SSTL books first fall in revenue, reconsiders spectrum purchase

20 Nov 2012

Russian-backed cellco Sistema Shyam TeleServices (SSTL), which operates under the MTS India brand name, has booked a decline in quarterly revenues for the first time since launching operations. SSTL booked revenues of INR4.040 billion (USD73.424 million) for the three months ended 30 September 2012, down by 3% quarter-on-quarter from INR4.177 billion in June 2012. The operator attributed the decline to the negative impact of regulations on tariff structures, which led a drop in MOU and ARPU. Strict control over sales and marketing expenditure slowed the cellco’s subscriber growth, whilst ‘predatory practices’ and aggressive pricing from competitors increased churn of existing subscribers. However, stringent controls on expenditure have seen the company reduce its net losses for the period under review in comparison to the previous quarter and the year-ago period. Losses for Q3 2012 were INR4.954 billion, a 58% q-o-q improvement from INR11.801 billion.

The cellco had its licence cancelled by the Supreme Court in February this year and will be forced to terminate operations in January next year when the cancellation comes into force if it is unable to resolve the matter. The cellco did not participate in the reauction of spectrum earlier this month, opting to continue pursuing its curative petition with the apex court. The Economic Times reports that the operator may reconsider bidding for 800MHz spectrum if the government lowers the reserve price, but its main priority is its case with the Supreme Court.

India, Sistema Shyam TeleServices (SSTL, MTS India)