Sistema Shyam Teleservices (SSTL) has secured spectrum in the 800MHz band in eight regions in India, after being the sole bidder in the country's latest auction. The company, which operates under the name MTS India, won blocks in Delhi, Gujarat, Karantaka, Kerala, Kolkata, Tamil Nadu, Uttar Pradesh West and West Bengal, the Department of Telecommunications announced.
The auction finished in one day, with only three rounds of bids. Other operators boycotted the auction, saying the reserve prices were too high, despite a 50 percent cut from the government's original proposal. Plans to auction frequencies in the 900 and 1800 MHz bands are also on hold, after no applications to participate.
MTS was one of the operators that saw its licences canceled early last year by the Supreme Court, due to irregularities in the previous spectrum awards process. It was last month forced to suspend services in ten regions due to the expiration of the licences. The operator said its footprint going forward will include the eight circles where it won spectrum, as well as Rajastan, which was not affected by the court ruling.
Due to competition and spectrum pricing issues, it decided to not bid for licences in Mumbai, Maharashtra and Uttar Pradesh East, meaning it will close permanently its operations there. As a result, SSTL's final footprint will include three blocks of 1.25MHz each in nine circles, servicing 10.45 million customers.
The total cost of the new licences is USD 665 million. The government will allow MTS to deduct the cost of its previous licences, totaling USD 297 million, from the amount. It must pay 25 percent of the amount within ten days, and the balance will be due from March 2016 in ten annual installments. The new licences are technology neutral and valid for 20 years.
MTS said the result gives it access to 40 percent of the Indian population, where 60 percent of market data revenues are generated. Compared to its previous footprint, it will maintain around 75 percent of revenues. With no cash upfront costs for the licences and the new regional focus, the company expects to substantially reduce its operatings. Further financial details of its plans will be announced before shareholder Sistema's annual results on 16 April.
