Sistema keen on spectrum sharing, trading; awaits guidelines

New Delhi: Sistema Shyam Teleservices, which is not participating in the ongoing spectrum auction, is now awaiting sharing and trading guidelines for airwaves for its business expansion. The company expects negotiations and partnerships on spectrum sharing and trading guidelines to begin once the government announces guidelines in this regard.[caption id=“attachment_2097959” align=“alignleft” width=“380”]  Spectrum business. Reuters[/caption] “In circles where we operate a good high speed LTE (4G), services cannot be rolled out without partnership as there is no contiguous block of spectrum available,” Sistema Shyam Teleservices (SSTL) chief executive officer Dmitry Shukov said in New Delhi today. He was speaking on the sidelines of company’s financial results announcement. The company uses 800 Mhz, known as CDMA spectrum, to provide mobile services, but skipped the auction as it felt the base price fixed for the airwaves is too high. The base price for 3G services per megahertz pan India is Rs 3,705 crore. The scarce CDMA spectrum has seen a huge demand in the ongoing auction and about over two-fold jump in the base price in some areas. “It is positive for us. Now owner of spectrum will look for partnership to get quick return on investment that he is making. More companies bidding for 800 Mhz spectrum band is good for us. They will join us in developing an eco-system which we were driving alone earlier,” Shukov said. Of the total 800 Mhz spectrum, 20 MHz is available for telecom services, which has been partially allocated to various players in the industry including Reliance Communications and Tata Teleservices. SSTL was the lone bidder in CDMA spectrum auction held in March 2013 and the company purchased fresh airwaves only in eight service areas. At present, the company has operations in nine circles – Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West), West Bengal, Rajasthan – out of 22 circles in the country. When asked about the impact of ongoing spectrum auction on its footprint expansion, SSTL’s head of strategy Ranjan Banerjee said, “There is lot of 800 Mhz band spectrum that will come up for renewal in 2020 held by competition. This auction does not block our future growth path. In fact it has helped us in driving ecosystem for services, especially data.” The company mainly focuses on mobile internet business which is a major part of its non-voice revenue that contributes 47 percent to its total revenue. The company’s net loss widened to Rs 481.4 crore in the fourth quarter ended 31 December 2014 due to increase in forex losses. “The forex loss on year-on-year basis was about Rs 110 crore. This is not in our control,” SSTL chief financial officer Sergey Savchenko said. SSTL had posted a net loss of Rs 445.5 crore in the quarter to December a year ago. Sharing details of the financial result, Shukov said, “During the quarter, our non-voice revenues grew by 11.5 percent, thereby contributing 47 per cent of the total revenues, the highest in the industry. One of the key reasons for improvement in our data revenues was due to expansion of our HSD (high speed data) services across all our nine circles.” SSTL made investments of Rs 139.8 crore during the reported quarter and its debt from banks and financial institutions stood at Rs 3,827 crore as on 31 December 2014. “During the quarter, the company has invested in sales and marketing, which has resulted in decline in OIBDA loss. We expect revenues to improve further on the back of sales and marketing activities taken during the fourth quarter of 2014,” Savchenko said. The company reported narrowing of its increase in its OIBDA (Operating Income before Depreciation and Amortization) loss by about 25 percent at Rs 156.7 crore in reported quarter compared to Rs 208.1 crore it posted in corresponding period in 2013. The revenue of the company, however, increased by about 17 percent to Rs 350.8 crore in the reported quarter due to demand for its mobile internet services compared to Rs 299.6 crore it posted in October-December 2013 period. “Revenue in fourth quarter 2014 increased by 17 percent year-on-year to Rs 3,508 million, the improvement is driven largely by increase in data revenues,” Shukov said. The annual net loss of the company narrowed by about 39 percent to Rs 1,638 crore at the end of December 31, 2014 from Rs 2,694.2 crore it posted at the end of 2013. The annual revenue of the SSTL rose by about 10 percent Rs 1,347.2 crore at end of 2014 from Rs 1,227 crore in 2013. The increase in mobile internet usage also reflected in companies average revenue per user which was up by 4.2 percent to Rs 122. The company reported mobile subscriber base of about 90 lakh as of 31 December 2014. PTI