Sistema Shyam TeleServices Ltd. (SSTL), which operates its telecom services under the MTS brand in India has succeeded in narrowing the loss at Rs 778.7 crore for the quarter ended December 31, 2012.
 
During the same quarter a year ago the company had reported a net loss of Rs 1,197.7 crore.
 
“Inspite of the uncertainties, SSTL’s revenue remained largely stable in Q4 and continued to expand year-on-year. Consolidated revenues for the quarter down by just 3% to INR 3,902 million (USD 72 million) but for the full year up by 31% to INR 16,192 million (USD 303 million)” SSTL said.
 
SSTL said that 21 of SSTL’s licenses were cancelled by the Supreme Court on  February 2, 2012. It said that the uncertainties resulting from such cancellation has compelled the company to conserve its resources and initiate the process to inform its customers in 13 circles to port out to other telecom operators of their choice.
 
It said that non Voice revenues now contribute 36.8% of total quarterly revenues and the contribution has increased by 15bps for the quarter.  Non-voice revenues from both data and mobile VAS for the quarter declined by 3% to INR 1,437 million (USD 27 million) but for the full year 2012 improved by 56% to INR 5,831 million (USD 109 million).
 
Blended mobile ARPU for the quarter increased by 2% to INR 79 but for the full year 2012 declined by 3% to INR 81.
 
SSTL’s data card subscriber base for the quarter declined by 2% to 1.78 million subscribers. The data card subscriber base declined mainly due to uncertainties and the new regulatory requirements for customer registration.
 
The Company recorded lowest full year OIBDA loss in last three years. Consolidated OIBDA loss for the quarter and year stands at INR 2,786 million (USD 51 million) and INR 14,456 million (USD 271 million), respectively. Yearly OIBDA margins improved 64 p.p.
 
According to Vsevolod Rozanov, President and Chief Executive Officer of Sistema Shyam Teleservices Ltd, “During the quarter, our focus was on retaining subscribers, controlling expenses and preparing for auctions. Post Auctions, SSTL secured spectrum in 8 of its core circles. With Rajasthan circle also a part of SSTL’s footprint, we will be able to potentially service 40% of country’s population, address around 60% of data business potential, safeguard 75% of our current revenues and significantly optimize our losses. We now look forward to turning the page on last year’s uncertainties and building an even stronger business in India through continued focus on our data centric-voice enabled strategy.”
                             
 SSTL’s mobile subscriber base declined by 10.5% quarter-on-quarter and reached 14.89 million customers as of December 31st, 2012. SSTL’s mobile subscribers’ MoU for Q4 2012 improved to 268 min vs. 263 min in Q3 2012. The MoU increased due to increase in traffic in the festive season.
 
SSTL reported an OIBDA loss of INR 2,786 million for Q4 2012, reflecting an improvement in OIBDA margin by 74 p.p. Y-o-Y, margins improved on account of cost optimization and Operational efficiencies. The OIBDA loss for the full year was the lowest in last three years. The Total Revenues during the quarter declined 0.5% over Q4 2011. The number of data subscribers declined for the first time by 2.4% over Q3 2012 to 1.78 million.
Sergey Savchenko, Chief Financial Officer of Sistema Shyam Teleservices Ltd., commented, “During the quarter the Company continued to take steps to reduce its cash outgo. The initiatives have resulted in further improvement in OIBDA margins, by 16 p.p. during Q4 2012. SSTL recorded its lowest full year OIBDA loss in the last three years.”
 
SSTL’s net income during the quarter declined by 57% Q-o-Q. The Net Income benefitted due to improvement in OIBDA but the impact was completely offset by the unfavorable movement in exchange rate resulting in recording of forex losses with respect to Long Term Foreign Currency denominated loans, as Rupee depreciated against the dollar at the end of the quarter.
 
The CAPEX investments made by SSTL in India at the end of 31st December 2012 stands at INR 65.68 billion, it includes investment of INR 182 million made during Q4 2012. Consolidated debt from banks and financial institutions at the end of 31st December 2012 stands at INR 56.7 billion.
 
On 11th March, the Company participated and won spectrum in the 800 Mhz band in 8 circles i.e. Delhi, Kolkata, Gujarat, Karnataka, Tamil Nadu, Kerala, Uttar Pradesh (West) and  West Bengal. The Company’s operational footprint also includes Rajasthan circle which was not affected by the Honorable Supreme Court of India’s order. While bidding for spectrum in the auctions, MTS India considered a range of variables including spectrum pricing, number of carrier slots available, levels of competition, future data potential in the circles etc.
 
With 9 circles footprint, SSTL would be able to service 40% of country’s population, address around 60% of data potential and also safeguard 75% of the Company’s current revenues.
 
For the 8 circles won by SSTL in the spectrum auctions, the company would be required to pay INR 3,639 crores for a license period of 20 years. The Government of India has confirmed that SSTL will be able to set off the previous license cost of INR 1626 crores against the new spectrum cost.
 
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