Sistema to take $1-bn write-down on India

Sistema will take a write-down of nearly $1 billion related to the suspension of its Indian licences, as the Supreme Court has ordered the cancellation of the Russian firm’s telecom licences in this country.

The write-down was a non-cash item that would be recognised in Sistema’s fourth-quarter results, eroding earnings, Reuters quoted sources close to the Moscow-based conglomerate as saying. Around half of the write-down was related to a licence revaluation and the rest to goodwill, the Vedomosti newspaper quoted a source as saying. The company, founded in 1993, is expected to announce its results on April 26. Sistema India declined to comment.

It was on February 2 that a two-judge bench of the Supreme Court ordered the cancellation of 122 telecoms licences held by eight operators, including Sistema and Norway’s Telenor, over alleged irregularities in the way they were awarded the bandwidth in 2008.

Sistema has already asked the Indian government to resolve the issue in six months, lest it would start proceedings against the government as provided in the Bilateral Investment Treaty. Oslo-headquartered Telenor, too, has said it would seek damages from the Indian government, if the issue of its 22 licences was not resolved. Telenor, which owns a 67.25 per cent stake in Unitech Wireless through its unit registered in Singapore, has served a notice to the Indian government, threatening international arbitration in the absence of finding a solution.

The apex court had directed the government to auction the vacated spectrum after cancellation in four months. According to this, the licences will continue till June 2. However, the department of telecommunications (DoT) had said the auction of 2G spectrum would take “at least 400 days”.

Of the impacted companies, Telenor and Sistema in India have invested close to Rs 30,000 crore. Both had also filed review petitions in the court, but they were dismissed. Telenor now plans to file a curative petition in the court, while Sistema has maintained that it would explore future legal course of action.

Foreign investors such as Etisalat and Bahrain Telecom, which had stake in STel, have already decided to call it quit from India after the court order.