SSTL, the Indian unit of Russian investment company Sistema, has announced it will pay $665 million for 800MHz spectrum in eight of the 21 telecoms ‘circles’ where it had licenses revoked by authorities last year.
The company was the sole bidder in a government auction of frequencies used to support CDMA-based services.
SSTL’s new licenses are valid for 20 years and cover the regions of Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) and West Bengal.
India’s government has allowed the company to offset a payment of $297 million it made in 2008 for the licenses that were ultimately cancelled, reducing the amount due to $368 million.
Because SSTL (New Delhi, India) managed to cling on to a license covering the Rajasthan circle, its final footprint “will include three carrier slots of 1.25MHz each in nine circles, servicing 10.45 million of its customers”.
SSTL has been scaling down its operations in India after losing its concessions and said it will inform customers in Mumbai, Maharashtra and Uttar Pradesh (East) of the closure of operations in those circles after deciding not to bid for 800MHz licenses in the recent auction.
“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,” said Mikhail Shamolin, the president and chief executive of Sistema (Moscow, Russia). “Crucially, this outcome results in no upfront cash license cost, substantially reduced operating losses and a clearer roadmap for SSTL’s profitability.”
The company says its 800MHz spectrum gains provide it with an opportunity to strengthen its data-driven strategy through a possible rollout of 4G technology in the future.
It intends to provide more details of its plans before Sistema publishes annual results on April 16.