SSTL protests exclusion of 800MHz, criticises regulatory ‘mess’

27 Sep 2013

Russian-backed cellco Sistema Shyam TeleServices (SSTL) has confirmed its interest in expanding its footprint in India in a letter of complaint to the Telecoms Regulatory Authority of India (TRAI), protesting the watchdog’s proposal to exclude 800MHz band CDMA frequencies from the next spectrum auction. SSTL was the only bidder to take part in the March 2013 sale of 800MHz spectrum, when it purchased concessions for eight circles. In its most recent recommendation for the upcoming spectrum tender – which suggested substantial price-cuts for GSM 900MHz frequencies – the TRAI cited a lack of interest in the airwaves as the reason for their exclusion from the proposals. However, SSTL notes that, as with its GSM-based rivals, it was deterred from investing more heavily by the high reserve price for spectrum. The Economic Times quotes SSTL CEO Dmitry Shukov as saying: ‘Had reserve price for 800MHz spectrum band been reasonable, we may have bought more spectrum in eight circles and participated in auction for remaining 13 circles and continued with pan-India operations.’

Shukov pointed out that SSTL has already invested USD3.6 billion in the market and would need to secure additional spectrum to meet growing demand from customers and maintain quality of service. The official went on to say that he was ‘perturbed’ by the regulator’s mercurial attitude towards policy and the last-minute decision to withhold the sale of 800MHz spectrum noting that investments in the sector are long-term in nature and require a degree of certainty: ‘A clear policy framework without discrimination and equal opportunity to all operators will boost investors’ confidence.’

Another senior official of SSTL’s parent company, Russia’s Mobile TeleSystems (MTS), Vsevolod Rozanov, also heavily criticised India’s Byzantine regulatory authorities, describing the revelation that 800MHz spectrum had been axed from the schedule for sale as a ‘rude shock’ and explained SSTL’s conservative bidding in the previous sale was a result of the ‘exorbitant’ reserve prices.

Commenting on the company’s plans, should the Department of Telecommunications (DoT) and the TRAI move forward with their plans as they currently stand, Rozanov said that it would be more sensible to bow out of the market than become entrenched in a lengthy legal battle: ‘I can only say that I hope 800MHz is treated at par with 1800MHz. As a foreign investor, we don’t have the ability to fight and use the tricks which domestic operators can. We can only ask the government to protect and support us. Before escalating this issue to higher levels in the government, we want to resolve this amicably. But, if things do turn out to be unfavourable, it makes sense to wind up rather than fight a court case for five to ten years.’

Similarly, Rozanov ruled out MTS increasing its stake in the cell to 100%, noting that it had still not been allotted the spectrum it had won in March 2013: ‘There is no point in buying anyone out in such a regulatory environment … We are committed but not a single rational foreign investor will put money into this mess right now.’