In a setback to Russian telecom giant Sistema’s joint venture in India — Sistema Shyam Teleservices (SSTL) — the Supreme Court today dismissed a curative petition challenging the cancellation of Sistema Shyam Telservices’ licences across the country by the apex court in February 2012.
The SC also dismissed the curative petitions of Videocon Telecommunications, Idea Cellular and Tata Teleservices, which were filed for the same reason.
The four companies had filed curative petitions after the review petition was dismissed. In an order, the SC said: “We have gone through the curative petitions and the relevant documents. In our opinion, no case is made out. Hence, the curative petitions are dismissed.”
Sistema Shyam will be the worst hit as the SC had cancelled its CDMA licences in 21 of the 22 circles across India. With 14 million customers, the company has already invested $3.2 billion in India and would have to bid for the upcoming CDMA 800 MHz auction, to protect its investment.
However, sources say the company might bid for only a selected number of circles instead of all the circles, which will bring down the amount of money they would have to fork out. According to experts, except Sistema and maybe TTSL in some circles, there would not be any takers for the auction now.
Based on the base price cleared by the government, the Russian major will have to fork out over Rs 9,100 crore if it wants to retain all the circles it now has and get 5 MHz of spectrum. However, currently, Sistema has 2.5 MHz of spectrum in India, and retaining this amount would require a minimum of Rs 2,892 crore after adjusting the Rs 1,658 crore it had paid earlier for the cancelled licence. However, if it goes for a lesser number of circles, the outgo would be much lower.
“It is unfortunate that the Hon’ble Supreme Court has not admitted the curative petition of Sistema Shyam TeleServices Limited. The company believes that it has been unfairly penalised in the 2nd February 2012 order by the honourable Supreme Court. While SSTL remains committed to its operations, it would be up to the shareholders to decide the go forward strategy of the company,” said a spokesperson of Shyam Sistema.
However, Idea Cellular which had been impacted by the SC order in seven circles, has already forked out Rs 2,031.31 crore to retain these in the auction held by the government last November for 1,800 MHz spectrum. Similarly, Videocon won six circles by paying Rs 2,221 crore, while earlier it had permits for 14 circles, and will have to close services in eight circles.
Venugopal Dhoot, chairman of the group, said: “The judgment has no impact on us as we have already participated in the 1,800 MHz auction and chosen circles where we want to continue.’
TTSL, which has lost its licence in three circles in CDMA, might be the only other player which could be bidding in the coming auction.
After there were no takers for the CDMA auctions in November, the cabinet had decided to bring down the auction reserve price for the 800 MHz by 50 per cent. However, with no more spectrum available for growth in this band, most operators have kept away from bidding.