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Sistema closes 10 telecom zones, prepares for Indian auction

Sistema Shyam will shut down services in 10 of its 22 telecom circles in India, while gearing up for the upcoming spectrum auction on March 11.
Written by Jamie Yap, Contributor

Sistema Shyam, the Indian unit of Russia's Sistema, is shutting down operations in 10 of its 22 telecom circles in the country, while it prepares for the next round of spectrum auction in March to secure new licenses.

According to an Economic Times report Friday, the telco confirmed its participation in the March 11 auction. Vsevolod Rozanov, CEO and president of Sistema Shyam Teleservices (SSTL), said in a statement: "We are in the process of drawing an optimal strategy for the auctions based on several factors, including spectrum pricing and levels of competition."

Sistema Shyam will end operations in 10 of its 12 telecom services in India.

"[SSTL is looking] at life beyond all the uncertainties and build an even stronger MTS brand in India", Rozanov added. MTS is the brand name of SSTL's services.

The company also announced it will end services in 10 of its current 22 telecom circles in Assam, Andhra Pradesh, Bihar, Himachal Pradesh, Haryana, Jammu and Kashmir (J&K), Madhya Pradesh, North East, Orissa, and Punjab. Affected subscribers have 30 days to switch to other service providers, it said.

According to the Economic Times report, Sistema Shyam's move will affect over 2.2 million customers and 300 employees.

The announcement comes days after the Indian Supreme Court on Sunday ordered all operators to terminate services immediately if they had held 2G licenses revoked since February 2012 and had not secured new licenses from the November auctions

This prompted Sistema Shyam to write to India's telecommunications department (DoT), seeking a temporary license to continue operations until the March auction. A week ago, the Supreme Court rejected Sistema Shyam's petition to reinstate its permits which were revoked by its earlier ruling. 

Sistema Shyam lost 21 of its 22 permits when the court revoked 122 existing licenses in February 2012 on grounds of graft, and ordered these permits be put up for reauction. The company did not participate in last November's auction for CDMA licenses, saying it was awaiting the outcome of its petition.

The Indian government eventually scrapped the November auction for CDMA after the two interested bidders, Tata Teleservices and Videocon, pulled out. Sistema Shyam Teleservices is a joint venture between Russian conglomerate Sistema and India's Shyam Group.

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