Sistema Shyam plans IPO next year

NEW DELHI: Sistema Shyam Telecom plans a public offer in the second half of 2011 after the completion of its 20% stake sale to the government of Russia for close to $600 million early next year. Ongoing inquiries into spectrum allocation will not affect the company’s India plans and it will reply to letter from the Indian government on not meeting rollout deadlines, chief executive Vsevolod Rozanov said on Monday.

Last week, the telecom ministry had sent notices to 85 licencees named by the government auditor, asking to reply within 15 days on why the permits, given in 2008, should not be cancelled. However, Rozanov said the letter received by the company was related to paying "liquidated damages" and not licence cancellation.

The Telecom Regulator Authority of India had earlier recommended cancelling some telecom licences, including 10 held by Sistema Shyam, for failing to meet rollout requirements . "This doesn't affect Sistema's plans in India because we haven't received any show cause notice and at this stage continue to roll out our network," he said.

Inquiries stemming from scam alleging former telecom minister A Raja gave licences to ineligible companies at much lower than market prices, costing the exchequer estimated Rs 1.76 lakh crore in revenue.

SSTL is a joint venture company between Russia's oil-totelecom group Sistema, which owns 73.7% equity, and India's Shyam Group, owning 23.7%. The rest of the stakes are publicly held. SSTL operates in 13 of India's 22 telecom zones and holds licences for all circles.

Sistema's stake in SSTL will reduce to about 54% after the deal closes, well under the government cap of 74% foreign investment mandated in Indian telecom sector.

Earlier in the day, the telco signed an agreement with Russia's Gazprombank for a $200-million loan to further expand operations.

"We expect that next year we should be ready for listing. Then the board will make a decision depending on the market condition," Rozanov said.