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Business News/ Opinion / Online-views/  Losses mount at Sistema Shyam despite data-driven strategy
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Losses mount at Sistema Shyam despite data-driven strategy

Losses mount at Sistema Shyam despite data-driven strategy

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Sistema Shyam TeleServices Ltd, a mobile services company, majority owned by Russia’s AFK Sistema OAO, has reported results for the quarter ended September.

Sistema Shyam reported an 18% sequential increase in revenue to 328 crore. On a year-on-year basis, revenue grew by as much as 125%.

The company, operating through the MTS brand and using code division multiple access (CDMA) technology platform, is present in almost all the major areas in the country.

Its total subscriber base grew by 13% sequentially to 13.27 million, within which the number of data card subscribers increased by 30% sequentially to 1.07 million. Its subscriber base has doubled in the past one year, compared with a relatively small base.

The data card subscriber base has trebled in the past one year. Both sequentially and on a year-on-year basis, the pace of revenue growth has exceeded the growth in subscriber base.

This is because data and other non-voice revenues have been an area of focus for the company. They contributed as much as 32% to the total revenue, much higher than other telecom companies. Non-voice revenues accounted for less than 15% of revenue for Bharti Airtel Ltd and around 13% in the case of Idea Cellular Ltd.

Even so, losses continued to mount. At the operating level, the company’s losses stood at 458 crore, around 1.4 times its revenue. The only solace here is that the losses have reduced as a proportion of revenue. A year ago, they amounted to 2.7 times the revenue, and in the June quarter, they amounted to 1.5 times the revenue.

The company’s operations are in a relatively nascent stage, especially in its newly launched circles, and to that extent the losses are understandable. At the post-tax level, losses were as high as 1,010 crore last quarter, or 3.1 times the revenue.

Sistema Shyam is one of the few among the new operators that have gained in revenue market share in recent times. Even so, it is evident that the road to profitability will be long and difficult.

Also See | Deepening troubles (PDF)

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Published: 15 Dec 2011, 11:58 PM IST
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