Sistema asks India to settle telecom dispute in 6 months

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16 Feb 2012
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New Delhi: Russia’s Sistema asked India to settle within six months a dispute over a court order to revoke 21 telecom licences held by its joint venture in the country, and said it reserves the right to approach an international tribunal.

Sistema Shyam TeleServices Ltd (SSTL), majority owned by Sistema, is set to lose all but one of its telecom permits after an order by the Supreme Court earlier this month to revoke in four months a total 122 licences awarded under a scandal-tainted 2008 sale.
“Sistema believes that the cancellation of SSTL’s licenses following Sistema’s investment of billions of dollars into the Indian cellular sector is contrary to India’s obligations” under a bilateral investment treaty between India and Russia, the oil-to-telecom conglomerate said in a statement on Tuesday.

Sistema said it sent a “formal notice” on Tuesday through its legal counsel to India’s finance, foreign and telecom ministries to settle the dispute in an “amicable way” by 28 August.

“Sistema believes it has a strong case and reserves the right to commence proceedings against India before an international arbitration tribunal...if the dispute is not settled amicably within the deadline,” it said.

Sistema owns 56.68% of the mobile phone carrier, which is ranked ninth in India’s 15-player mobile phone market. It had 15 million customers as of end-December. India’s Shyam Group and the Russian government are the other key shareholders.

Sistema Shyam TeleServices also plans to separately contest the Supreme Court order and will file a petition this week, seeking a review of the order, the carrier’s chief executive Vsevolod Rozanov said in the statement.

The licence cancellation order affects eight companies totally, including Norway’s Telenor and Abu Dhabi’s Etisalat.

The companies losing their licences have the option to bid and win back the licences and radio airwaves in an auction, for which rules have yet to be set.

Telenor, whose majority shareholder is the Norwegian government, has said it will fight the order using legal as well as diplomatic channels.

Telenor wants to scrap its current Indian joint venture and dump its Indian partner and said it will migrate the business to a new company. It had earlier said it would consider bidding in the auction after seeing the rules and base price.

Sistema Shyam, which operates on the CDMA technology platform, plans to bid for radio airwaves in the upcoming auction.
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