India needs more transparent rules to allow phone operators to merge, said Vladimir Evtushenkov, whose AFK Sistema is struggling to recover its wireless licences as Russian President Vladimir Putin visits New Delhi.
“The industry can’t be successful with a dozen operators fighting for a market share, it’s clear that consolidation is needed,” the Russian billionaire said in an e-mailed. India’s government needs more clarity in regulating the industry, including for mergers and acquisitions, he said.
The supreme court cancelled 122 permits in February, prompting the government to alter airwave policy, requiring operators to bid at auctions that collected less than a quarter of the planned $7.3 billion last month. The original allocation in 2008 had been corrupted by “money power” and some buyers’ “ability to manipulate the system,” the court said.
Sistema unit Sistema Shyam TeleServices Ltd stayed away from the November auction and might now lose its licence as soon as January 18. Putin’s visit to India for talks with Singh today might help defend Sistema’s position, according to Alexander Vengranovich, an analyst at Otkritie Capital in Moscow. Sistema Shyam is 17 per cent owned by the Russian government.
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Appealing ruling
Sistema is appealing the court decision and wants its licences returned. The Russian company is among operators including Norway’s Telenor, Emirates Telecommunications, or Etisalat, and Indian billionaire Kumar Mangalam Birla’s Idea Cellular that lost permits. In the November auction, companies including Vodafone Group and Bharti Airtel avoided nationwide licenses and concessions in New Delhi and Mumbai, because of high prices.
“Our situation is special,” Evtushenkov said. “In 2008, Sistema Shyam was the only operator seeking a pan-Indian CDMA spectrum. India’s Controller and Auditor General never said that CDMA frequencies were in such high demand as the GSM ones.”
Sistema’s talks with India are continuing, Evtushenkov told reporters in New Delhi today.
Positioning system
Evtushenkov declined to discuss strategic plans for India until the decision on the company’s appeal is made.
Indian legislation makes it unclear whether a company that acquires a licence holder will retain the permit, according to Sistema.
Sistema’s shares advanced 0.4 per cent to 24.5 rubles at 12:30 pm in Moscow.
During Putin’s visit, another Sistema unit, NIS, may sign agreements with Indian fixed-line operator Bharat Sanchar Nigam and an information-technology company Tata Consultancy Services (TCS) on providing navigation services based on a Russian global-positioning system with local partners, NIS said.
Russia is trying to challenge US dominance in space-based navigation systems. The country has spent at least $3.3 billion in the last decade to develop its Glonass system with 24 satellites.
It’s an alternative to GPS which was first developed by the US department of defence and then spread to civilian applications such as mobile phones and transport monitoring.
