mts

The data card subscriber base for Sistema Shyam Teleservices (SSTL) which operates in India as MTS India, has declined to 1.29 million subscribers for the quarter ended March 31, 2014 (Q1 2014), down 4% from 1.34 million subscribers in the previous quarter, on account of cleaning up of inactive subscribers.

This cleanup also impacted the company’s total connection base which declined by 7.9% quarter-on-quarter (QoQ) to 9.04 million connections, from 9.8 million connections in the previous quarter.

The non-voice revenues which includes data and VAS revenues however increased by 9.1% QoQ to Rs 112.4 crore for the quarter, from Rs 103 crore in the previous quarter. As a percentage of revenues, non-voice contribution increased to 35.3% of the company’s quarterly revenues, up from 34.5% in the previous quarter. SSTL claims that this percentage is the highest in the industry right now.

Highlights

– Minutes of Use increased to 414 million minutes for the quarter, up 109% from 373 million minutes in the previous quarter.

– Blended mobile ARPU increased by 9.8% to Rs 107 for the quarter from Rs 97 in the previous quarter, due to increase in minutes of usage.

– SSTL’s HSD services now covers over 600 towns across 9 circles, up from 550 towns across 9 circles in the previous quarter.

– During the quarter, MTS India launched (pdf) new prepaid and postpaid data plans targeted towards heavy data users.

– It also tied-up (pdf) with D-Link to launch an IP-based surveillance solution called MSecure which provides an MBlaze WiFi dongle and a D-Link security and surveillance camera along with 32 GB storage with auto rewrite facility. The solution was available at a starting price of Rs 6,000 with monthly charges ranging from Rs 400 – Rs 500.

Discussing the company results, SSTL CEO Dmitry Shukov mentioned that with the new government in place, they are now expecting greater clarity on the pricing and subsequent auction of 800MHz spectrum.

Earlier this year, TRAI had recommended a 48% increase in the reserve price for a pan-India license in the 800MHz band, however these were strongly opposed by SSTL and Reliance Communications who had reportedly said that a high reserve price may prevent them from participating in the auctions. Earlier this month, Department of Telecommunication was apparently planning to ask TRAI to reduce the reserve prices, as per a The Economic Times report.

Financials

– Consolidated revenues in nine operational circles increased 6.4% QoQ to Rs 318.8 crore for quarter, up 6.4% from Rs 299.6 crore in the previous quarter. The company attributed this increase to the growth in usage minutes and in non-voice revenues.

– Net loss also reduced by 29% QoQ to Rs 316.2 crore for the quarter, from Rs 445.5 crore in the previous quarter. This was mainly due to reversal of estimated provisions and lower interest expenses.

– OIBDA (Operating Income Before Depreciation and Amortization) loss reduced by 53.2% to Rs 97.5 crore for the quarter, from Rs 208.1 crore loss in the previous quarter.

– SSTL made investments of Rs 55.1 crore during the quarter while the debt from banks and financial institutions at the end of March 31, 2014 was at Rs 3,619 crore.

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