Sistema Shyam narrows loss to Rs 495 cr

Sistema Shyam, which provides services in the brand name of MTS, today reported its net loss has narrowed to Rs 495.4 crore for the third quarter ended September 30.

The company had posted a net loss of Rs 1,009.7 crore in the same period a year ago. The company registered increase in revenue by 23 per cent at Rs 404 crore during the reported quarter compared to Rs 328.2 crore in the corresponding period last fiscal. The revenue of the company, however, declined by 3 per cent from its previous quarter revenue of Rs 417.7 crore.

"In a seasonally weak quarter the revenues of SSTL were impacted. The revenues declined for the first time since the start of the company¿s operations," SSTL President and Chief Executive Officer Vsevolod Rozanov said.

SSTL attributed decline in revenue growth on quarterly basis to "continued effect of TRAI changes in tariff structure" and "slowdown in subscriber acquisition activity". The continued effect of changes in tariff structure made by Telecom Regulatory Authority of India lead to drop in minutes of usage and average revenue that company earns from an user, it added.

"The subscriber growth during the quarter also suffered on account of uncertainties in the operating environment and due to the predatory practices adopted by competition," Rozanov added.

The Supreme Court on February 2 had cancelled 21 licences of SSTL along with 101 other permits that were issued during tenure of then Telecom Minister A Raja in 2008.

SSTL is majorly owned by Russian Conglomerate Sistema JSFC and provides CDMA technology based mobile telecom services in the country.

The company was allowed to participate in recent spectrum auction to continue its operations but it opted out of it.

Rozanov said "Going forward, the plan includes to continue our focus on driving operational efficiencies. In addition, the company's immediate priority is to look at the outcome of its curative petition filed in the Honourable Supreme Court."

On staying away from the spectrum auction Rozanov said: "Given this context, and also considering the level of recommended spectrum prices, SSTL had no choice other than not to take part in the 2G auctions for 800 Mhz."

SSTL's mobile subscriber base increased by 0.3 per cent quarter-on-quarter and reached 16.64 million customers as on September 30, 2012.

The minutes of telecom service usage by company's mobile subscribers in third quarter of 2012 declined to 263 minutes compared to 281 minutes in second quarter of 2012.

Rozanov said the subscriber growth during the reported quarter slowed down due to strict control over sales and marketing expenditures, aggressive tariffs and predatory practices launched by competition which lead to churn of existing subscribers. SSTL's subscriber market share increased to 1.83 per cent in third quarter of of 2012 compared to 1.77 per cent in the second quarter of 2012.

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