19/11/2012
Sistema Shyam TeleServices Ltd Announces Financial Results for the Third Quarter Ended September 30, 2012
Gurgaon, India, 19th
November 2012 - Sistema Shyam TeleServices
Ltd. (SSTL), which operates its telecom services under the MTS
brand in India, today announces its unaudited consolidated
financial results for the Third Quarter ended September 30,
2012.
Key Financial &
Operational Highlights for the Third Quarter of
2012
- Consolidated revenues down by
3.3% Q-o-Q to INR 4,040 million (USD 73 million). Total wireless
(Voice & Data) subscriber base for the quarter grew by 0.2% to
16.6 million.
- Non-voice revenues from both data
and mobile VAS for the quarter remained flat Q-o-Q at INR 1,482
million (USD 27 million), which now contributes 36.7% of total
revenue. The contribution of Non Voice Revenues to the Total
Revenues is amongst the highest in the industry.
- Blended mobile ARPU for the
quarter declined by 6% Q-o-Q to INR 78.
- SSTL's data card subscriber base
for the quarter up by 5.9% to 1.83 million subscribers. SSTL added
0.10 million data card subscribers during the quarter.
- The Company continues to develop
its data business- HSD services now cover over 450 towns across
India.
- Consolidated OIBDA loss for the
quarter stands at INR 3,541 million (USD 63.5 mn). OIBDA margins
improved 20 p.p. Q-o-Q.
According to Vsevolod Rozanov,
President and Chief Executive Officer of Sistema Shyam Teleservices
Ltd,"The telecom industry continues to suffer due to regulatory
actions. In a seasonally weak quarter the revenues of SSTL were
impacted. The revenues declined for the first time since the start
of the Company's operations. The subscriber growth during the
quarter also suffered on account of uncertainties in the operating
environment and due to the predatory practices adopted by
competition. Going forward, the plan includes to continue our focus
on driving operational efficiencies. In addition, the Company's
immediate priority is to look at the outcome of its curative
petition filed in the Honorable Supreme Court."
Financial
Summary
|
INR million
|
Q3 '12
|
Q3'11
|
Y-o-Y
|
Q2'12
|
Q-o-Q
|
|
Revenues
|
4,040
|
3,282
|
23%
|
4,177
|
-3%
|
|
OIBDA
|
-3,541
|
-4,584
|
23%
|
-4,509
|
21%
|
|
-margin
|
-88%
|
-140%
|
52p.p.
|
-108%
|
20p.p.
|
|
Net Income
|
-4,954
|
-10,097
|
51%
|
-11,801
|
58%
|
|
-margin
|
-123%
|
-308%
|
185p.p.
|
-282%
|
159p.p.
|
Revenue growth during the quarter
was impacted due to the continued effect of TRAI changes in tariff
structure leading to drop in Minutes of Usage (MoU) and Average
Revenue Per User (ARPU), for all operators including MTS. The
revenue growth for MTS was also impacted due to the slowdown in
subscriber acquisition activity. The subscriber growth slowed down
due to strict control over sales and marketing expenditures,
aggressive tariffs and predatory practices launched by competition,
all leading to churn of existing subscribers.
SSTL's mobile subscriber base
increased by 0.3% quarter-on-quarter and reached 16.64 million
customers as of September 30th, 2012. SSTL's mobile subscribers'
MoU for Q3 2012declined to 263 min vs. 281 minin Q2
2012. SSTL's subscriber market share increased to 1.83% in Q3
2012 (vs. 1.77% in Q2 2012).
SSTL reported an OIBDA loss of INR
3,541 million for Q3 2012, reflecting an improvement in OIBDA
margin by 52 p.p. Y-o-Y, margins improved as a result ofincrease in
the scale of the business andon account of Operational efficiencies
as well as certain onetime reversal of provisions. The Total
Revenues during the quarter grew 23% over Q3 2011. The revenue
growth was driven by25% increase in subscriber base over Q3 2011.By
the end ofQ3 2012, SSTL's HSD services covers more than 450 towns
in India.The number of data subscribers increased by 5.9% over Q2
2012 to 1.83 million.
Sergey Savchenko, Chief Financial
Officer of Sistema Shyam Teleservices Ltd., commented, "SSTL's
current focus on driving operational efficiencies has resulted in
improvement in the OIBDA margin during the quarter, OIBDA margins
improved by 20 p.p. as compared to Q2 2012. The quarter also saw
SSTL successfully raising INR 480 crores from banks which again
reaffirmed the continued trust of our partners. The plan is now to
further optimize cash outflow, given the continued uncertainties in
the operating environment."
SSTL's net income during the
quarter improved by 58% Q-o-Q. The Net Income benefitted due to
improvement in OIBDA and also due to favorable movement in exchange
rate resulting in recording of forex gains with respect to Long
Term Foreign Currency denominated loans, as Rupee strengthened
against the dollar at the end of the quarter.
The CAPEX investments made by SSTL
in India at the end of 30th September 2012 stands at INR
65.5 billion, it includes investment of INR 158 million made during
Q3 2012. Accumulated losses of SSTL as at 30th September
2012 aggregated to INR 101 billion. Consolidated debt from banks
and financial institutions at the end of 30th September
2012 stands at INR80.64 billion.
Since End of Q3
2012
- MTS
Launches an innovative Mobile Advertising Service - mAd; becomes
the first telecom operator to offer FREE mobile calls on a Pan
India basis.
- MTS launched new Smartphone; MTS
MTag 353, under INR 6,000. The latest launch is in line with MTS'
strategy to offer greater choice to CDMA Smartphone customers. MTS
subscribers can now choose from an expanded portfolio of 10
smartphones.
- MTS launched 13 new branded
retail stores in Tamil Nadu, now servicing over 15 lakh Voice and
Data customers in the circle.
Legal and Regulatory
Update
- SSTL has taken all the necessary
legal steps within the four corners of the Indian Judicial system
to safeguard its interest. As part of the same strategy, SSTL on
4th May 2012 filed a Curative petition in the Hon'ble Supreme
Court. The Company has consistently maintained that being a pure
play CDMA operator, its legal case is significantly different
compared to the other mobile operators. For example, there is no
finding or suggestion by the CAG report that CDMA spectrum was
equally or anywhere near in demand as GSM back in 2008.SSTL
believes that it has a strong case and is determined to await its
hearing. Given this context, and also considering the level of
recommended spectrum prices, SSTL had no choice other than not to
take part in the 2G auctions for 800 Mhz. The Company is hopeful
that the highest court of the land will speedily look into the
merits of its case and will give it justice.
- It may also be noted that,
Sistema JSFC, the majority shareholder in SSTL, had invoked its
right under the Bilateral Investment Treaty (BIT) between India and
Russia, after the decision of the Hon'ble Supreme Court.
Communication exchanges continue between Sistema JSFC and the
Republic of India. This is a part of the conciliatory process as
per the provisions of the BIT.
- The SSTL management has the
intent to continue its operations in India. The Company is hopeful
that its curative petition will lead to a favorable outcome.
Alternatively, the Company is also working on other plans and
operational models to ensure the continuity of brand MTS in the
country.
- In the mean time, inspite of
various on ground business challenges arising out of the current
regulatory and legal environment, SSTL a national telecom operator
continues to service more than 16 million customers, employing over
7,000 (Direct and Indirect) employees, and with investments of over
USD 3.2 billion.
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About Sistema Shyam
TeleServices
Ltd
Sistema Shyam TeleServices Ltd.
(SSTL) is a venture, involving equity participation by Sistema
{LSE: SSA} of Russia, the Russian Federation and the Shyam Group of
India. Sistema is the majority shareholder in the Company which
operates its telecom services under the MTS brand. MTS is well
recognized in India and worldwide for its commitment to high
quality and innovative telecom solutions. MTS has recently been
ranked by Millward Brown as 85th most valuable brand in the world.
In a short span of time, MTS in India has secured over 16 million
wireless subscribers and under the MBlaze brand provides mobile
broadband services to more than 1.8 million customers in over 450
townsacross the country.
For more information please contact:
Viraj Chouhan
Corporate Communications- Director
Sistema Shyam TeleServices Ltd.
Viraj.chouhan@mtsindia.in
+91 9136404000
Inder Kalra
Investor Relations
Sistema Shyam TeleServices Ltd.
inder.kalra@mtsindia.in
+91 9136001788
