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Sistema Shyam aims for 40m subs in three to five years

07 мая 2009

Growth is the mantra at Sistema Shyam TeleServices Ltd., and Chief Executive Vsevold Rozanov is driving a multi-pronged strategy to help the company capture a chunk of India's mobile services market.

If all goes according to script, the Russian-controlled Indian mobile services provider will have 40 million subscribers in three-five years' time, up from the current 500,000.

This may appear to be a stiff target, but India has the world's fastest-growing mobile services market, adding more than 10 million subscribers a month.

"Shortly, we will be having our first million subscribers, definitely and hopefully this quarter," he said.

Rozanov believes that the company's tie-up with Russia's Mobile TeleSystems OJSC, or MTS, will help Sistema Shyam elbow its way into the market.

"MTS is one of the strongest brands in the world. Almost 100 million people are subscribers of MTS. There is a lot of awareness about the brand... Maybe not in India, but in Europe and in the U.S. certainly," Rozanov told Dow Jones Newswires recently.

To move things along, Sistema Shyam plans to triple the number of its towers and roll out its mobile phone services in two or three telecom service areas every quarter. It currently operates in four of India's 22 telecom circles.

"This quarter we will launch in least two circles, Kolkata and West Bengal... maybe Bihar, too," he said.

Sistema Shyam TeleServices - 74%-owned by Russia's Sistema JSFC and 26% by India's Shyam Group - aims to offer its mobile phone services under the MTS brand across India by September 2010.

By the end of December, Sistema Shyam plans to have launched its services in at least 11 of India's 22 telecom service areas.

The company, which uses code division multiple access, or CDMA, technology, will continue with that platform. It currently competes with CDMA operators Reliance Communications Ltd. and Tata Teleservices Ltd. which have 72.66 million and 35.12 million subscribers, respectively.

The two competitors are now launching global system for mobile communications, or GSM, services because high-spending customers in India prefer GSM networks.

Three of every four mobile subscribers use the GSM platform in India, the world's second-largest telecommunications market after China.

In India, GSM is more popular than CDMA because - having been first on the scene - it offers more flexibility with handsets and better roaming options.

Open to buying GSM company
Sistema Shyam is open to acquiring an existing GSM operator, said Rozanov.

"At this stage, it is more a theoretical statement. But if something comes up to speed up our development and fits naturally into our strategy, then of course we will consider," Rozanov said.

He added that number portability will allow the company to wean subscribers away from other operators.

Number portability allows phone users to switch service providers without having to change their phone numbers, and is to be implemented in the country by September this year.

Telecom tower business
Sistema Shyam, which has some 2,700 telecom towers, plans to increase the number to 7,500 as it expands its mobile services across the country.

"We plan to significantly increase the number of towers that are being built. We can also share them with other players or operators," he said.

Russian govt may buy stake
The Russian government is in discussions to acquire a stake of some 20% in Sistema Shyam, said Rozanov, adding that a decision is likely to be taken by the middle of the year.

"At this stage, it is budgeted in the Russian Federation budget and is about $600 to $700 million approximately (for the stake)," he said.

Sistema owns Russia's largest mobile operator - OAO Mobile TeleSystems. It posted a net loss of $713.9 million in the fourth quarter through December 2008, due mainly to the depreciation of the Russian ruble. It had profits of $466.8 million a year ago. The loss also raised the book value of the debt it had in countries outside Russia.

Looking at outsourcing
Sistema Shyam TeleServices is currently evaluating opportunities to outsource some of its work, including telecom network management.

As a startup venture, Rozanov says the company is yet to gain the scale for which outsourcing may prove cost-effective, but he added that the company is looking at the option.

The company is expected to take a final decision on its IT Outsourcing strategy in the next three-four months, Rozanov said.

Источник: Total Telecom

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