'Uncertainties Killed Innovation in Indian Telecom'

New Delhi, Nov 21 (IANS): Lack of investments and uncertainties arising out of a series of corruption scandals and ambiguity in policies have killed innovation in India's telecom sector, which is negatively impacting services, according to Sistema Shyam TeleServices Ltd (SSTL).

"There is absolutely no innovation in services. No new investment is coming into the sector. People are just talking about cutting costs," said Vsevolod Rozanov, president and chief executive officer of SSTL, which provides telecom services in India under the MTS brand.

Rozanov said lack of innovation would negatively affect telecom services and the industry in India.

"There is hardly any country in the world where telephone tariffs have risen. Lack of innovation can result in tariff hikes in India," Rozanov told IANS.

He said there was need for consolidation in the Indian telecom industry to improve services. "There is need for consolidation in customer base and certain other areas."

Rozanov, who heads the joint venture firm of Russian conglomerate Sistema and India's Shyam Group, said the regulators must act quickly to fix the problems in the industry, which was until a couple of years back one of the most promising industries in India.

"There are needs for stability and clarity and policies. These changes must come when the industry is still alive," he said.

The telecom industry is mired in controversies since the official auditor, the Comptroller and Auditor General of India, in a report released in 2010, pointed out irregularities in allocation of second-generation (2G) spectrum on the "first come, first served" basis. The official auditor has pegged the presumptive loss of Rs.1.76 lakh crore to the exchequer due to the government's failure to auction 2G spectrum in 2008.

Taking cognisance of the CAG report, the Supreme Court in February this year ordered cancellation of all 122 licences issued in 2008 by the then communications minister A. Raja.

SSTL, in which the Russian conglomerate Sistema controls majority 56.68 percent stake, is among the nine companies whose licences were quashed by the Supreme Court. SSTL is set to lose all but one of its 22 licences.

Rozanov said companies like SSTL, which have made investments with genuine business interests, are unfairly penalised due to the Supreme Court order. SSTL has invested $3.2 billion in Indian markets and employs around 7,000 people.

SSTL has filed a curative petition in the Supreme Court seeking restoration of its licences.

Rozanov expressed the hope that the apex court would give a positive verdict and SSTL would continue to operate in India. The Supreme Court is likely to take up the curative petition before Jan 18, 2013.

The Russian firm has also said it would start arbitration before a global tribunal if India does not resolve the dispute amicably.

Asked whether there was any negotiation going on at the government level to resolve the issue, Rozanov said a panel of officials of the two countries was looking into the matter.

"I can't give you any detail on that because I am not authorised to speak," he said.

Sistema's investment issue is reportedly one of the reasons behind postponement of Russian President Vladimir Putin's visit to India.

The Russian president's visit to India has been deferred to Dec 24 from an earlier schedule of Oct 31-Nov 1.


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