Sistema India mobile unit sees users tripling by 2013

Sistema India mobile unit sees users tripling by 2013

New Delhi: Russian oil-to-telecoms group Sistema’s Indian mobile unit expects to triple its customer base by 2013 and aims to breakeven at operating level by then, the unit’s chief executive said on Tuesday.

Sistema Shyam TeleServices’ Vsevolod Rozanov also said the firm would finalise in the next couple of months the investment banks that would manage its planned initial public offering (IPO), although the timing of the issue was not yet decided.

“As we have said, we will be ready (for IPO) by the end of this calendar year," Rozanov said, but added the timing of a listing would depend on improvement in regulatory environment and on market conditions.

India is the world’s fastest-growing mobile market by customer additions and its 771 million mobile subscribers make it the second-biggest mobile market after China, but carriers operate under wafer-thin margin amid fierce competition in a crowded 15-player market where mobile voice business dominates.

Sistema Shyam, which on Tuesday announced it had crossed 10 million customers, aims to grow it to about 30 million by 2013, Rozanov said, and is focusing on gaining a bigger share of India’s fledgling but growing mobile data market where there is less competition.

The once-booming telecoms sector has also been hit by a scandal over grant of licences and radio airwaves in 2007/08, which a state auditor said could have cost the government upto $39 billion in revenue. Several telecoms carriers face risk of losing their permits as a probe into the alleged scam is on.

Sistema Shyam is not involved in the licensing scam, but is among companies that have been named by the sector regulator to not have met network rollout requirements. The regulator has recommended to the government to cancel dozens of licences, including 11 held by Sistema Shyam over rollout.

The government this month issued notices Etisalat’s Indian mobile venture and Idea Cellular to defend their licences for not meeting the rollout requirements.

But Rozanov said they had not received any of the so-called “show cause" notice. He said the company had launched commercial services in 18 of India’s 22 zones and will launch operations in the remaining zones in the next two to three months.

Sistema entered India in late 2008 by picking a controlling stake in a small Indian mobile firm, which has been since renamed as Sistema Shyam TeleServices. Sistema owns a 73.7% stake in Sistema Shyam, while India’s Shyam group owns 23.8% and the remainder is held by minority shareholders.

The Russian government in December paid $600 million for a stake of about 17% of Sistema Shyam. Rozanov said he expected the Russian investment deal to be closed in next few weeks, which would dilute Sistema’s holding in the company.