Sistema warns of huge claims if licence issue not resolved

Failure to resolve the case could threaten India's broader diplomatic interests with Russia and standing in global business community

Russia's Sistema has warned it will seek "billions of dollars" in damages from India if licence cancellation issue of its Indian telecom venture Sistema Shyam is not resolved in time.

Sistema JSFC has written to the Department of Telecom and the Ministry of External Affairs said: "In addition to the billions of dollars in damages that we would seek in arbitration under Bilateral Investment Treaty, failure to resolve this case could threaten India's broader diplomatic interests with Russia and standing in global business community."

Sistema JSFC holds 56.68% stake in SSTL, which operates under MTS brand and the remaining is held by Indian group Shyam. The Russian government has 17.14% stake in the company.

In February, the Supreme Court cancelled 21 out of 22 licences of SSTL along with 101 other licences. These permits are valid till January 18, 2013.

In May, SSTL filed curative petition before the apex court but it has not come for hearing yet.

The apex court allowed companies to buy spectrum in auction if they wish to continue operation.

However, SSTL did not participate in auction due to around 11 times high spectrum base price fixed by government in the recent auction and the curative petition which was pending before the court.

The Russian conglomerate said in 2008 as well as in the recent auction there were no bidders for the spectrum that SSTL had been allocated.

It added that SSTL has used this spectrum along with massive investments to create telecom business in India.

"And yet India seems prepared to completely destroy the valuable business, despite the fact that there has been no determination that any of the Supreme Court's purported reason for cancelling the other 2G licences even apply to SSTL," Sistema Vice President and General Counsel Anya Goldin said in the letter.

The Russian major has sought urgent meeting tomorrow to address and resolve its licences issue.

Sistema had also served notice to Indian government in February under Bilateral Investment Promotion and Protection Agreement (BIPA).

It had also expressed its disappointment with working group that was formed in July 2012, after issuing BIPA notice, to resolve its licence termination issue.