Russian conglomerate Sistema JSFC, the majority shareholder in Sistema Shyam TeleServices ( SSTL), has written to Prime Minister Manmohan Singh accusing the government of initiating steps that benefit existing telecom operators, which may result in the exit of new entrants. Sources in the government said that in a letter to the PM on June 29, Sistema chairman Vladimir Evtushenkov said that the proposal to waive "all payments for spectrum held by them (incumbent operators), despite the Telecom Commission having decided to charge for the same" was akin to a bailout for existing players.
He went on to demand a lower reserve price for his Indian venture and said the price proposed for CDMA players was twice the level suggested for those using the GSM technology. Sistema Shyam's 21 telecom licences are among the 122 cancelled by the Supreme Court and it is expected to bid aggressively to protect its investment, estimated to be of the order of over $3 billion (around Rs 16,500 crore at current exchange rates).
Separately, the Russian conglomerate has threatened to initiate arbitration proceedings to protect its investments and even the Russian government has taken up the issue with India.
Although Evtushenkov's letter was written around two weeks ago, its contents are becoming public on the eve of a meeting of the reconstituted ministerial panel on spectrum, headed by home minister P Chidambaram, which is scheduled to meet on Thursday.
Apart from looking at the issue of pricing, which the industry has said is too high, the issue of how to deal with excess spectrum will be dealt with by the Empowered Group of Ministers (EGoM). Telecom regulator Trai has suggested that the reserve price for spectrum in the 1800 MHz band be fixed at over Rs 18,000 crore. In addition, it wants existing players to vacate airwaves in the 800 MHz (CDMA) and 900 MHz (GSM) bands and switch to the 1,800 MHz band and also pay a market price for it.
Further, the EGoM has been tasked to look at charging the market price on existing spectrum with operators.
In his letter, Evtushenkov said the "acceptance of various recommendations (of Trai)... would irreversibly tilt the already skewed playing field in favour of the incumbents. In effect, it would force the new operators (such as Sistema Shyam) to exit the Indian market, leaving the incumbents in a monopolistic position, with serious consequences for Indian consumers and the economic development of the country".
He also suggested that the issue of fresh spectrum allocation and issue of licences be settled as "time is fast running out, and no viable solution for protecting our investments and helping to minimize our losses is in sight". Sistema Shyam CEO Vsevolod Rozanov has already said that the company is losing around Rs 7 crore a day.