India’s SSTL sees net loss widen on network closures

India’s Sistema Shyam Teleservices (SSTL) saw its net loss widen to INR6.4 billion ($115 million) in the first quarter of 2013, from INR5.3 billion a year earlier, after license revocations forced the operator to shut down much of its business.

Owned by Russia’s Sistema (Moscow), the parent of Russian mobile-phone operator MTS, SSTL (New Delhi, India) reported a 14% drop in revenues, to INR3.5 billion, after closing networks in 13 of India’s telecoms circles.

India’s Sistema Shyam Teleservices (SSTL) saw its net loss widen to INR6.4 billion ($115 million) in the first quarter of 2013, from INR5.3 billion a year earlier, after license revocations forced the operator to shut down much of its business.

Owned by Russia’s Sistema (Moscow), the parent of Russian mobile-phone operator MTS, SSTL (New Delhi, India) reported a 14% drop in revenues, to INR3.5 billion, after closing networks in 13 of India’s telecoms circles.

The operator also blamed its earnings setbacks on license uncertainties and new regulatory requirements for customer registration.

SSTL was left with 11.92 million subscribers at the end of March after losing 20% of its customers during the quarter, and claimed its subscriber base was hit by strict controls over sales and marketing expenditure, aggressive tariffs and market competition.

Chief executive Vsevolod Rozanov, who is set to be replaced by Dmitry Shukov on June 1, drew attention to the operator’s success in recent spectrum auctions – which saw it win 800MHz licenses in eight circles – and said the operating environment “finally became stable” for the company during the quarter.

“The key focus now is to drive growth across all business lines in a profitable and sustainable manner, in sync with the company’s data-centric voice-enabled strategy,” he said.

Non-voice revenues contributed 35.7% of the total last quarter, which SSTL claims is the highest in the industry, but the operator’s data card subscriber base declined by 1% in its nine operational circles during the quarter due mainly to its “new subscriber acquisition policy”, said SSTL.

More encouragingly, SSTL managed to increase monthly average revenue per user by 2.5%, to INR81.

SSTL also reduced its losses on the basis of operating income before depreciation and amortization to INR2.1 billion, from INR3.6 billion in the first quarter of 2012, thanks to “cost optimization” initiatives, including the controls over expenditure on sales and marketing.

“However with uncertainties relating to the telecom licenses now over, our challenge going forward is to bring the company back on a high growth path by making efficient investments to increase the business,” said Sergey Savchenko, the company’s chief financial officer.