2G: Unitech MD finds fault with licences of Sistema Shyam Ltd

Unitech Ltd MD Sanjay Chandra, facing trial in the 2G spectrum case, today told a Delhi court that applications for grant of 2G licences filed by rival Shyam Telelink Ltd, which has entered in joint venture with Russia's Sistema, were required to be "summarily rejected" as there were defects in it.

Chandra alleged Shyam Telelink took "advantage" of net worth of Sistema to apply for UAS licences without entering into agreement before the September 25, 2007, cut-off date.

These arguments were made by Chandra's counsel Rebecca John, who was cross-examining T Narasimhan, a prosecution witness and Deputy CEO of Indo-Russian joint venture Sistema Shyam Teleservices which operates under the brand name MTS.

Narasimhan, however, denied all the allegations levelled by Chandra's counsel and during his deposition before Special CBI Judge O P Saini said applications for UAS licences were filed by Shyam Telelink based on the net worth of Sistema JSFC and there was agreement prevailing between them when the applications were submitted on September 25, 2007.

"It is wrong to suggest that the applications filed by Shyam Telelink Ltd were full of defects and were required to be summarily rejected by the DoT. It is wrong to suggest that Shyam Telelink took advantage of net worth of Sistema, though by that time it had not even entered into an agreement with it.

"It is wrong to suggest that promoters of Shyam Telelink sold their shares to Sistema and made huge profits in the bargain," Narasimhan said, adding "the shares were sold at par". 

Narasimhan said Shyam Telelink Ltd had applied for licences in 21 service areas on September 25, 2007, and at that time Sistema was holding its 10 per cent equity.

He said that before Sistema JSFC entered into a partnership with their firm, it was having 100 million subscribers in Russian Federation and central Asian countries.

Narasimhan said the joint venture agreement between Shyam Telelink Ltd and Sistema JSFC was signed on September 25, 2007, the day it had applied for the 2G licences to the DoT.

He accepted that in 2007, Sistema had purchased 10 per cent stake from promoters of Shyam Telelink Ltd and acquired its another 41 per cent stake on January 17, 2008, a week after issuance of letter of intents (LoIs) to the telecom firms by the DoT.

"It is correct that in 2007, Sistema purchased ten per cent stake from the promoters of Shyam Telelink Ltd at the value of USD 11.4 million. I do not know if after this purchase by Sistema, Shyam Telelink Ltd was valued at USD 114 million.

"It is correct that on January 17, 2008, Sistema acquired additional 41 per cent stake in Shyam Telelink Ltd. This was done after the issuance of LoIs on January 10, 2008, in 21 circles," he said, adding this 41 per cent equity was acquired for USD 46.74 million.

He said he did not know if Sistema JSFC had made an announcement in Russia regarding the company making purchase of shares in Shyam Telelink Ltd on September 26, 2007.

On being shown a certified copy of a form of March 31, 2008, filed by Sistema Shyam Teleservices Ltd with the Registrar of Companies (RoC) in Rajasthan, he said the date of transfer of 10 per cent stake to Sistema, which was mentioned as September 26, 2007, was "factually incorrect".

Narasimhan, whose recording of statement concluded today, said that in June 2008, Sistema increased its stake in Shyam Telelink Ltd to the extent of 73.71 per cent.