Uncertain policy environment, lacklustre markets prompt decision

Volatile market conditions and uncertain regulatory framework in the telecom sector has forced new telecom operator, Sistema Shyam, to postpone its proposal to enter the capital market through an IPO, but would consider the plan after the new telecom policy is announced.

“Given the present regulatory environment and unproductive market conditions, especially in the telecom sector, known to everyone, an IPO might not result in good valuations... One is looking forward to introduction of the new telecom policy which should in turn enable liberal merger and acquisition norms,” Sistema Shyam Teleservices (SSTL) President and CEO, Mr Vsevolod Rozanov, said.

Such policy issues would go a long way in consolidation of the sector and thereby improve the operating environment for the entire telecom industry, he said.

SSTL offers mobile services under MTS brand and claims to be one of the fastest growing telecom companies in India in the telecom space.

The current economic environment has dampened the spirit of unlocking value of a range of infrastructure companies. The impact is felt even more so within the telecom sector given the range of issues being faced by the sector, he added.

Industry observers believe that such sentiments are a reflection of the current mood in the telecom industry.

In October last year, the Telecom Minister Mr Kapil Sibal had unveiled draft National Telecom Policy 2011 that paves the way for mobile telephone users to make calls without paying roaming charges and change operator outside their circle while retaining the same number.

Declaring an agenda of ‘One Nation-One Licence' across services, the NTP endeavours to create an investor-friendly environment by attracting additional investments in the sector, which has been marred by controversies relating to 2G scam in the recent past.

SSTL has invested over $2.5 billion in India, focusing on its data centric and voice enabled strategy.

The company nationally provides telecom services to over 15 million wireless subscribers, including more than 1,200,000 high speed mobile broadband customers in over 200 cities across the country.

The company is a joint venture, involving equity participation by Russia-based Sistema, the Russian Government and the Shyam Group of India.

The Russian Government holds a 17.14 per cent stake in the company. Sistema is the majority shareholder with a 56.68 per cent stake, Shyam Group holding a 23.98 per cent stake and others 2.2 per cent.

(This article was published on January 5, 2012)
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