Govt to take a call on Sistema soon

New Delhi, Dec. 24: Russian President Vladimir Putin during his meeting with Prime Minister Manmohan Singh today discussed the the cancellation of mobile operator Sistema Shyam's telecom permit in India.

Though no official comment on the issue was available, sources told The Telegraph that a solution was in the works, which may involve a substantial payout by the Russian mobile operator to continue services.

Russians say the move to cancel the licence violates the India-Russian bilateral investment pact. The company has already invoked its right under the Bilateral Investment Treaty, which gives Moscow the right to approach international arbitration and seek damages from the Indian government if no solution is reached before January 18 when Sistema's Indian licences will be revoked.

Earlier this month, Sistema had written to the external affairs and telecom ministries saying that it would seek billions of dollars in damages by initiating international arbitration proceedings if India failed to reinstate mobile permits for its local unit.

Russian deputy Prime Minister Dmitry Rogozin during his October visit had said India should not "reconsider the rules of the game once the game has begun".

Mobile permits of Sistema Shyam TeleServices Limited (SSTL) ' a joint venture between Russian conglomerate Sistema and India's Shyam Telecom ' was cancelled earlier this year after the Supreme Court ordered the termination of 122 licences over allegations of bribery and corruption.

However, Sistema has been emphatic that as a pure-play CDMA operator, its legal case is different from the seven other GSM carriers whose permits were quashed.

Sistema holds a 56.68 per cent stake in SSTL, while the rest is with Shyam. The Russian government has a 17.14 per cent stake in Sistema. Since its entry into the Indian telecom sector in 2008, the company has invested around Rs 6,474 crore (till March 2012).

Last week, external affairs minister Salman Khurshid expressed optimism about resolving the impasse. "We have done some work on it (Sistema deadlock) and we'll be able to take the matter forward. I think there is some positive, significant steps we have been able to take," Khurshid told reporters.

The telecom operator, which offers CDMA-based mobile services in India under the MTS brand, has also filed a curative petition in the Supreme Court on May 4, seeking re-examination of the verdict. However, it has still not been listed for hearing.

Merger norms

Sistema's chairman Vladimir Yevtushenkov today told reporters that India needed more transparent rules to allow phone operators to merge.

"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. The government needs more clarity in regulating the industry, including mergers and acquisitions, he said.