Light at the end of the tunnel; SSTL improves earnings as cost cutting measures take hold

28 May 2013

Russian-backed wireless operator Sistema Shyam TeleService Ltd (SSTL), which operates under the MTS India brand has booked net losses of INR6.439 billion (USD115.61 million) for the first three months of 2013, improving from losses of INR7.787 billion for the quarter ending 31 December 2012. Revenues dropped to INR3.52 billion, a slump of 14% year-on-year and 10% quarter-on-quarter, driven largely by the closure of operations in 13 circles and the resultant reduction in the cellco’s subscriber base to 11.922 million users from 15.818 million at 31 March 2012 and 14.885 million at 31 December 2012. SSTL’s cost-cutting exercise has proved successful, however and the cellco posted EBITDA losses of INR2.113 billion for the period under review, representing an improvement of 42% y-o-y and 24% q-o-q. Monthly ARPU and MOU both improved compared to Q4 2012, but decreased compared to the year-ago period, coming in at INR81 and 295 minutes respectively, from INR79 and 268 minutes at end-2012 and INR85 and 296 minutes as at 31 March 2012.

Commenting on the results, SSTL CFO Sergey Savchenko said: ‘During the quarter the company achieved its lowest EBITDA quarterly loss in the last three years. This was a result of continued efforts to optimize costs and [impose] strict control over expenditures. 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.’

India, Sistema Shyam TeleServices (SSTL, MTS India)