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MTS India Plans LTE Services On CDMA Spectrum; 9.7M Active Data Subs

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After reporting increased losses of Rs 778.7 crore for the quarter ending December 31, 2012, Sistema Shyam Teleservices (SSTL) which operates in India as MTS India, has informed in its investor presentation (pdf) that it hopes to break even in India by the end of 2014 or the first half of 2015.

Remember that the company was impacted by the cancellation of many of its licenses, following a Supreme Court ruling which cancelled 122 licenses in all, including 21 of SSTL’s 22 licenses. This led to SSTL eventually shutting down operations in 13 circles.

Some notes from the Investor presentation (download it here):

– New India Strategy: The company informed that its new strategy involves optimizing its existing business and expand its data services in the country, which includes launching LTE services on CDMA spectrum. However, the company hasn’t revealed any specific timeline for this rollout. Sistema currently operates in nine telecom circles in India, which includes the eight circles where it secured spectrum in the March 2013 auctions and Rajasthan circle which was not affected by the Supreme Court ruling. Through these nine circles, the company hopes to reach out to 60% of the total data potential in the country and 40% of the country’s population.

– LTE Services on 850MHz Spectrum: SSTL plans to deploy LTE services on 850 MHz spectrum band in India and claims that this spectrum band will allow them to migrate to LTE and offer better experience than the existing 3G services. The company cites examples of similar LTE rollouts by LG Uplus and SK Telecom in South Korea. SSTL estimates the LTE expenditure in the country to be around $200 million.

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Non-Voice Revenues: SSTL reported a total non-voice revenue of $109 million for 2012, a significant increase from $25 million in 2011 and $20 million in 2010. Note that non-voice revenues includes both data and VAS revenues. The non-voice revenues accounted for 36% of SSTL’s total revenues in 2012, a significant increase from 30.1% in 2011 and 16.6% in 2010.

Active Data Subscribers: SSTL has 9.7 million active data subscribers in nine operational circles for the quarter ending December 31, 2012, up from 8.4 million active data subscribers in Q3 2013 and 5.3 million active data subscribers in Q4 2012. Earlier this month, it had reported a total 1.78 million data card subscribers for the year ending 2012, up from 1.34 million data card subscribers in 2011 and 584,000 data subscribers in 2010.

Sistema Data Subs

– SSTL also plans to focus on its smartphone business in tier 2 and tier 3 cities. The company claims that there is a lower variety and choice of handsets available for subscribers in these regions and informs that its existing distribution infrastructure is suitable for sales in tier 2 and tier 3 cities. It also hopes to offer low cost bundled voice and data plans across the country.

– West Bengal Break Even: SSTL informed that West Bengal has reached OIBDA (Operating Income Before Depreciation and Amortization) break even in Q4 2012 and it hopes that all nine circles will reach OIBDA break even by the end of 2014 or the first half of 2015.

Debt: SSTL also informs that its debt was substantially reduced to $1.05 billion in 2012 from $1.57 billion in 2011 and hopes that the debt further reduces to $700 million in 2013.

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