immediately initiate the process of informing its customers in the Mumbai, Maharashtra and UP (East) circles to switch to other operators.

Of the Rs3,639 crore that SSTL has to pay, 25 per cent has to be paid within 10 days, followed by a payment moratorium until March 2016, after which the balance will be paid in 10 equal annual installments, SSTL said in a statement.

SSTL will be able to offset the previous license cost of Rs1,626 crore against the new spectrum cost.