Sistema writes off $698 mn on cancelled licences

Russian conglomerate Sistema on Thursday reported a net loss of $530 million after it wrote off $ 346 million on account of cancellation of 21 licences of its Indian telecom joint venture.

Besides, Sistema also wrote off $352 million of goodwill of the joint venture firm, Sistema Shyam Teleservices (SSTL).

"The Group's consolidated results for the fourth quarter of 2011 and the full year were impacted mainly by non-cash one-off ... related to the $346 million loss from impairment of SSTL licences following India's Supreme Court ruling to cancel 122 licences," Sistema Joint Stock Financial Corp said in a statement.

The Supreme Court in February cancelled 122 2G telecom licences, including 21 of SSTL, awarded in 2008 by the then Telecom Minister A Raja.

Sistema owns 56.68 per cent stake, Russian Government represented by Rosimushchestvo (Federal Agency for State Property Management) 17.14 per cent stake and Indian firm Shyam Telelink has 26.05 per cent stake in SSTL.

The group posted net loss of $530.2 million in the three months ended December 31 as compared to a net profit of $221.5 million in the year ago period.

However, without one-offs net income of Sistema stood at $261.4 million, which was close to three times high of $90.7 million it reported under the same head a year ago.

The revenue of Sistema JSFC increased by 15.3 per cent to $ 8,377.9 million during the three months period which ended on December 31, 2011 compared to $ 7,269 million it reported for the same quarter a year ago.

For the year ended December 31, 2011, Sistema reported increase of 23 per cent in revenue at $32,981.2 million compared to $26,811.3 million it reported at the end of 2010.

The operating loss of its Indian JV SSTL, which operates under MTS India, increased by more than three times at $463.3 million during the reported quarter compared to $103.6 million it reported a year ago.

However, revenue of SSTL increased by 77.3 per cent at $ 76.1 million during the reported quarter compared to $42.9 million it posted for the same period in 2010.

On annual basis, the revenue of SSTL more than doubled at $262.3 million compared to $114.6 million it garnered in 2010.

By end of March, month following SC order to cancel SSTL licence, the company added 4,19,480 customers taking its total customer base to close to 16 million.