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MTS to continue operations in 8 Indian circuits

March 11, 2013, 18:42 UTC+3

The company has already invested over 3.2 billion U.S. dollars in the expansion of its telecom network across the country

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NEW DELHI, March 11 (Itar-Tass) – Sistema Shyam TeleServices Limited (SSTL), a subsidiary of Russia’s Sistema Joint Stock Financial Corporation, which operates under the MTS brand, bade in a 2G spectrum auction in India on Monday, March 11, and won the right to acquire three frequency bands in eight circles. The circles won in the 800 Mhz spectrum auction include Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) & West Bengal.

The company’s operational footprint to also include Rajasthan circle which was not affected by the Honorable Supreme Court of India’s order dated February 2, 2012. “While bidding for spectrum in the auctions, MTS India considered a range of variables including spectrum pricing, number of carrier slots available, levels of competition, future data potential in the circles etc. Based on such criteria, the Company also decided not to bid for Mumbai, Maharashtra and UP East circles and would be immediately initiating the process to inform its customers in 3 circles to port out to other telecom operators of their choice,” the company said.

According to Vsevolod Rozanov, President & CEO, Sistema Shyam TeleServices Ltd., “Given the range of variables we have considered and the spectrum cost for 800 Mhz, it was a big challenge to arrive at a core list of 8 circles and to bid accordingly. With Rajasthan circle also a part of MTS India’s footprint, we would be able to service 40 percent of country’s population, address over 60 percent of data business potential, safeguard 75 percent of our current revenues and significantly optimise our losses. Our go forward plan includes building an even stronger MTS brand in the country by focusing on our data centric-voice enabled strategy.”

The spectrum won by SSTL in eight circles is technology neutral and would be valid for 20 years. The company would be required to pay INR 3,639 crores for the license period. The terms include payment of 25 percent of the final bid amount within 10 days, followed by a payment moratorium until March 2016, after which the balance amount will be paid in 10 equal annual installments. The Government of India has confirmed that SSTL will be able to set off the previous license cost of INR 1,626 crores against the new spectrum cost, the company said.

SSTL said earlier that it had to stop mobile services in 10 Indian circles, which have about 2.2 million subscribers, that is, about 15 percent of MTS customers in India.

SSTL is one of the fastest growing telecom companies in the Indian telecom market and is one of the top three data service providers in the country. The company nationally provides telecom services under the brand MTS to over 16 million wireless subscribers including more than 1.7 million High Speed Mobile Broadband customers in over 420 towns across the country. MTS is well recognised in India and worldwide for its commitment to high quality and innovative telecom solutions.

Headquartered in Gurgaon, the company has already invested over 3.2 billion U.S. dollars in the expansion of its telecom network across the country. It has so far opened more than 1,200 branded retail stores across India and engages customers through a retail universe of over 300,000 outlets.

Twenty-one of SSTL’s licenses were cancelled by the Honorable Supreme Court of India in an order dated February 2, 2012. Over the last year, the uncertainties resulting from such cancellation has compelled the company to conserve it’s resources and initiate the process to inform its customers in 10 circles i.e. Assam, Andhra Pradesh, Bihar, Himachal Pradesh, Haryana, Jammu & Kashmir, Madhya Pradesh, North East, Orissa and Punjab to port out to other telecom operators of their choice.

As of February 28, 2013, SSTL had on rolls employee count of about 2,850 out of which 15 percent are employed in the 3 circles where the Company decided not to bid and would therefore be affected. Full efforts are being made to absorb maximum number of employees in other circles. In-addition, care is being taken to place some of the employees in other Companies. The Company will also be closely working with all its local partners to address their concerns. SSTL has a customer base of over 12.1 million, out of which 13 percent come from the impacted circles.

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