Sistema issues India ultimatum over SSTL licences

11 Dec 2012

Russia’s Sistema has issued an ultimatum to the Indian government, that it will seek ‘billions of dollars’ in damages if a strategy for restoring the operating licences of its local wireless unit, Sistema Shyam TeleServices (SSTL) is not finalised before the Indo-Russian summit on 24 December, the Economic Times reports. Sistema threatened to seek international arbitration, invoking the bilateral investment treaty (BIT) between Russia and India, shortly after SSTL had its licences revoked in February this year. The group, which lists the Russian Federation amongst its shareholders, refused to take part in the reauction of concessions last month, opting to pursue its case before the Supreme Court instead. Frustrated by the lack of progress, Sistema has returned to its original plan. Anya Goldin, Sistema’s global vice president was quoted as saying: ‘Destruction of Sistema Shyam’s business would be manifestly unjust to Sistema and SSTL’s other shareholders and could have serious repercussions for India. Apart from the billions of dollars in damages that we would seek in arbitration under the Bilateral Investment Treaty, failure to resolve this case could threaten India’s broader diplomatic interests with Russia and its standing in the global business community.’ Regarding the upcoming talks, Goldin added that ‘it is important to reach an agreement before the impending Russia-India summit…. [otherwise] the subject of SSTL is certain to distract the participants from all other pressing bilateral issues.’

TeleGeography’s GlobalComms Database notes that, despite the problems, SSTL’s subscriber base has grown by more than three million in the twelve months to end-September 2012. However, should Sistema fail to reach an agreement with the Indian government by 18 January, when the company’s licence is officially terminated, SSTL’s more than 16 million users will be disconnected.