Operation closure in 13 circle narrows SSTL Q2 loss to Rs 845cr

Company posted loss of Rs 1,180 crore during same period a year ago

Indian telecom arm of Russian Conglomerate Sistema, SSTL, today reported reduction in loss at Rs 844.7 crore during three months period (Q2) ended June 30, 2013, due to cutting down of operations in loss making circles.

The company had posted loss of Rs 1,180 crore during same period a year ago.

"There was one time loss reduction of around Rs 469 crore due to closure of operations where return was not very high. The finality of operations came after March auctions and we could relaunch our business in Q2," Sistema Shyam Teleservices' Chief Executive Officer, Dmitry Shukov said here.

"The quarter on quarter Net Income declined mainly on account of forex losses and exit costs," SSTL's Chief Financial officer Sergey Savchenko said.

As result of reduction in company's footprint, its customer base reduced by 19% on quarterly basis to 98 lakh and its non-voice revenues, from both data and mobile VAS, during the period declined by 20% to Rs 100.1 crore.

The company loss due to depreciation in value of rupee stood at Rs 329 crore during the reported quarter.

"The  impact of exit cost was less compared to forex losses" Savchenko said.

SSTL had to close down business in 13 out of 22 circles as a consequence of Supreme Court order which cancelled 122 2G telecom licences , including 21 of SSTL, in February 2012.

SSTL won spectrum in 8 circles in March through auction to continue its operations but government is yet to allocate the airwaves frequencies that it acquired.

"We are waiting for third carrier (spectrum slot) for launch of Revision B network. The peak speed at this network is around 10 megabit per second. Even inside room or building an user will get at least speed of 3 mbps," SSTL's Head for Strategy Ranjan Banerjee said.

Savechenko said the cost of dongle for revision B network will be less compared to current price.

"We are also talking with both Chinese and Indian handset vendor for smartphones that will support Revision B network," Shukov said.

SSTL halved its OIBDA (operating income before depreciation and amortisation) loss to Rs 219.3 crore from Rs 450.9 crore.

The total revenue of the company declined on yearly basis to Rs 290.9 crore in the reported quarter from Rs 417.7 crore in corresponding period a year ago mainly due to reduction in company's footprint in the country.

The company, however, reported increase in revenue in 9 circles where it currently operates, by 2.4%.

During the quarter, SSTL invested Rs 15.4 crore and its total debt stood at Rs 4,187 crore.