Sistema to explore spectrum trading deals with Tata Tele, RCom

Thomas K Thomas New Delhi | Updated on April 23, 2014

Company has pan-India ambitions, says CEO

Sistema Shyam Teleservices Ltd, which operates mobile services under the MTS brand, is open to exploring the option of trading spectrum with other CDMA players, including Tata Teleservices and Reliance Communications. This is part of the company’s Plan B to get pan-Indian footprint.

Although Sistema Shyam’s first priority would be to acquire spectrum through the auction mechanism, CEO Dmitry Shukov said that trading would be the alternative route to expand presence beyond the existing 9 circles.

Two options

“Spectrum trading and sharing are other options for us if we find the auction price unacceptable. In any case, telecom industry needs additional routes to get access to spectrum other than auction. It’s the era of data and that depends on spectrum,” Shukov said. Sistema Shyam has pushed for fixing the reserve price for 800 MHz spectrum at 80 per cent of the final bid amount received during the last round of auction in February for 1800 MHz band. However, the Telecom Regulatory Authority of India (TRAI) has proposed a higher fee. “We hope that the new Government will take a final decision that’s fair,” said Shukov.

For now, the company has kept its network on a standby mode even in areas where its earlier licences were cancelled post the 2G scam. “In some circles, we have not dismantled our network in the hope that we will be able to get spectrum and restart services,” he said.

The immediate objective for the company is turn profitable by the first quarter of 2015. The company’s losses have narrowed to ₹ 445 crore in the fourth quarter ended December 31, 2013. The company posted loss of ₹778.7 crore in the same period a year ago. To push up usage, the company is planning to launch a new campaign from June aimed at attracting low-end users for voice telephony. The strategy, which Shukov terms as guerrilla tactics, essentially revolves around providing cheap voice plans to targeted segments.

“We want to focus on the bottom of the pyramid because this segment is underserved by incumbent players. Our tariff proposition and attractive customer service will hook this segment. This is very lucrative in terms of gross addition of subscribers,” he said.

In the long-term, however, Sistema wants to push its data services because that’s where the revenue growth is coming from.

Focus on data

The company recently launched a plan which offers 40GB data per month at ₹999 to post-paid users. Data services contribute 34 per cent of SSTL’s revenues, the highest in the industry. Therefore, access to more spectrum is crucial to the company. “We are thinking about 4G but for that we need at least 5 MHz of contiguous spectrum,” Shukov said.

Published on April 23, 2014

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