Sistema Shyam pulls out of 10 circles

Indian regional operator Sistema Shyam TeleServices has shut down its operations in ten of the country’s telecom circles. The firm said that the decision was made based on “several factors” including spectrum pricing and the levels of competition in those markets.

The CDMA player – a subsidiary of Russia’s Sistema operator group – had 21 licences cancelled in February 2012. India’s Supreme Court revoked all licences allocated in the initial 2G auction in 2008, due to allegations of corruption.

The operator said that its decision comes at a time when it is drawing a new blueprint for growth, and confirmed that it will be participating in India’s next 2G spectrum auction, due to be held in March 2013.

“We’re looking at multiple elements such as spectrum pricing and levels of competition,” a spokesperson told Telecoms.com. “When you look at these ten circles through these filters it does not make for a viable case for a CDMA operator to remain there.”

The operator said that the Indian government has confirmed that the firm will be able to offset previous licence costs against the new auction prices.

The case of Sistema Shyam is one that the Indian government must deal with sensitively, according to Stefan Zehle, CEO of consultancy firm Coleago.

“Sistema Shyam said it hasn’t done anything wrong so it will invoke the bilateral investment treaty between Russia and India, as the Russian government is an investor in Sistema,” he said.

“So there are two options: either India heads for confrontation with the Russian government over the Sistema license, or – and I suspect this is what is happening now – they could find a compromise and say alright, we’ll only charge you half of the reserve price, and this is perhaps how they’re trying to get out of this particular pickle.”

Customers in Assam, Andhra Pradesh, Bihar, Himachal Pradesh, Haryana, Jammu & Kashmir, Madhya Pradesh, North East, Orissa and Punjab have 30 days to port their phone numbers to any other operators their choice, Sistema Shyam said.