- Secured 8 circles, with 3 carrier slots of 1.25 Mhz each
- Final footprint to service 40% of country's population, address over 60% of data potential and safeguard 75% of SSTL's current revenues.
- 3 circles to close with resulting operations to consist of 9 circles
- Licence cost reduced to US$ 368 million (approx.) net of previous licence fees
Moscow, Russia - March 11, 2013 - Sistema JSFC ("Sistema", or the "Group") (LSE: SSA), the largest publicly-traded diversified holding company in Russia and the CIS, today announces that the Group's Indian telecom subsidiary, Sistema Shyam TeleServices Limited ("SSTL" or the "Company"), has won a spectrum in the 800 Mhz band in 8 circles following its participation in today's licence auction.
The circles won by SSTL include Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) & West Bengal. The Company's operational footprint will also include the Rajasthan circle which was not affected by the Supreme Court of India's order dated February 2, 2012. When bidding for the spectrum, SSTL carefully considered a range of variables including spectrum pricing, number of carrier slots available, levels of competition, future data potential in the circles. Based on such criteria, the Company decided not to bid for Mumbai, Maharashtra and Uttar Pradesh (East) and will immediately inform its customers of the closure of SSTL operations in those circles. As a result, SSTL's final footprint will include 3 carrier slots of 1.25Mhz each in 9 circles, servicing 10.45 million of its customers.
For the 8 circles won by SSTL in the spectrum auctions today, the Company will be required to pay a total of US$ 665 million (approx.) for a licence period of 20 years. The terms include payment of 25% of the final bid amount within 10 days, followed by a payment moratorium until March 2016, after which the balance amount will be paid in 10 equal annual installments. The Government of India has confirmed that SSTL will be able to set off the previous licence cost of US$ 297 million (approx.) against the new spectrum cost.
The spectrum in 8 circles is technologically neutral and is valid for 20 years. This provides an opportunity to strengthen SSTL's data driven strategy through a possible LTE roll out in the future. Moreover, the selected circles account for over 60% of the current data market in India.
SSTL intends to provide a more detailed operational update on the new footprint and future strategy before Sistema's annual results on 16th April.
Mikhail Shamolin, President and CEO of Sistema commented:
"Today's news is an important result which highlights the success of our strategy as SSTL's operations will now focus on the most prospective regions, servicing 40% of the country's population, amounting to over 60% of the data market whilst also maintaining 75% of the company's revenues. Crucially, this outcome results in no upfront cash licence cost, substantially reduced operating losses and a clearer roadmap for SSTL's profitability. We look forward to providing more details about SSTL's resulting footprint in due course."