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Sistema issues mobile permit ultimatum to India govt

Russian company, who owns part of Sistema Shyam Teleservices, is requesting India's court to reinstate its cancelled 2G licenses by Dec. 24 or face legal action worth "billions of dollars in damages".
Written by Jamie Yap, Contributor

Russian conglomerate Sistema has issued a deadline for India's government to reinstate cancelled mobile licenses for its local unit Sistema Shyam Teleservices (SSTL). Should it not be met, the company threatens punitive legal action worth "billions of dollars in damages" and worsening bilateral ties between both countries.

According to an Economic Times report Monday, the Russian company had written to India's Department of Telecommunications and Ministry of External Affairs to request that the government reinstates SSTL's cancelled mobile licenses before the summit between both countries on Dec. 24 takes place.

Sistema's vice president and general counsel, Anya Goldin, said in the letter to both ministries: "Sistema Shyam has made massive investments to create a thriving telecom business but India seems prepared to completely destroy it despite the fact that there has been no determination that any of the Supreme Court's purported reasons for cancelling the other 2G licences even apply to Sistema, and despite the fact that there does not seem to be other demand for SSTL's spectrum."

"Destruction of Sistema Shyam's business would be manifestly unjust to Sistema and SSTL's other shareholders and could have serious repercussions for India. Apart from the billions of dollars in damages that we would seek in arbitration under the Bilateral Investment Treaty, failure to resolve this case could threaten India's broader diplomatic interests with Russia and its standing in the global business community," Goldin added.

The letter was issued to the ministries because SSTL, a joint venture between Sistema and India's Shyam Group, will lose 21 of its 22 permits to operate mobile services on Jan. 18, 2013, following the Indian Supreme Court's decision to revoke all existing 122 2G licenses due to fraud.

The telco did not re-bid for its licenses as it waited on the outcome of its court petition to reinstate its existing licenses, which was submitted in May but has not been set a date to be heard. The spike in prices for the minimum bid of spectrum licenses also contributed to its decision for not joining in the 2G auction held in November.

Other foreign operators, such as Bahrain Telecom and Etisalat, have since quit India after the Supreme Court cancelled mobile permits held by their local joint ventures, leaving Sistema and Norway's Telenor still in the market. Telenor had succesfully bidded for licenses in six Indian telecom zones during the November auction and can continue operations after the Jan. 18 deadline.

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