2G licence cancellation: Sistema to take $1 billion writedown on India?

MOSCOW: Russian services conglomerate Sistema will take a writedown of nearly $1 billion related to the suspension of its Indian licences, sources close to Sistema said on Friday.

The writedown is a non-cash item that will be recognised in Sistema's fourth-quarter results, eroding earnings, one of the sources told Reuters. Sistema declined to comment.

Around half of the writedown is related to a licence revaluation and the rest to goodwill, the Vedomosti newspaper quoted a source as saying.

Supreme Court in February ordered the cancellation of 122 telecoms licences held by eight operators, including Sistema and Norway's Telenor, over alleged irregularities in the way they were awarded in 2008.

Telenor said last month it would seek compensation from India. Last month, Sistema invoked a bilateral treaty between India and Russia to protect its investments worth $3.1 billion, and warned that if the government failed to settle this dispute amicably within six months, it could commence arbitration before an international tribunal.

The mobile phone companies whose licences were cancelled by the Supreme Court may have to suspend operations from June 2 as the government will not approach the court seeking an extension of the four-month deadline.

Telecom secretary R Chandrasekhar confirmed that operations of quashed licences would have to stop on June 2 unless the court was to grant an extension.