Sistema eyes break-even by 2nd quarter of 2015

Sistema Shyam Teleservices (SSTL) today said that it targets to breakeven in India by the second quarter of 2015. It has already reached the break-even point in West Bengal telecom circles in the fourth quarter of 2012.

SSTL, which has bought fresh spectrum under the 800 MHz band through auction in March in eight circles and has announced its plans to provide 4G LTE services, estimated that the company would require investing about $200 million (about Rs 1,093 crore) to roll out 4G LTE, according to SSTL president and CEO Vsevolod Rozanov.

However, the company will not start 4G LTE services this year.

“We have gone through tough times over the last 12 months, but the doubts and the ambiguity are now over. SSTL’s debt was substantially reduced in 2012 by Sistema and the total debt is anticipated to fall further this year,” said Rozanov.
The company expects its debt to come down to about $700 million this year, from $1,047 million in 2012.

Over the next couple of years, its requirement for finance for operations and operating expenses will also come down, he added.
Rozanov said SSTL plans to “migrate” and launch LTE services with the recently bought 800 MHz spectrum, while its existing customers will not be migrated.

In March, SSTL won 3.75 MHz of spectrum in each of eight circles — Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) and West Bengal for Rs. 3,639 crore. The company already has operations in Rajasthan circle.
SSTL plans to deploy a version of 4G technology that can work only in 1.4 MHz of spectrum. The company has a total of 10.58 million subscribers, of which 1.18 million are data subscribers.

The company had entered India in 2008 and has reportedly invested around $3.6 billion (more than Rs. 19,000 crore) in the India.

SSTL plans to focus on tier-II and tier-III cities in India as the company’s existing distribution network is tuned to sales in these cities, he added.

While the company is set to compete with Reliance Jio and Bharti Airtel who have 20 MHz of spectrum in the 2300 MHz band for LTE, Rozanov is hopeful that it will be able to serve its customers in India efficiently with the quantum of spectrum it currently has.

“Speeds and capacity available on broadband LTE (>5MHz) are superior to any technology,” he said. LTE over the CDMA band are already being rolled out in some countries like South Korea, he added.

Besides, SSTL, which operates under the MTS brand, will price data and voice bundled competitively against the incumbent operators. However, it is yet to work out the final pricing of devices and tariff for data and voice.

Recently, Videocon Telecommunications, which also plans to offer LTE over the 1,800 MHz spectrum band, has said that it would keep prices atleast 20% below the incumbent operators.