High spectrum price keeping Sistema away from auction

Sistema Shyam will look for spectrum sharing, trading and strategic alliances in order to get access to more radio frequencies.

The company, which operates mobile services under the MTS brand, had earlier announced its decision to stay away from the upcoming auctions to be held in March.

On Thursday, in a note to MTS employees, Chief Executive Officer Dmitry Shukov explained the company’s stand on why it is staying away from the spectrum sale.

“The underlying objective for any business is to first turn cash positive. This basic fundamental would have got violated had we bought additional spectrum within the 800 MHz band at ₹3,646 crore per MHz. Given the ecosystem realities, there is no way to justify such an investment. We are a responsible enterprise whose objective is to not only safeguard but enhance shareholder value,” Shukov wrote in the email accessed by BusinessLine .

He said that a lot of thought had gone into making this decision. “The step has been taken as part of a larger strategic plan after considering a range of variables,” he stated.

Apart from the high price, Shukov said that there was no point in acquiring more spectrum if the existing one, won during the last auction, is not made contiguous.

Sistema Shyam was one of the players whose licences were cancelled in the wake of the 2G scam order by the Supreme Court. The company, however, managed to win back spectrum in 8 circles. However, this spectrum was fragmented.

The DoT has, however, allowed operators to buy more spectrum in the upcoming auction and make the entire holding contiguous, which is more efficient. But the bidder will have to pay additional fee for this.

“This has to be done without the levy of any additional charge. If such a levy is indeed imposed as is suggested in the new auction guidelines, then it amounts to changing the rules of the game and violates the principles of a level playing field,” Shukov wrote.

Putting to rest any concern in the employees mind, Shukov said, “I would like to reassure you that the future holds a lot of positivity for us in the form of spectrum sharing, trading, getting into strategic alliances, the list goes on and on.”

The CEO said the company continues to focus on becoming OIBDA +ve within this year. “This continues to be the top most priority for all of us. I urge all teams to concentrate on their annual operating targets and take as doables cast in stone.”

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