Even though Russian telecom company Sistema has decided not to bid for the 2G spectrum auction, it is perhaps going to hard press the government to get back into the game by dragging India to an international court on the basis of the bilateral investment and trade agreements signed between India and Russia.
Earlier this month, Russia's deputy prime minister Dmitry Rogoz warned that the row over Sistema's India contract would have 'great repercussions' not only on bilateral cooperation but also for foreign investments in the country. "We should never reconsider the rules of the game after the game has begun and we should follow the rules till the game is over," Rogozin had said.
The company lost 21 of its 22 telecom licences due to the 2 February Supreme Court order that cancelled 122 telecom licences and spectrum allotted to nine companies in January 2008 on account of "illegalities" in manner in which 2G spectrum was allocated by the Telecom Department during the tenure of then Telecom Minister A. Raja.
Explaining the rationale for keeping away from the auctions, a Sistema release said that it has been unfairly penalised by the Supreme Court ruling and has filed a curative petition seeking to restore its licences. "(The company) believes it has a strong case and is determined to await its hearing."
If the court does not rule in favour of Sistema, the telco's subscribers (around 16 million) will see their phones going dead in January. The company, which operates under the MTS brand, currently offers CDMA-based services in 14 circles including Delhi and Mumbai. It has more than 1.7 million users of data services.
The company, however, has ruled out any interruption in services. This very statement leads to the next possible conclusion of consolidation in the telecom sector.
Industry has been abuzz with news that Sistema Shyam is considering a majority stake in Aircel, which is the fifth largest telecom player and has a pan-India footprint as far as 2G is concerned. In case of 3G, it has spectrum in 13 circles and BWA spectrum in eight circles.
It is known that Aircel's promoters Maxis Communications Bhd want to exit the company and Sistema is looking to continue its business. An Economic Times report in September had said Sistema would buy into Aircel's parent company based overseas with rights to have the Indian arm transferred to it after an ongoing restructuring process is completed. Sistema Shyam, however, has said that it has no plans of acquiring any telecom service provider.
Experts have been predicting a coming consolidation in the Indian telecom business, and say there will only be around three or four large telcos a few years from now.
Updated Date: Dec 20, 2014 13:04:19 IST