Sistema Shyam plans to raise Rs 6,000 cr

Sistema Shyam Teleservices on Friday took an enabling resolution to raise as much as Rs 6,000 crore via preference shares.

The company, whose 21 licences have been cancelled by a court order, said the issue of preference shares would increase the authorised capital base of the company to Rs 12,000 crore. “The increase in authorised capital base provides SSTL with added flexibility to raise finances for its rapidly expanding business operations across the country. It may also be noted there is no change in the equity structure of the company,” a company spokesperson said in a statement.

The preference shares will be non-convertible and redeemable in nature. Preference shareholders do not have voting rights unlike common shareholders of the company. While one kind of preference shares allow it to be convertible to common stock or any other instrument, those that could be issued by Sistema Shyam cannot be converted. This would ensure the current shareholding structure will remain unaltered.

Sistema holds the majority shareholding in the company. Minority shareholders hold around two per cent of the company, while the Russian conglomerate Sistema holds 56.68 per cent stake. The Russian Federation too has 17.14 per cent stake after it invested around $600 million (Rs 2,820 crore) in 2010. Shyam group too has around 24 per cent stake.

While the statement did not clarify whether the money would be used for the fortcoming 2G auction analysts say that Sistema obviously cannot expand as their licences have been canecelled and they have only a few months to stop operations. The enabling resolution will help the company raise money to fund its network expansion, said a company official. Sistema Shyam had lost its licences as a part of the Supreme Court order, to cancel all the telecom licences issued in 2008.

After the 2G scam broke out, telecom companies found it tough to raise debt. Following this, state owned Russian banks had to give guarantees to loans raised by the Indian telecom joint venture. The company has since sent a formal notice to Indian government notifying it of a dispute under the bilateral investment treaty, and has also filed a review petition with the Supreme Court.

The court order also indicated the government to go ahead with a re-auction of 2G airwaves.

Until now, it has invested around $3.1 billion in Indian operations, and has over 15 million subscribers. Of these, the CDMA player has 1.5 million data subscribers, and has high speed Internet network in 350 cities. While some companies like Etisalat DB and STel have talked about exiting the business, Sistema and Uninor have been considered the most serious players of those who won their licences in 2008.