Sistema Shyam TeleServices Ltd. (SSTL), which operates its telecom services under the MTS brand in India, today announces its unaudited consolidated financial results for the Second Quarter ended June 30, 2012.
Key Financial & Operational Highlights for the Second Quarter of 2012
- Consolidated revenues up by 2.6{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} Q-o-Q to INR 4,177 million (USD 77 million). Total wireless (Voice & Data) subscriber base for the quarter grew by 4.9{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} to 16.60 million.
- Non-voice revenues from both data and mobile VAS for the quarter up by 3.9{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} Q-o-Q to INR 1,484 million (USD 27.4 million), which now contributes 35.5{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} of total revenue. The contribution of Non Voice Revenues to the Total Revenues is amongst the highest in the industry.
- Blended mobile ARPU for the quarter declined by 2.3{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} to INR 83.
- SSTL’s data card subscriber base for the quarter up by 11.8{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} to 1.73 million subscribers. SSTL added 0.18 million data card subscribers during the quarter.
- The Company’s HSD services now cover over 420 towns across India.
- Consolidated OIBDA loss for the quarter stands at INR 4,509 million (USD 83.8 mn). OIBDA margins improved 39 p.p. Y-o-Y.
- SSTL further strengthened its Smartphone Portfolio with the launch of MTS MTag 401 Smartphone, sporting a screen size of 4 inches with free bundled data.
According to Vsevolod Rozanov, President and Chief Executive Officer of Sistema Shyam Teleservices Ltd, “The recent regulatory and tax developments have significantly impacted the growth of the Indian Telecom Industry. Despite these challenges, SSTL has maintained its scale of operations and has also grown its business by further strengthening all its revenue lines. Our data card subscriber base continues to grow in double digits despite the recent tariff reduction by 3G operators. Going forward, the plan includes to continue our focus on driving operational efficiencies and to provide greater value to all our stakeholders.”
Financial Summary
| INR million |
Q2 ‘12 |
Q2’11 |
Y-o-Y |
Q1’12 |
Q-o-Q |
| Revenues |
4,177 |
2,782 |
50{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} |
4,072 |
3{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} |
| OIBDA |
-4,509 |
-4,101 |
-10{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} |
-3,621 |
-25{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} |
| -margin |
-108{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} |
-147{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} |
39p.p. |
-89{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} |
-19p.p. |
| Net Income |
-11,801 |
-6,576 |
-79{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} |
-5,278 |
-124{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} |
| -margin |
-282{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} |
-236{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} |
-46p.p. |
-130{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} |
-153p.p. |
SSTL’s mobile subscriber base increased by 4.9{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} quarter-on-quarter and reached 16.60 million customers as of June 30th, 2012. SSTL’s mobile subscribers’ MoU for Q2 2012 declined to 281 min vs. 296 min in Q1 2012. SSTL’s subscriber market share increased to 1.77{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} in Q2 2012 (vs. 1.72{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} in Q1 2012).
SSTL reported an OIBDA loss of INR 4,509 million for Q2 2012, reflecting an improvement in OIBDA margin by 39 p.p. Y-o-Y, margins improved as a result of increase in the scale of the business. The Total Revenues during the quarter grew 50{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} over Q2 2011. The revenue growth was driven by 41{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} increase in subscriber base over Q2 2011. By the end of Q2 2012, SSTL’s HSD services covers more than 420 towns in India. The number of data subscribers increased by 11.8{af589cdba9d77786c8c861317dbad60bba1e2ebbf56e2ffab874a1b59fde9ce3} over Q1 2012 to 1.73 million.
Sergey Savchenko, Chief Financial Officer of Sistema Shyam Teleservices Ltd., commented, “Given the continued uncertainties around the operating environment, SSTL is currently focused on retaining its customers and controlling its expenses to optimize cash outflow. It is heartening to note that in such challenging times our customers, vendors and lending banks, have demonstrated true partnership by extending their full support. During the quarter, SSTL has successfully been able to raise INR 500 crores from banks.”
SSTL’s net income during the quarter suffered from the adverse movement in exchange rate resulting in recording of forex losses with respect to Long Term Foreign Currency denominated loans, as Rupee depreciated considerably against the dollar during the quarter.
The CAPEX investments made by SSTL in India at the end of 30th June 2012 stands at INR 65.35 billion. Accumulated losses of SSTL as at 30th June 2012 aggregated to INR 96.06 billion. Consolidated debt from banks and financial institutions at the end of 30th June 2012 stands at INR 92.96 billion.
Since End of Q2 2012
- MTS set a new industry benchmark in India, by simplifying mobile tariffs; customers now have to pay just 30 paisa to enjoy local, STD, roaming, ISD calls, SMS and data.
- MTS launched three Smartphones; MTS MTag 351, MTS MTag 352 & MTS MTag 281, all under INR 8,000. The latest launch is in line with MTS’ strategy to offer greater choice to CDMA Smartphone customers. MTS subscribers can now choose from an expanded portfolio of 8 smartphones.
Legal and Regulatory Update
- SSTL is taking all the necessary legal steps within the four corners of the Indian Judicial system to safeguard its interest. As part of the same strategy, SSTL on 4th May 2012 filed a Curative petition in the Hon’ble Supreme Court. The Company has consistently maintained that being a pure play CDMA operator, its legal case is significantly different compared to the other mobile operators. For example, there is no finding or suggestion by the CAG report that CDMA spectrum was equally or anywhere near in demand as GSM back in 2008. The Company is hopeful that the highest court of the land will look into the merits of SSTL’s Case and will provide company justice.
- It may also be noted that, Sistema JSFC, the majority shareholder in SSTL, had invoked its right under the Bilateral Investment Treaty (BIT) between India and Russia, after the Decision of the Hon’ble Supreme Court. Communication exchanges continue between Sistema JSFC and the Republic of India. This is a part of the conciliatory process as per the provisions of the BIT.
In the mean time, inspite of various on ground business challenges arising out of the current regulatory and legal environment, SSTL a national telecom operator continues to service more than 16 million customers, employing over 7,000 (Direct and Indirect) employees, and with investments of over USD 3.2 billion