Sistema gets spectrum in eight India service areas

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Russian telco’s Indian unit to pay $665 million for 800-MHz spectrum.

Russian conglomerate Sistema JSFC’s Indian unit Monday won back telecommunications bandwidth through an auction in eight of 21 telecom service areas where its licenses were revoked by the Supreme Court last year.

Sistema Shyam Teleservices Ltd. will need to pay 36.39 billion rupees ($665 million) for the bandwidth in these eight areas for 20 years, the company said in a press release.

From the new spectrum price, Sistema Shyam has been allowed by the government to set off 16.26 billion rupees it had paid in 2008 for the now-cancelled licenses, the Russian company said.

Sistema Shyam was the only bidder in Monday’s auction to sell spectrum in the 800-megahertz frequency, used by companies providing services using the code division multiple access, or CDMA, technology.

Getting the bandwidth is crucial for Sistema Shyam to continue its operations in the world’s second-largest market for telephone services. Its permits in 21 of India’s 22 telecom service areas were part of the 122 licenses the Supreme Court cancelled citing corruption in their allotments in 2008.

The court ordered the government to conduct auctions to reallocate the bandwidth given under the cancelled licenses. It allowed the affected companies to provide services until the government completes the auction.

Since February, Sistema Shyam has been scaling down its operations. The company asked its subscribers in 10 service areas to move to other networks. Monday the company said it will immediately start informing its customers in three more service areas where it didn’t bid for bandwidth.

The move will affect about 15% of the company’s 2,850 employees and 13% of 12 million users in India.

The bandwidth auction is critical for the federal government to narrow its fiscal deficit. It planned to raise as much as 400 billion rupees through bandwidth sales this fiscal year ending on March 31, but has managed just about 90 billion rupees before Monday’s auction.

New Delhi was scheduled to hold another auction Monday to sell bandwidth used by companies providing services using the global system for mobile communications, but postponed it because of a lack of interest from operators.