India Telecom Business Encyclopedia

Vital Statistics on GSM

2009-06-15T23:51:00.001+05:30

Vital Statistics on GSM

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Amar Chitra Katha now on iPhone and iPod

2009-06-04T13:51:00.003+05:30

From www.ciol.com on 04 June, 2009

MUMBAI, INDIA: ACK Media, India's leading entertainment and education company for young audiences in partnership with iRemedi Corp. has announced the launch of Amar Chitra Katha, acollection of illustrated classics that retell the enchanting stories aboutIndian Heroes, on iPhone and iPods for the International market.

The popular Amar Chitra Katha Comics are now available on iRemedi's ETHER MEDIA, an innovative media content deliverysolution for the iPhone platform. iRemedi is ACK Media's technology partner forthe iPhone platform. This launch will allowthe iPhone community to enjoyfull color high-resolution art and story in an award winning and intuitive userinterface from iRemedi. The offering will beavailable to the iPhone and iPods users through the Apple iTunes store.

Amar Chitra Katha (ACK), ever since its inceptionin 1967, has sold more than 90 million copies of 400+ titles across Indianmyth, epics, history and fables. ACK brings alive the Indian storytellingtradition through a unique blend of commentary,dialogue and illustration in comic format. The Indic art style and vibrantcompositions lends a sense of drama thus elevating the experience ofstorytelling. ACK comics have been an integral part of generations of readersinspiring them with deep rooted culture and values thus making it a 'one of itskind' cultural phenomenon.

iPhone users need to log on to the Apple iTunes store and search by Amar Chitra Katha or iRemedi or by the title names. Most titles are available for purchase at$1.99 along with free previews to some titles as well.

According to Samir Patil, CEO and Founder of ACK Media said, "We are very excited to launch Amar Chitra Katha on iPhone for the International audience.ACK has enthralled millions of people from diverse culture and generations overthe past four decades worldwide. With this launch of a wide range of Amar Chitra Katha comics we have taken an important step towards bringing the worldof Indian storytelling to the iPhone community. In addition to comics we arelooking at creating new applications and games for this platform".

SridharBhat, CEO and Founder of iRemedi said"This is a historic moment for both ACK and iRemedi. At iRemedi, we are verythrilled to have ACK as our first media partner for our high quality intuitivemedia app for iPhones and iPods. We always strive to deliver the bestexperience for the iPhone user community and we are confident ACK's fans willshare our excitement in enjoying ACK comics on the go. For ACK this is a keymilestone in bringing the classical Indian mythology and rich culture to theglobal community instantly in the amazing user experience with iPhones. TheiPhone's revolutionary platform brings limitless avenues for various dreams tobecome".

SSTL hopes to break even in 3 years: Dy CEO

2009-06-04T11:56:00.003+05:30

4 Jun 2009, 0006 hrs IST, Rashmi Pratap, ET Bureau

MUMBAI: Telecom company Sistema Shyam Teleservices, which is launching CDMA-based mobile services across the country, hopes to be able to pay for all its operating expenses within three years despite intense competition from a dozen other players in the market.

The joint venture between Russia’s Sistema and India’s Shyam Group is expecting to start generating enough money to be left with cash in hand after servicing debt by FY 2013.

Sistema-Shyam’s guidance on profits is interesting because analysts tracking the sector believe new players may not be financially strong and could be prime targets for acquisition. Deputy CEO T Narasimhan said Sistema Shyam will be able to break even by FY12 as there was still a lot of potential left in the India growth story.

“India is a huge market and remains under-penetrated. The cellular growth story is still unfolding and we have already roped in one million users,” he said. Sistema Shyam operates in Rajasthan, Kerala, Tamil Nadu and Kolkata, with spectrum for a pan-India operation. Both telecom operators and investors are bullish on the Indian market that has 400 million users in a population of 1.15 billion. New entrants like Loop Telecom, Datacom Solutions and Unitech-Telenor are expected to soon roll out their services.

According to UBS analyst Suresh A Mahadevan, new operators face challenges of brand building, distribution, organisation building, negative free cash flow, and scale. “We conclude it will take four to five years for EBITDA to break even and seven to eight years for net profit to break even,” he stated in a recent report on the sector.

Sistema Shyam CFO Sergey Savchenko said it is too early for the company to give any revenue targets as it is still rolling out operations and building scale.

“However, we do not see any difficulty in terms of finances. We hope to turn free cash flow positive in four years from now,” he said. He said this was possible because the company could reach the market in a very short time by sharing passive infrastructure.

“It takes time to set up your own towers. We have instead tied up with various operators for sharing passive infrastructure across India,” Savchenko said.

The company’s overall investment of $5.5 billion includes operating expenses like rentals for towers also. “Not all of it is capex. It has our opex too,” he added.

“Our tower portfolio will have 20% of our own towers while the rest will be in tie-up with other operators. This increases operating expenditure but reduces the roll-out time, and it is a huge saving,” he said. He ruled out any changes in the company’s shareholding in the near future. Recently, the Russian government bought a stake from Sistema in the company. Currently, Sistema has 73.7% share, Shyam group 23.8% and the public 2.5% in the company.

BlackBerry: RIM warns of vulnerability

2009-06-04T11:51:00.000+05:30

From www.ciol.com on 04 June, 2009

BOSTON/WASHINGTON, USA: BlackBerry maker Research in Motion Ltd has issued a security patch for the popular device, whose users include US President Barack Obama, warning that it is vulnerable to attacks by hackers.

Research in Motion issued the security warning last week in a bulletin on its web site, but officials could not be reached to comment on details of the patch.

If the patch is not applied, security experts said, there is a risk that hackers could exploit the vulnerability, though they have not done so yet.

Such problems are not unique to Research in Motion. Technology companies constantly battle to stay ahead of increasingly sophisticated hackers. Every time a vulnerability is identified, there is potential for hackers to exploit it.

"It is a serious problem. You need to read the advisory and implement a fix before the hackers try to take control," said Graham Cluley, a senior researcher with anti-virus software marker Sophos.

When companies publicize security flaws, criminals rush to to exploit them because it can take weeks or months for users learn of such problems and protect against them.

Businesses often hold off on installing patches so they can test them to make sure that the new software is compatible with other programs in their network. Sometimes a patch can cause other types of software to malfunction.

The newly disclosed vulnerability could allow hackers to take control of servers running BlackBerry systems by sending emails with tainted attachments in Adobe Systems Inc's PDF format, according to computer security researchers.

If the device's user opens one of those attachments, it would seek to install malicious software on the server at the data center that runs a company's BlackBerry network. Hackers could then covertly use that server to send spam or steal corporate data.

"All kinds of nastiness could occur," Cluley said.

A spokesman for Symantec Corp, the world's biggest maker of security software, said the cost of such an attack would be greater than the value of the BlackBerry since it would hit the far bigger corporate network itself.

Research in Motion issued patches to resolve similar problems in January.

The Canadian company pays close attention to such issues because it prides itself in security, counting intelligence agencies and top executives at the world's largest corporations among its customers.

Research in Motion suggests that businesses block their users from opening attachments until they install the patch. The advisory is posted at: blackberry.com/btsc/KB18327

India will get next 400 million mobile users five times faster

2009-06-04T11:42:00.003+05:30

From The Hindu Business Line by Thomas K Thomas on 04 June 2009

Thomas K Thomas

New Delhi, June 3 It took 15 years for India to get 400 million mobile users, but under three years it will add the next 400 million.

According to the revised estimates by the Cellular Operators Association of India, the mobile subscriber base is expected to zoom to 893 million by 2012. That is 150 million more subscribers than what was projected earlier. The COAI’s earlier estimates had put the mobile user base at 743 million by 2012.

The reason for the new optimism is derived from the huge uptake of mobile services in rural areas.

Explains Mr T. V. Ramachandran, Director-General, COAI: “We have revised the projections because the rate at which infrastructure is growing is faster than what we had expected. Operators are moving into the hinterland and uncovered areas. Secondly, we are getting almost 50 per cent of our new additions from the rural areas. The third factor is that the level of competition has increased with new players in the sector which again leads to faster deployment of networks.”

According to Mr Atul Bindal, President, Mobility, Bharti Airtel, three out of five new subscribers are now coming from non-urban areas. “Indian growth story is here to stay. I will push back against any view that says to the contrary. There is still a huge untapped market in both rural and urban areas,” says Mr Bindal, who expects Airtel to get its next 100 million users in another two-three years.

India, with 400 million mobile users, is now the second largest market in the world after China which has over 650 million subscribers. According to COAI’s projection, there will be 1.24 billion mobile users in 2015 - which means one phone for every Indian.

GSM broadband users

Our Mumbai Bureau reports: India could have 100 million mobile broadband users on the GSM platform by 2014, if the 3G auctions happen during the current fiscal, according to the GSM Association. Overall broadband penetration in India is 4.7 per cent now.

3G investments would lead to economic benefit worth around $70 billion, Mr Jaikishan Rajaraman, senior director, GSMA, said at a press meet here on Wednesday.

The delay in the auction of 3G spectrum in the past two years has led to a huge loss of around $16 billion, according to a study by global consulting firm LECG Corp.

The losses include direct investments as well as those arising from missed opportunities.

“Cost of capital increases whenever you choose to defer investments,” said Mr Rajaraman.

BSNL readying WiMax tender for rural broadband project

2009-06-04T11:36:00.003+05:30

From The Hindu Business Line by Thomas K Thomas on June 04, 2009

New Delhi, June 3 To boost its plans to roll out WiMax-enabled broadband services in the rural areas, state-owned Bharat Sanchar Nigam Ltd will shortly launch a Rs 1,500-crore project to buy 7,000 WiMax base stations to set up Common Service Centres (CSC) across the country.

The tender document for this project is being prepared and BSNL will invite Expression of Interest from equipment manufacturers to supply WiMax gear.

This comes even as BSNL scrapped another tender for appointing franchisees for rolling out WiMax-based broadband services across the country. This project had run into controversy after it came out that five of the six short-listed bidders had similar corporate details, including contact e-mail, address, lawyers and auditors. BSNL will float a new tender for appointing franchisees.

Three phases

The PSU plans to roll out WiMax in three phases. Phase One will set up the broadband infrastructure in the rural areas. A part of this project has already been given to the Chinese vendor Huawei and a relatively unknown entity from Tamil Nadu, Gemini. The two vendors are to set up 1,000 base stations to connect an equal number of remote blocks. The new tender for another 7,000 base stations will be floated in a week.

In the second phase, BSNL plans to roll out broadband infrastructure in the urban areas. While Huawei has been selected for rolling out services in Punjab, Telsima has emerged the lowest bidder in Kerala. The PSU is expected to award the contracts to these vendors shortly. Tender for other circles will be floated later.

The third project was on a franchisee model which has now got scrapped.

Only Two operators

BSNL and MTNL are the only two operators to have got the spectrum for rolling out WiMax broadband services.

However, neither has been able to get going on the WiMax project though each has launched third generation mobile services. Cancelling the franchisee tender will only delay further the broadband services roll out.

Patni eyeing next generation telecom tech

2009-06-04T11:32:00.002+05:30

From The Hindu Business Line on Thursday, Jun 04, 2009

Hyderabad, June 3 Patni Computers is gearing up to take advantage of the potential demand for next generation telecom technologies such as fixed-mobile convergence and long-term evolution (LTE).

“From a user perspective, the next big things in telecom technology are integration of one’s mobile phone and fixed lines and LTEs,” Mr Siddhartha Kataki, Associate Vice-President told Business Line here.

In simpler terms, fixed-mobile convergence will ensure continuous access to a person through his phone. LTE is the latest standard in mobile technology aimed at enriching user experience in areas such as multi-media online gaming and streaming of content.

“Just imagine your mobile device with up to 50 MBPS speed. You can uplink any content very easily,” Mr Kataki said.

This is the speed akin to what is available in an ordinary personal computer.

When asked on the R&D progress at Patni in this regard, he said: “We know the underlying IT space and are pretty much gearing up to the market needs.”

MVNO

The Hyderabad facility of Patni with over 1,200 professionals is supporting global customers. “A major part of mobile virtual network operator (MVNO) framework is developed by us. We can ensure that MVNOs can launch their operations in just 60 days,” he said.

On the impact of recession on IT space in telecom, he said Patni had not yet seen any negative impact.

Sensing Opportunity

“The customer in India is both data-hungry and voice-hungry. There is a huge demand for bandwidth augmentation. 3G, Wi-Max and other rich-media content delivery devices will be in great demand,” he added.

Vernacular versions of electronic communications would lead to social calibrations and thus drive growth in market, Mr Kataki observed.

“On every rupee spent in telecom, 30 per cent goes to IT sector. With 6-7 per cent gross domestic product growth, the opportunity in India will be huge notwithstanding global recession,” he added.

The company also plans to hire over 120 this year at the Hyderabad facility, he added.

HC asks BSNL to maintain status quo on GSM tender till June 10

2009-06-04T11:28:00.002+05:30

From The Hindu Business Line, Thursday, Jun 04, 2009

New Delhi, June 3 The Andhra Pradesh High Court on Wednesday asked Bharat Sanchar Nigam Ltd to maintain status quo in the tendering process for awarding to Huawei a contract for rolling out GSM network in the South zone till June 10.

The court has asked the Department of Telecom to file a response to a petition filed by Nokia Siemens challenging the tendering process. The Chinese vendor Huawei will be a party to the case.

Nokia Siemens had challenged BSNL’s decision to disqualify its bids on technical grounds. The Finnish company said that it had supplied equipment to BSNL on previous occasions and, therefore, it was unfair to find technical problems with its bid. It alleged that BSNL had designed the tender to favour some vendors. According to Nokia Siemens, the technical deficiencies in its bid have not been explained.

In a letter written earlier to the Department of Telecom, NSN said that it had clarified all questions which BSNL had raised during the valuation of the technical bids

Similar plea

A similar petition was filed by Nokia Siemens in the Punjab and Haryana High Court which asked BSNL to submit its reasons for disqualifying the company. The Finnish company is examining BSNL’s reply given to the Punjab and Haryana High Court before taking the next step.

The Andhra Pradesh High Court’s order will delay BSNL’s plans to roll out 93-million lines across the country.

The project was divided into four zones. While Ericsson has been shortlisted for North and East zones, Huawei was chosen for South. Bids for the West zone were not opened by BSNL after the Intelligence Bureau (IB) raised questions about giving contracts to Chinese vendors in sensitive regions.

Though the IB had raised objections to giving contracts in the South to Chinese vendors, BSNL went ahead with Huawei.

Vodafone paid Sarin 500,000 pounds for relocating to US

2009-06-04T11:23:00.001+05:30

Jun 03, 2009 at 2001 hrs IST on Finacial Express

London: British telecom major Vodafone's former chief executive Arun Sarin received 500,000 pounds (Rs 3.87 crore) to relocate to the US following his departure from the company.

According to the group's annual report, for the year ended March 2009, Sarin received a remuneration of 1.42 million pounds (Rs 10.99 crore), which includes basis salary, cash incentives and other benefits.

The company stated that the benefits and other category in the renumeration “includes 500,000 pounds in respect of relocation for Arun Sarin.” In the FY 2009, Sarin collected 436,000 pounds in basic salary, 434,000 pounds in incentive schemes, 553,000 pounds in other benefits and awards, including the relocation fee of 500,000 pounds in 2009, the data available in the company's annual report shows.

Overall, Sarin's pay package stood at 8.1 million pounds in the year to March 31. It included 6.1 million pounds in shares and dividend of 564,000 pounds.

The company stated that Sarin had an contractual entitlement to 500,000 pounds in connection with his relocation to the US.

In the previous financial year 2008, Sarin had received 3.59 million pounds as remuneration from Vodafone.

Bharti, MTN to see $6.9 bn additional debt after deal: Fitch

2009-06-03T18:03:00.001+05:30

3 Jun 2009, 1628 hrs IST, PTI on www.economictimes.com

NEW DELHI: A potential merger being discussed by Indian telecom major Bharti Airtel and South Africa's MTN could increase the net debt of the two firms by about $6.9 bn, global rating agency Fitch said today.

"Under the current terms as presented to the market, it could result in additional net debt of 4 bn dollars at Bharti and 2.9 bn dollars at MTN," Fitch said in its comments on the potential transaction, but noted that it would wait for finalisation of the transaction before taking any rating action on the two firms.

Fitch said that it would closely monitor developments and was taking "note of the strategic merits of a potential partnership between Bharti and MTN, as well as the positive impact on their respective business risk profiles in terms of diversification and enhanced scale."

"Nevertheless given the early stages of the discussions, potential regulatory hurdles and other associated uncertainties surrounding the transaction, Fitch will await finalisation of the transaction structure before taking any formal rating action," it added.

Opera leads mobile-browser market

2009-06-03T14:38:00.002+05:30

On www.ciol.com

HELSINKI, FINLAND: Norway's Opera Software overtook Apple's iPhone browser in May as the most popular mobile browser in the world, Web analytics firm StatCounter said on Tuesday.

Of all Internet pages that were downloaded to mobile devices globally in May, 24.6 percent were downloaded through Opera's browser and 22.3 percent via iPhone, StatCounter said.

The top spot has see-sawed this year.

"Opera began the year in the number one slot but iPhone overtook it in February," Aodhan Cullen, chief executive of StatCounter, said in a statement. "It will be fascinating to watch how this battle plays out over the year."

Opera sells its browser to many cellphone makers and operators, and consumers can directly download it for free, while the Apple browser's ranking reflects only iPhone users surfing the Internet.

Nokia, the world's top cellphone maker, retained third place in mobile browsers with 17.9 percent of the market, StatCounter said.

StatCounter said its research data is based on four billion pages loaded per month.

Interview -- CDMA is better than GSM: Sistema Shyam

2009-06-03T13:54:00.007+05:30

From www.ciol.com on 01 June 2009

BANGALORE, INDIA: Indian telecom sphere is all set to witness a tug of war with six new international telecom players set to enter the scenario.

Sistema Shyam Teleservices, a joint venture between Russia's Sistema and India's Shyam group, the only CDMA (code division multiple access) player of the lot, recently launched its services in West Bengal.

During an interview given to CIOL, Vsevolod Rozanov, president and CEO, Sistema Shyam TeleServices, said that CDMA is a better technology than GSM because it enables better utilisation of the frequencies available, and thus helps in bringing down the costs. Excerpts:

CIOL: The Indian metros and urban areas have attained saturation in terms of telecom density. So where do you see the demand coming from and for what?

Vsevolod Rozanov: If we have to grow fast, apart from expanding our footprint in new circles and getting new customers (first-time users), we have to wean away customers from the incumbents.

We believe there is a huge market for us to grow. While there are players who have the first mover's advantage, there is still a vast chunk of existing individual users who will find higher value for money in our tariff and billing plans.

CIOL: What are your investment plans for India? What will be the focus?

VR: We plan to invest $5.5 billion in India over a period of five years. We will utilize most of this projected investment over the next two years for setting up infrastructure that will enable accessibility and better connectivity for mobile phone users.

We have already invested more than $1 billion in setting up our network. We have launched the brand in Rajasthan, Tamil Nadu, Chennai, Kerala and Kolkata. We are planning to launch services in Delhi by Q3 this year, and looking to foray into one circle every month.

We will eventually cover UP, Haryana and Maharashtra circles by the end of this calendar year. Thus, in the next nine months, the MTS brand will be seen in half of the 22 telecom circles across the country, achieving a pan-India footprint by mid-2010.

CIOL: Do you see a possibility of M&A going forward to meet the increased challenge? What is your take on infrastructure sharing among service providers to combat frequent network disruptions owing to issues like natural disasters?

VR: We are not aware of any significant player in the CDMA segment in India who is planning to hive off its telecom business.

We will have a combination of self-owned and shared infrastructure to ensure that we provide the best connectivity across the country. We already have tie-ups and agreements with various infrastructure companies across the country to ensure superior quality of service.

CIOL: How different will be your 'go-to-market' strategy?

VR: In Rajasthan, the key message of our campaign is to create a churn in the market through the slogan, "Badlo life ka plan" (change your life's plan).

Today over 50 per cent of our subscribers in Rajasthan are not new customers, but those who have switched over from other mobile service operators. They are doing so because they are frustrated with the quality of the old incumbent networks, and are willing to try our non-congested network.

We do not see much difference between GSM (global system for mobile communications) and CDMA. Customers using CDMA technology are approximately one quarter of all. Given the size of the Indian market, this is not small at all.

We have been looking at whether we should wait until we are fully ready with CDMA data offerings or we should start building our customer base and deliver our data offers a bit later. We decided to go in for the second option. We will be coming out with the data offering soon.

CIOL: With several service providers in the frame, will the cost of service be brought down further?

VR: India is a highly price sensitive market. Our pan-Indian strategy will focus on simplicity in all our marketing strategy. We will offer simple, very clear and understandable tariff plans for our customers. Our tariffs will be the lowest, with no hidden charges.

We have dropped the price of entry-level colour phones to Rs 999, and they come with six months of free calls and lifetime validity. The subsidy that we incur on every phone is going down as the price of phones is going down faster than the fall in new offers.

We will offer SMS at 50 paise unlike most other operators who charge one rupee. The tariffs can fall further, if the regulator makes the termination charge cost-based, which would be less than 10 paise a minute from the current 30 paise, the same can be passed on to customers.

CIOL: How do you see advanced mobile technologies - such as 3G, CDMA - gaining currency in rural areas as well, especially when India has very less wireless penetration?

VR: The advanced mobile technologies such as 3G have the potential to meet the digital divide between rural and urban India by penetrating into far-fetched areas, where fixed-line connectivity is sparse due to high deployment cost of infrastructure. 3G will not only alleviate the existing level of voice-based services, but also make Internet broadband access a reality for larger population.

3G will also fit well into the urban user's plan. It will enable quality voice and address the pent-up demand for high-bandwidth data exchange on mobile phones and support high-speed Internet access on other portable devices.

The government has recognized 3G as the cornerstone for growth of the telecom sector and is expected to allocate the third generation on priority.

CIOL: What is being done to take the brand into the market?

VR: MTS is the eighth-largest telecom company in the world with over 100 million customers. In India, we are the sixth or seventh operator. We are using faces of models talking on the mobile phone to relate to the consumers and give our service the human touch. We have also decided to concentrate most of our advertising and marketing spend on local media, via regional language instead of English.

We have also recently rebranded our existing operations in Rajasthan, under the 'Rainbow' brand, to MTS. Rainbow was a regional brand limited to Rajasthan and what we needed was a pan-India brand name. Accordingly we painted the Pink City Jaipur to red - the colour of our brand.

The most important factor is the time-to-market - how quickly we could launch the brand across India in the next nine months. With MTS, the brand material, logo and specifications are all readymade and already available

CIOL: How do you look at the slowdown?

VR: Global economic slowdown is a business challenge for enterprises across the globe. However, Sistema is one of the largest public diversified corporations in Russia. We have sufficient funds to expand our operations, and launch our services on a pan-India basis.

India is one of the fastest growing markets for telecom, and has been relatively un-impacted by recession. As of now, the situation is under control, because the financial meltdown has not impacted Indian banks in a major way.

However, if the situation worsens, then we could be in a spot as we are not allowed to bring in foreign funds in the form of debt. We are allowed to bring money in the form of equity, but our promoters would like to have the flexibility to decide on what form they would like to pump in money into the company.

The Indian Government should consider relaxing the foreign investment norms, which will allow international players to bring in funds in the form of loan.

CIOL: What would be the newer trends in the Indian mobility sector?

VR: The year 2009 is expected to be an exciting year for the Indian mobile telephony market. With the Congress-led UPA (United Progressive Alliance) voted back to power, the sector can look forward to speedy auction of the long-awaited 3G spectrum.

A significant portion of the rural population will witness phased growth in first-time Internet access and welfare programs covering telemedicine, e-governance and distance learning - propelled by 3G mobile broadband and WiMax.

While the 3G network would infuse better services for subscribers and enhance revenues from VAS (value-added services) for operators, the introduction of MNP will offer users the convenience of retaining their mobile phone number even after switching between networks and operators.

Mobile payment and commerce for micro-transactions is also expected to attract greater user-orientation.

Interview -- Bharti Airtel hopeful of 200-m user mark in 3 years

2009-06-03T13:41:00.002+05:30

On The Hindu Business Line dated 03 June 2009

Thomas K. Thomas

New Delhi, June 2 To keep its leadership position in the fastest growing mobile market, Bharti Airtel is embarking on a multi-pronged strategy, including a comprehensive customer retention programme, partnerships with companies that offer mobile entertainment and commerce services, domestic acquisitions and a thrust on driving growth in the rural areas.

In his first interview after taking over as the President of Bharti’s mobile business, Mr Atul Bindal, told Business Line, “I do not agree with those who say Indian mobile growth story is on the verge of getting over. We will reach the next hundred million subscribers by a combination of reaching out to the huge potential that exists in the rural areas, taking advantage of the untapped opportunity in large urban areas and possibly through the organic route which we will evaluate as when opportunities come by.”

Bharti crossed the 100-million mark in May and is hoping to reach the 200-million mark in another two-three years.

Number portability

Asked on the impact on Bharti of new players and introduction of mobile number portability (MNP), Mr Bindal said the company has put in place a customer life-cycle management system which will enable it to take customer services to the next level.

“At present most operators are looking at a few broad consumer segments to create offering and services around them. We are going to take this to the next level wherein Bharti will target micro segments of subscribers to offer customised services. For example, a subscriber who travels a lot to a particular country would like to get a special international roaming tariff. The system will allow us to target products based on the user’s behaviour rather than launch broad mass offerings,” Mr Bindal said.

He added that MNP is an opportunity for Bharti to acquire customers from other operators.

Mr Bindal reckons that mobile commerce and mobile entertainment are going to be big applications.

“Value added service the way we know today is going to change drastically. We are giving a huge thrust to music, games, movies and sports under mobile entertainment wherein we plan to be an end-to-end service provider. We will also enable application providers to use Bharti’s network as a conduit to reach our subscribers. In m-commerce, we are looking at the unbanked segment and micro-finance in a big way,” he said.

Asked if Bharti was open to tie-ups with companies such as Nokia, which also is launching an entertainment platform, Mr Bindal said that such partnerships were possible.

Acquisition plan

He also did not rule out the possibility of Bharti acquiring small companies offering value-added services or a technology that will add to its business model.

“Bharti has always been in favour of strategic partnerships and alliances as long as it offers a compelling value proposition to our customers,” Mr Bindal said.

BSNL set to invite fresh tenders to run WiMax ops

2009-06-03T12:40:00.004+05:30

3 Jun 2009, 0223 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: India’s largest telecom firm BSNL will invite fresh tenders to run its WiMax operations, after the previous attempt was aborted in light of dubious operators making it to the final shortlist. The state-run firm will now seek fresh bids for franchisees across the country to roll out technology that allows users wireless access to high-speed internet and other data applications over a large area, according to two top executives of the company. BSNL expects WiMax to generate multi-billion dollar revenues over the next 10 years.

ET had reported on February 20 that a string of ‘shell’ companies that exist only on paper had made it to BSNL shortlist for WiMax.

The telco subsequently cancelled the tender after its own investigations revealed that five of the six shortlisted companies — WiExpert Communications, SV Telecom Systems, Digitelco Communications, Spectrus Communications and Technotial Infoways — were acting as ‘fronts’ for certain individuals.

It was found that these companies shared the same corporate details, notaries, auditors and dates of incorporation, and even their last annual general body meeting was shown to be held on the same day.

BSNL came under pressure from its labour unions to scrap the tender following reports of wide-scale corruption in the methodologies adopted to shortlist successful bidders. Doubts were also raised on the disqualification of several companies with proven track record of offering WiMax services including Soma Networks, Cisco-backed Terracom, Unwire India and Welcomm Communications — it had a tie-up Huawei and Aricent — in the earlier shortlist.

This has strengthened the allegations of a possible scandal especially since BSNL had failed to provide valid reasons for the disqualification. During the recent election campaign, opposition BJP had alleged that five of the six shortlisted companies were promoted by telecom minister A Raja’s confidant Sanjay Kapoor and had sought a CBI probe into the issue.

“BJP demands that allotment of BSNL’s WiMax franchise should be suspended immediately and the telecom minister be sacked as reports suggest wholesale loot and corruption in the process,” party spokesperson Prakash Javadekar had said during a press conference in Delhi on May 6.

Earlier this year, the WiMAX Forum, an industry association that has more than 530 member companies globally and 50 members in India had warned BSNL that companies existing only on paper are exploiting lax eligibility criteria for bids invited by the telco for franchisee operators for its WiMax services.

The Forum had also alleged that these newly floated front companies have approached global majors to buy them out quoting BSNL’s spectrum and network assets as valuation criteria. “This is a result of the lax eligibility conditions in the tender which these paper companies are exploiting,” the association had said.

No criminal cases against telcos: DoT; Foreign telcos get clean chit in licence fee, service tax case

2009-06-03T12:32:00.012+05:30

3 Jun 2009, 0143 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: Department of telecom (DoT) will not file any criminal case against Indian and international long-distance operators including AT&T, British Telecom, France Telecom, Verizon, Bharti Airtel, Reliance Communications and Tata Communications after investigations by both the CBI and an internal committee of the communications ministry proved that collaborations between these players did not result in revenue losses to the exchequer.

The DoT had earlier alleged that the international operators were providing long distance services to customers in India by tying up with Indian counterparts rather than taking separate licences leading to huge losses in levies to the exchequer.

The DoT had said that these foreign operators had not paid a one-time entry fee of Rs 25 crore (prior to January 1, 2006) plus 15% of their annual revenues as levies for offering long distance services in India. All these international long distance operators have now taken licences for their Indian operations.

After the CBI had completed preliminary investigation on behalf of DoT, the central agency had suggested that the government file a case against these companies for a thorough probe into probable financial loss.

But, following the CBI report, the DoT committee gave an opportunity to all these companies to explain their viewpoints on the alleged violations. On studying the presentation by these telcos, DoT committee concluded that there was no loss to the exchequer.

Story on The Hindu Business Line dated 03 June 2009

Foreign telcos get clean chit in licence fee, service tax case

Thomas K Thomasin

New Delhi, June 2 In a move that removes all hurdles to global telecom firms to bid for third generation mobile (3G) spectrum, an internal panel of the Department of Telecom has decided to close a six-year-old case against international majors including AT&T, BT (formerly British Telecom), Equant and MCI Worldcom for alleged evasion of licence fee and service tax.

While it is not clear on who will actually bid for 3G spectrum, a clean chit from the DoT panel on the issue has removed possibilities of any legal complications later on for these multinational majors.

The issue dates back to 2003 when it was alleged that the foreign telecom players including AT&T Communications Services India, Equant and MCI Worldcom India were selling managed data network services to corporates in India without taking any licence from DoT.

It was alleged that these companies had got into a partnership with Indian operators, including Videsh Sanchar Nigam Ltd (now Tata Communications), Reliance Communications and Bharti, to bypass paying local taxes and levies. The companies were hauled up by the Parliamentary Standing Committee on IT for allegedly violating foreign direct investment norms and also for depriving the national exchequer.

The matter was referred to the Central Bureau of Investigation which, in turn, put the ball back in DoT’s court on the ground that the telecom department should carry out its own assessment based on the licence conditions. The CBI had concluded that in case the DoT found irregularities then it could lodge an FIR for further investigation.

But now, in a relief to the multinational operators, a DoT committee has concluded that the alliance with Indian players was not illegal. For example, in the case of AT&T, the DoT panel stated, “there is no loss of revenue to the Government as the service tax have been properly accounted for and the licence fee has been paid by VSNL. Further, as per terms and conditions of the international long-distance licence, the licensee can always employ or appoint agents for provision of service.” The panel said that AT&T has produced invoices and tax details to prove that it had met with local laws in India.

“The committee feels that in the case of AT&T, being the service support organisation of VSNL and interfacing with customers in India on behalf of VSNL, there is no violation of Indian Telegraph Act 1885 and loss to exchequer. On the part of VSNL also there is no violation. Therefore, there is no merit in the complaint and the case can be closed,” it added.

In the case of BT, the DoT panel observed that the company had got into an arrangement with Bharti to service its global customers in India. BT, however, had also serviced clients directly through its subsidiary in Singapore.

The UK-based company claimed that the revenues earned by the Singapore unit relate to services provided by BT outside India and, therefore, it was not liable to pay service tax and licence fee to the DoT.

Similar story on www.ciol.com at http://www.ciol.com/technology/mobility/news-reports/dot-clears-3g-spectrum-hurdles/3609120497/0/

MTS Hits 1 Million Subscriber Mark

2009-06-03T12:04:00.003+05:30

On www.efytimes.com on 02 June, 2009

Tuesday, June 02, 2009: Sistema Shyam TeleServices Ltd (SSTL) has reached the subscriber base of one million for its service brand MTS. In the last three months, the company expanded its presence from Rajasthan to three more circles including Tamil Nadu, Kerala and Kolkata covering 13 per cent of the population in the country.

Commenting on the performance, Vsevolod Rozanov, president and CEO, SSTL, said, “The first magical number of a million gives us the confidence that the MTS brand is gaining popularity and our customers acknowledge and believe in the brand promise of superior network quality, exceptional customer service and honest and simple tariff plans. As a new telecom operator, our performance in the last six months has surpassed our expectations. I am confident that we will continue to progressively expand our presence with attractive pricing and superior customer care delivery.”

MTS as a pure play CDMA operator has achieved a share of net addition of subscribers in the range of 11-13 per cent per month, of the total mobility market of Rajasthan, since launch on the 1 October 2008. As of today, Rajasthan contributes 87 per cent to the subscriber-base of MTS, while the remaining 12.5 per cent is spread across Tamil Nadu and Kerala where services were launched two months ago. Kolkata is the latest circle to introduce the brand MTS.

MTS provides telephony connections to over 600 towns of Rajasthan, 513 towns of Tamil Nadu and 247 towns of Kerala, in addition to Kolkata where it made a foray in May this year.

Similar story in

The Hindu Business Line at http://www.thehindubusinessline.com/2009/06/02/stories/2009060251510400.htm
www.ciol.com at http://www.ciol.com/technology/mobility/news-reports/mts-touches-one-million-subscriber-mark/2609120382/0/

SingTel to keep stake in Bharti Airtel intact

2009-06-03T11:16:00.000+05:30

Gairola, Hindustan Times , 03 June 2009

The proposed partnership deal between Bharti Airtel and South Africa’s MTN may not necessarily result in huge dilution of Singapore Telecommunications Ltd (Singtel), which holds a 30 per cent stake in Bharti.

A source familiar with the deal said that Singtel finds India an important market and is exploring ways such that it does not have to dilute its equity in the company, if the Bharti-MTN deal goes through.

Singapore’s largest company by market capitalisation, Singtel neither confirmed nor denied the development.“Discussions between Bharti and MTN are ongoing at this stage and as stated in Bharti’s press release, SingTel will remain a significant shareholder and strategic partner in Bharti post any successful transaction,” said a Singtel spokesperson in written reply to Hindustan Times.

“Consistent with our approach as a strategic investor and equity accounting for our investments, we will continue to equity account for Bharti, in its enlarged form post the transaction if this is successful,” the spokesperson said.

On May 25, Bharti Airtel announced a “strategic partnership deal” with a broader objective to achieve a “full merger” with MTN. The announcement said that MTN and its shareholders would acquire about 36 per cent economic interest in Bharti, of which 25 per cent would be held by MTN and the rest will be held by MTN shareholders.

In turn, Bharti would acquire about 49 per cent shareholding in MTN.

By virtue of its 30 per cent holding in Bhrati Airtel, Singtel’s stake in the post-merger scenario should fall to about 19 per cent. “However, Singtel is looking at higher stake in India operations,” said the source. “The company would like to maintain the present level of equity.”

Goldman Sachs is advising Singtel on this deal, the source said, adding that Singtel is willing to extend financial support to Bharti for the deal. The size of the two-way deal is about $23 billion.

MTNL unveils pre-paid 3G service for Rs 300

2009-06-02T19:36:00.007+05:30

2 Jun 2009, 1650 hrs IST, PTI on www.economictimes.com

NEW DELHI: State-run MTNL today brought 3G services to the masses by introducing a prepaid option for this high-end service at just Rs 300.

Announcing the launch of the pre-paid 3G service, company CMD R S P Sinha said, "MTNL is launching 3G Jadoo Prepaid Services so that customer should be able to avail the latest 3G/3.5G services at an affordable price".

Since pre-paid is the preferred by customers, the 3G service will be available for only Rs 300 with lifetime validity, whereby a customer can make local video calls at Rs 1.8/minute and data download at Rs 3/MB.

In addition, a subscriber can also choose any of the data coupons to avail free data downloads coupled with free video calling to suit ones individual requirement, Sinha said. Sinha expects the launch of pre-paid 3G services to increase it customer base.

He said the PSU has around 400 subscribers for its recently-launched 3G service and expects 2,00,000 to 3,00,000 users for in the first year of operations.

The company introduced 3G services in Delhi in December and in Mumbai last month.

The state-run telecom operator expects to add new capacity to accommodate 8,00,000 users, he said.

Same story in Financial Express at http://www.financialexpress.com/news/mtnl-unveils-prepaid-3g-service-for-rs-300/470071/

Story from The Hindu Business Line dated 03 Jun 2009

MTNL launches pre-paid card for 3G services

Our Bureau

New Delhi, June 2 To get more users for its third generation mobile services, state-run Mahanagar Telephone Nigam Ltd (MTNL) on Tuesday launched a pre-paid option that will enable customers in Delhi experience high-speed data connectivity at an upfront cost of Rs 300.

MTNL had launched its 3G services in January but has only 400 subscribers till now. The pre-paid option is expected to drive up the demand for the company. Mr R. S. P. Sinha, Chairman and Managing Director, MTNL, said he expected at least two lakh 3G users within the first year of operations.

Initially, the services were launched in NDMC area in New Delhi with 50 base stations.

Extended coverage

Now, MTNL has extended 3G coverage to Trans Yamuna, Central Delhi, South Delhi and NCR of Gurgaon with 225 base stations. The company will soon cover Noida, Dwarka, Karolbagh, North-West and the remaining areas in and around the capital.

The 3G pre-paid services are available at Rs 300 with lifetime validity, and a customer can make local video calls at Rs 1.8 a minute and download data at Rs 3 for each MB.

In addition, a subscriber will have to buy data ranging between Rs 99 and Rs 2,500 coupons. MTNL has bundled free data download of 50 MB with a trial coupon for Rs 99. Heavy users can pay Rs 2,500 a month for unlimited data download.

The PSU will add new capacity to accommodate 8 lakh users. Since 95 per cent of existing mobile users are on pre-paid, MTNL expects more demand for the 3G service.

Mr Sinha said the service has given an advantage to the state-run company over private players.

MTNL and BSNL are the only operators to have got spectrum for offering 3G services.

IBM to build data centres for MTS

2009-06-02T19:32:00.002+05:30

From The Hindu Business Line on 02 June, 2009

Bangalore, June 1

IBM said on Monday that it will design and build two green data centres – one each in Chennai and Gurgaon for MTS India, the mobile telephony services brand of Sistema Shyam TeleServices Ltd, a joint venture between Sistema of Russia and Shyam Group. The green data centres will help achieve 20 per cent energy savings for SSTL that is expanding operations across the country. IBM will also build a network operations centre (NOC) to help SSTL monitor and manage applicat ions and network. The Chennai site will serve as the main data centre for SSTL, while the data centre in Gurgaon will serve as the disaster recovery site.

Similar story in The Hindu Business Line at http://www.thehindubusinessline.com/2009/06/02/stories/2009060251450400.htm

3G-WIMAX : Simplifying the future

2009-06-02T14:55:00.005+05:30

On www.ciol.com by Sunny Sen on 02 Jun 2009

INDIA: Amongst the innumerable potentials 3G has, network manageability is perhaps the most important one. In the coming years, with increasing Internet usage, a huge explosion of data will happen over networks. The other major area where 3G would make a difference is in the billing process.

For infrastructure providers 3G will be a value-add during slowdown, as they would get to put in a lot of new developments. Layout of next generation networks that are 3G compatible will help in better manageability of services over the networks. Even service providers believe that 3G would make the entire mobility space much more accessible. The government, though, has to look at 3G with a much broader perspective. The broadband connection, as they have not reached the set target, will also benefit with 3G coming to India.

Looking at the manageability front, 3G will not only help in managing new services, but also fall in line with 2G and 2.5G services. It will give a whole new experience of network management at the back end. "As a 3G network is downward compatible, SPs would prefer to upgrade their existing networks so that with increased bandwidth they can offer high-bandwidth applications and services to their 3G customers, as well as serve more 2G and 2.5G customers on the improved network," says Vish Iyer, vice president, service provider, Cisco India & SAARC.

3G Billing Process

In India there is a larger base for pre-paid customers compared to post-paid and so there is a greater need to simplify processes for the same. With 3G services there is a new advent in the next-generation voice, data and content services. And 3G billing services will give operators the opportunity to handle and retain the loyalty of pre-paid subscribers.

"Billing systems must cope with the dichotomy in business processes and the complexity in operations for accurately billing pre- and post-paid subscribers. This is a challenge that operators must address as it adds additional pressure to the bottom-line," says Paresh Shah, vice president, information management, Convergys India. For post-paid customers it would help the operators to offer innovative services on demand like real time balance tracking and notifications. This will actually become the handiest tool to operators as they are working to limit credit exposure from post-paid subscribers and provide the necessary cross subscription discounts and invoice generation that subscribers demand.

"In 3G, services priced differently will be posted in one bill. Apart from that a number of new parameters for calculating charges can be used like number of packets, uploading and downloading data, QoS, location and content. This will give rise to complex methods of billing," says Tamal Bardhan, marketing head, Usha Comm.

Easier Manageability

Not only on the billing side, but also on the network deployment side 3G is taking things forward. Solutions and services are getting simpler and handier. Enterprises and vendors have already started making futuristic deployments for the new business opportunities that 3G would bring in the network space. 3G's most important attribute will definitely be better infrastructure management.

"3G will help service providers manage their existing infrastructure better and remain competitive in a mobile number portability (MNP) regime. It will also generate a more addressable market to the GSM service providers. They can go back to their existing customer base and provide them with enhanced data services" says Animesh Sahay, head, telecom business, India and SAARC, Juniper Networks.

GSM and VAS are two other areas where 3G would be having a great impact. We are seeing a growth of around 5 to 6 mn users per month in these areas. The bandwidth provided right now is nowhere close to what we would have once 3G services are started. This would essentially lead to easy trafficking of data over the networks.

3G will not only make its presence felt in cities and towns but also bring in better and faster networks to rural India. "Looking at the country's broadband penetration through copper and coax; wireless technologies are becoming prominent. 3G and WiMax will ensure that remote and rural areas get networked. Thus 3G is a positive sign of the growth of the Indian telecom industry provided the government supports it equally," says Jayesh H Kotak, vice president, product management, D-Link India.

In the years to come 3G would make a lot of difference in making business models more innovative. 3G and WiMax will help solve the problem of low broadband penetration in India to a great extent. It is high time the government realizes the need and use of 3G. In a fast growing economy these technologies have the power to change the development roadmap of the country.

Data Matters

The current 2G network limits the download speed to nothing more than 30 to 40 Kbps, though the ISPs claim to provide much more. Even after the use of Edge technology one gets 384 Kbps of uplink and 171 Kbps of downlink. 3G is expected to sort out these problems. For enterprises 3G would bring in a lot of scalability and performance based application cutting short time constraints. 3G networks will be 2G and 2.5G compatible as well. Consolidation would bring down the costs for the company.

Apart from the bandwidth, 3G would also enable compressed data over the network. This would in turn maximize and increase WAN link by reducing the frame size, thereby allowing more data to be transmitted over the link. Though at this point we do not need much data compressibility as the transmission will be through fiber.

3G allows for transferring voice in networks much more efficiently than 2G and enables efficient VoIP in the future. This leads to decreased cost per bit and voice minute for the operator, and eventually for consumers. "Today's networks are many times more efficient than early 3G networks and will evolve to LTE which is again three times more efficient than current 3G networks," says Randep Raina, head, 3G India, Nokia Siemens Networks.

Looking Ahead

Will things stop only with the infrastructure developments of networks in Delhi? BSNL and MTNL are very differently placed in comparison to other private players. It is not yet known when 3G auctions will happen and which companies will be in the spectrum run. With a huge amount of investment only to acquire license, a lot of other costs would be involved when it comes to network building and implementation.

But the high costs will lead to new services making its way into the market, especially the urban areas. "Unlike 2G, in 3G one has to come up with very innovative applications and tariff plans. If operators are able to come up with new services there surely is a lot of money to be made," says Subhendu Mohanty, country head, home & networks, mobility business, Motorola.

It perhaps goes without saying that vendors are looking at 3G because it is one of the areas that would bring them enough revenues. For instance, in case of Motorola their deployments for MTNL in Delhi alone are close to Rs 300 crore.

Undoubtedly, 3G will definitely bring in manageability. With obsolete billing processes and difficult round ups it is an urgent need for the communications industry to head towards 3G. For quite some time, 3G has been a vision and a topic of discussion, but unfortunately, implementation is nowhere in sight.

SMS hot amidst slowdown

2009-06-02T14:43:00.005+05:30

On www.ciol.com on 02 June 2009

INDIA: For mobile operators, text messaging has become one of the most successful data applications with the volumes increasing year on year. However, ongoing price erosion in messaging has caused increased pressure on margins and this has resulted in the mobile industry frantically searching for revenue growth opportunities in new services. Software consulting firm, Ovum, states that no other single service has been able to get even close to the text messaging revenues. Even in 2009, 80per cent of worldwide messaging revenues will be generated by SMS.

Besides exploring alternative options to add to their existing text messaging revenues, operators need to consider a more evolutionary approach. In this case, text messaging should be used as a starting point. Future revenue growth can be reached through differentiation and the creation of new business on existing text messaging channel. Mobile messaging has not reached its limits and the time is right to leverage the unique values of mobile messaging beyond person-to-person traffic. In fact, Acision believes that messaging revenues have the potential to double by 2011, reaching a market size of $165 bn.

Real Truth of Future Text

The success of text messaging is often attributed to its ease of use, reliability, and transparent pricing. Yet, some argue that rich Internet-based messaging services will take over dominant position in a few years. This outlook is inspired by a few notable trends such as how mobile broadband coverage has increased dramatically, with market share of Internet enabled mobile devices surpassing the 25per cent mark.

On the contrary, text messaging is not showing any signs of slowing down. In May 2008, Ovum predicted an increase of 60per cent in the volume of text messaging by 2011. The popularity of text messaging has turned it into a key operator tool for subscriber acquisition and retention, which has resulted in near flat-fee pricing. The truth is that it will not decrease in volume or usage, but is more related to the operator's margins. However, if the right solutions are put in place, operators can increase their text messaging prowess.

Differentiation Drives Margins

Over the past 15 years, most operators have adopted a similar strategy of positioning text messaging as a new service. In recent years, however, messaging has reached mass market adoption and is like a commodity. To address this challenge, operators need to do what every business does when faced with commoditization. Operators must differentiate their mobile messaging portfolio by further refining the service positioning to address the different messaging needs of various user segments.

At the same time, it is crucial to avoid disruption of SMS's key asset: simplicity.

Confronting subscribers with complex features easily results in poor adoption rates. By gradually differentiating mobile messaging, operators will ensure text messaging relevance across their entire subscriber base and increase overall revenues. To realize the required margin growth, it is crucial to minimize the costs associated with service differentiation.

Based on this vision, leading messaging company, Acision defined a text messaging strategy aimed at doubling the messaging revenues. This strategy consists of five key elements that will drive subscriber and channel revenue.

Personalize the messaging experience: By offering personalized messaging services, operators are able to charge for a number of new features that are already proving to be effective. Currently, a vast majority of subscribers are using multiple messaging services. Through email and instant messaging, users are increasingly getting familiarized with features such as automated replies, forwarding, signatures, threaded messaging and presence information, and these should be applied to text. Initial launches of personalized messaging services indicated a growth potential of up to 15per cent on text messaging revenue. An example of such a personalized service launched by SingTel and Maxis in 2008 is auto-copy. This service automatically forwards copies of received text messages to another phone number or email address.

Extend mobile messaging to fixed: Besides mobile phones, many subscribers use a range of fixed devices such as PCs and TV sets daily. When offering access to text messaging on these devices, the barrier to use text messaging would be even lower. A fixed extension to text messaging offers the operator a viable entry for service revenues in the fixed domain. The additional user interface may also produce additional text messaging usage chargeable by the operator. The enhanced user interface may improve advertizing effectiveness and the user's abilities to personalize the messaging experience. Finally, delivery of text messages could be done over 3rd-party bearers such as cable or DSL Internet connection. This could substantially reduce costs as it would relieve the operator's radio network.

Widgets as extension to SMS: PC and web-based widgets enable users and web developers to have full control over where to position certain third-party applications. This drastically limits the barrier to use such applications. It is therefore not a surprise that in June 2008 alone, over 600 mn people communicated through widgets. If operators were to allow access to text messaging through widgets, it would enable them to increase the value of text messaging and help realize the opportunities mentioned above.

Instant messaging as extension of SMS: When faced with the instant messaging concept, most people will have dominant brands like Windows Live Messenger and Yahoo! Messenger in mind. In recent years however, the IM landscape is getting ever more diverse. A long list of social networks, mail providers, niche communities and mobile operators have launched their own IM services. Operator IM may not be a new killer application but could well act as a logical extension of mobile messaging for mobile and fixed Internet users.

Use messaging to mobilize the web: Internet usage among teenagers has grown to a staggering 12.5 online hours per week. Yet, the average teenager is available at least 112 hours per week through his mobile phone. In other words, teens are almost ten times more likely to be available through their mobile phone. Clearly, the mobile channel is a crucial link in enabling people to interact. As a result, a value-added services market has taken shape since the 1990s. However, there is still a large number of (Internet-based) service providers that do not mobilize their service offering through mobile messaging.

Mobilize business applications: On an average, 5.5per cent of patients do not show up at a doctor's appointment. A simple text messaging reminder would substantially reduce this number of no-shows and the associated costs. Incentivated, a mobile marketing agency, proposed a simple SMS reminder service for UK-based optician and helped to generate $8 mn in savings.

Operators have addressed the mobile enterprise opportunity mainly through technological innovations such as the wireless application protocol (WAP) and push email. This has resulted in a plethora of device specific applications with low reliability and high integration costs. Consequently, enterprise mobility has brought little or no productivity improvements for the average business.

Combining the reach and reliability of text messaging with the relevance of data in enterprise applications promises a quantum leap in enterprise productivity.

Set up a mobile marketing business: Operators can play a pivotal role in mobile advertizing value chain. They own customer relationship and access channels, the advertizing inventory, location information, and customer profile. This profile includes phone number, usage behavior, demographics, and content preferences.

Furthermore, the operator controls the main vehicle for the digital dialog: mobile messaging. According to IAB, 95per cent of text messages are opened compared to 25per cent of emails. This puts mobile operators in a very strong position indeed when competing for advertizing budgets.

At the same time, operators are often anxious to protect existing service revenue streams, as it may well remain the most substantial part of their business. To date, mobile advertizing is making slow but steady progress towards the forecasts of becoming a $19 bn industry.

In summary, advertizing revenues will never be adequate to replace service revenues but are a welcome supplement for operators. Mobile operators are uniquely positioned to monetize the best advertizing inventory in the world. Combining customer location and profile enables the delivery of unprecedented levels of advertizing relevance and reach. By addressing the essential enablers mentioned above, the competitive position of operators in the advertizing market would be second to none.

The future of messaging continues to be a bright amid the negativity in the current economic markets. Mobile operators can effectively extend their revenues by leveraging their existing assets and exploit the potential still left in today's mobile services, allowing them to remain agile and profitable.

mKhoj intros mobile advertising in local languages

2009-06-02T14:40:00.001+05:30

On www.ciol.com on 02 June 2009

BANGALORE, INDIA and PALO ALTO, USA: mKhoj, the leading mobile advertising marketplace for the rest of the world, today announced the ability to power relevant mobile advertising tailored to local languages in seventeen different countries. With this announcement, mobile advertisers can leverage mKhoj's ad network to display ads in hundreds of languages, including Afrikaans, Arabic, Bahasa, Hindi, Tamil, Turkic, and Zulu.

This new technology continues mKhoj's commitment to provide the fastest character mapping for more than 600 mobile publishers. With UTF-8 encoding, mKhoj allows advertisers to increase the power of their mobile marketing by more effectively targeting their audience, and increases the monetization as well as the value of the publishers' mobile properties through greater localization.

How it works:

When advertisers sign up, they now have the ability to upload their mobile advertising in any local language and in any alphabet. This gives advertisers new ways to target and communicate with consumers.

"Empowering advertisers to speak to consumers in their native language enables them to make more personal connections with their target audiences." Abhay Singhal, Head of Global Sales for mKhoj. "This provides multinational advertisers a more effective way to reach local audiences around the globe."

mKhoj has implemented its UTF-8 encoding technology to enable advertisers to easily upload local language advertising as-is, so publishers and their users are ensured a high quality experience.

Tata Indicom’s ILD offer

2009-06-02T13:39:00.001+05:30

On The Hindu Business Line dated 02 June 2009

Madurai, June 2

Tata Teleservices Ltd has launched ‘STV 76’, a special tariff voucher that offers attractive International Long Distance (ILD) calling rates for its prepaid subscribers, a press release said. Calls made to the US/Canada would be charged at Rs 2 a minute, calls to Gulf at Rs 7.50 and the rest of the world at Rs 12. The offer applies across Madhya Pradesh, Bihar, Orissa, Punjab, Himachal Pradesh, Gujarat, Karnataka, Tamil Nadu and UP East circles. The new re charge voucher is available at Rs 76 for 30 days. Prepaid subscribers can also make local calls using the special tariff voucher. All Tata-to-Tata local calls would be charged at 25 paise a minute whereas local calls to other network mobile would be at 75 paise a minute.

WiMAX Forum Global Congress

2009-06-02T13:31:00.000+05:30

From The Hindu Business Line on 02 June 2009

New Delhi, June 1 Indian telecom players including Tata Communications, MTNL, BSNL and Sify will participate in the annual WiMAX Forum Global Congress 2009 in Amsterdam from June 2-3. This annual congress will be led by players that are active and involved in the growing momentum of WiMAX ecosystem globally. Thought leaders from 40 operator companies, 14 analysts, 7 regulators and 3 investors from 40 different countries ar expected to participate in this meet. - Our Bureau

Interview -- ‘Number portability will benefit Idea in new markets’

2009-06-02T13:23:00.000+05:30

By Ashok Kumar in Financial Express on 02 June 2009

New Delhi: Speaking on the sidelines of a press conference to promote the upcoming IIFA awards, Pradeep Shrivastava, Chief Marketing Officer, Idea Cellular in a short conversation with IndianExpress.com tells, how Mobile number portability (MNP) on mobile phones will be both a challenge as well an opportunity for the service providers including Idea.

Talking about the impact of Number Portability on Idea Cellular, Shrivastava said, like any other company, the new regulatory provision of ‘number portability’ will be a challenge in the existing markets for all the service providers including Idea.

But, Shrivastava sounded positive about the impact of the measure on the new markets as he asserted, “In the new markets Idea will benefit from the number portability.”

Talking about the growth prospects for the company, in the already saturated telecom market, Shrivastava stated that the penetration in the rural markets is way behind the national penetration which stands in the range of 35 percent. “In the rural markets, the penetration of the mobile phones, industry wise, is still in single digits, which leaves us with enough scope for an impressive growth in future,” Shrivastava opined.

“Even in markets like Chennai where we (cellular operators) have a hundred percent penetration, the introduction of value added services spreads an impressive canvass for our company to grow,” Shrivastava clarifies.

Terming the Network and the pricing competitiveness as the hallmarks of Idea Cellular, Shrivastava feels it is the emotional connection of the brand with its millions of customers which separates it from the rest of the service providers.

Telephone tariff will drastically come down: Raja

2009-06-02T13:17:00.000+05:30

From Financial Express; ANI dated Jun 02, 2009 at 1539 hrs IST

New Delhi: Union Minister of Communications and Information Technology, A Raja has said that the prospects of the further lowering of telephone tariff in India are imminent in the future.

He said this while assuming his charge of the ministry here on Monday.

He also said that as a result of a drastic tariff cut, the telecommunication facility will be available to people living in the lowest edge of the social strata.

“In the telecom side already we brought healthy competition. More operators were permitted as per the TRAI recommendations. I do believe once the new operators start their operations the tariff will drastically come down and the telecommunication facility will be available to persons living in the lowest edge of the social strata,” he added.

He also said that India would auction third-generation wireless radio (3G) spectrum by the end of this year.

Raja declined to say how much the government expected to mobilise through the sale. India was to auction the 3G telecommunications spectrum in January, but the sale was delayed.

The telecommunication ministry had earlier expected the auction to raise 300 to 400 billion rupees but the Ministry of Finance in February estimated the sale could bring just half of that.

Third-generation services allow voice, data and video to be transmitted at high speeds to wireless devices, and are seen as the next growth driver for telecom firms in India.

India's Mobile Market Is Growing Despite Economic Slowdown

2009-06-02T12:52:00.003+05:30

From www.pcworld.com on 02 June 2009

By John Ribeiro, IDG News Service/Haarlem Bureau Tuesday, June 02, 2009 2:00 AM PDT

India's mobile phone market continues to be unaffected by the economic slowdown, with 11.9 million new mobile subscribers in April. That's a 45 percent greater increase than in the same month last year, according to data released Monday by India's Telecom Regulatory Authority of India (TRAI).

The mobile market has not been affected so far by the economic slowdown, as Indian consumers see communications as a necessity, said Kapil Dev Singh, country manager at analyst IDC India.

The mobile subscriber additions in April were however lower than the 15.64 million new connections in March, something the telecom regulator regards as a seasonal drop. In India, the monthly data is closely watched for signs of an impact of the economic slowdown on India's booming mobile market.

The slowdown between March and April is seasonal, and does not reflect an overall slowdown in the mobile business in the country, a TRAI official said Tuesday.

As the Indian fiscal year ends in March, mobile service operators offer deep discounts and are more aggressive in their marketing in March, the official said.

"There have been drops from month-to-month previously, so the drop in April is more likely to be seasonal," IDC's Singh said.

The new additions in April this year helped take the total number of mobile subscribers in India to 404 million.

India's largest mobile operator Bharti Airtel added 2.8 million new mobile subscribers in April, taking its total subscribers to 96.74 million, while state-run Bharat Sanchar Nigam Limited (BSNL) added about 1 million new subscribers to have a subscriber base of 53.17 million at the end of the year.

Reliance Communications, India's second largest mobile operator, added 2 million new customers in April, compared to 3 million additions in March. The company saw high additions in the first quarter as it rolled out its new GSM (Global System for Mobile Communications) network in addition to its existing service using CDMA (Code Division Multiple Access).

The number of mobile subscribers in the country is expected to increase as mobile operators target rural towns and villages. The auction of 3G licenses, now rescheduled for the end of this year after a number of postponements, is also expected to give this market a fillip.

COAI Gets New Executive Council For 2009-10

2009-06-02T12:19:00.005+05:30

From www.efytimes.com on June 02, 2009

Tuesday, June 02, 2009: The Cellular Operators Association of India (COAI), the main telecom industry lobby group of India, has announced a new executive council which has taken over the reins of the industry association. Suneeta Reddy, chairperson, Aircel Ltd and vice chairperson, COAI has been appointed as chairperson of COAI. Also Sanjay Kapoor, deputy CEO, Bharti Airtel has now become the vice chairperson of COAI for 2009-10.

During the COAI Annual General Meeting held on 29 May 2009 at New Delhi, outgoing chairman Asim Ghosh thanked the members for their unwavering support during his tenure as chairman. He reminisced fondly about his long association with the industry and the several challenges that the industry had faced and overcome in the last decade.

Ghosh noted that 2008 was a landmark year for the Indian industry as it had reached global scale. He pointed out that the job was never done and there would always be challenges ahead. He thanked Suneeta Ready for her support as vice chairperson, the executive council and the secretariat team for their efforts and contributions and wished them all the very best for the future.

Suneeta Ready, the chairperson elect, thanked the members for the trust and faith reposed in her. She emphasised that COAI had always stood for inclusive growth. She pointed out that the agenda for industry for the next 12 months included ensuring availability of adequate 2G spectrum, an early auction of 3G and BWA spectrum to facilitate the leap to the next generation of services, bridging of the digital divide, improving the financial viability of the industry and making it globally competitive.

Suneeta pointed out that with the imminent introduction of mobile number portability, the SIM card would become like a vote that could be exercised anytime by the consumers, and the industry should make all efforts to ensure that mobile is viewed as a service that adds value to the consumers lives.

The main members of COAI are: Aircel Ltd, Bharti Airtel Ltd, Datacom Solutions Pvt Ltd, Idea Cellular Ltd, Loop Mobile Ltd, Reliance Telecom Ltd, S Tel Pvt Ltd, Swan Telecom Pvt Ltd, Tata Teleservices Ltd, Unitech Wireless Pvt Ltd and Vodafone Essar Ltd.

Story at Financial Express on 30 May, 2009

New Delhi: The COAI Annual General Meeting held at New Delhi saw a smooth transition with the new Executive Council taking over the reins of the industry association.

The event saw the General Body ratify the nominations of Ms. Suneeta Reddy, Chairperson Aircel Ltd. and Vice Chairperson, COAI as Chairperson, COAI and Mr. Sanjay Kapoor, Deputy CEO, Bharti Airtel as Vice Chairperson of COAI for 2009-2010.

The nominations for the Executive Council were also ratified by the General Body.

Outgoing Chairman, Mr. Asim Ghosh thanked the members for their unwavering support during his tenure as Chairman. He reminisced fondly about his long association with the industry and the several challenges that the industry had faced and overcome in the last decade. He also noted how 2008 was a landmark year for the Indian industry as it had reached global scale. He pointed out that the job was never done and there would always be challenges ahead.

TTSL to launch services on GSM platform shortly

2009-06-02T12:12:00.004+05:30

From www.topnews.in Submitted by Darpana Kutty on Tue, 06/02/2009 - 05:07

The telecommunication company of the Tata Group – Tata Teleservices Limited (TTSL) is all set to launch services on GSM platform shortly. The TTSL is compelled to provide services on the GSM platform, due to the lack of a “spectrum roadmap for code division multiple access (CDMA) operators and the limited allocation of airwaves”.

The Managing Director of TTSL, Anil Sardana says, "If one can't grow, one will have to find alternative means to exist. It is the entire policy around allocation of spectrum that caused us to look at other means.”

Sardana explains that spectrum means the airwaves through which the communication signals travel. Spectrum is very important for telecom operators. Sardana reveals, "In the Indian situation, we need to keep the aspect of spectrum availability in mind. The spectrum allocation for CDMA operators is only 800 MHz and no extra spectrum is available beyond what is already allocated to us. Since there is no roadmap, it is from that compulsion that one has to look at alternatives to grow.”

One of the CDMA giants, TTSL, along with Reliance Communications (RCOM), took the first step towards the GSM by applying for dual technology licences in late 2007. The TTSL is set to start its GSM operations shortly, while RCom has already commenced GSM services in India.

The TTSL operates under the brand name “Tata Indicom” in several circles of India. The telephony services of the company include mobile, fixed wireless phones (FWP), public telephone booths and wireline services. The company also provides broadband data network and application services including leased lines, DSL, Wi-Fi, ethernet, managed gateway services and web conferencing services. The company has two unified access (basic + cellular) services licences (UASL) – one for Mumbai Metro and the other for the entire Maharashtra and Goa.

Hughes Launches VPN Service Plans For Indian Enterprises

2009-06-02T12:07:00.001+05:30

From www.efytimes.com on 02 June 2009

Tuesday, June 02, 2009: Hughes Communications India Ltd has introduced its new enterprise tariff plans for VPN Service under the HughesNet managed services portfolio. The newly introduced service plans are: VPN 32 (32 Kbps) at typical price per annum Rs 29,176; VPN 64 (64 Kbps) at Rs 45,959; VPN 128 (128 Kbps) at Rs 75,351; VPN 256 (256 Kbps) at Rs 138,308; VPN 512 (512 Kbps) at Rs 230,658; VPN 1Mbps (1024 Kbps) at Rs 359,227 and VPN 2Mbps (2028 Kbps) at Rs 694,803.

The new service plans look to provide a one-stop solution for all connectivity needs, better manageability and quality for the distributed enterprise.

K. Krishna, AVP, marketing, Hughes Communications India Ltd, said, "Indian enterprises have started to look beyond the metros and big cities for growth especially in sectors like retail, logistics, banking and finance, amongst others. This requires them to get reliable and consistent connectivity across the country. We at Hughes believe in simplifying and demystifying the satellite as a medium. The recent advancements in our technology have made it possible to launch a VPN service that is of terrestrial quality and at near terrestrial pricing."

These newly launched VPN Service plans are built on new generation satellite modems geared to provide MPLS grade (QOS), very high uptime, with IPSEC implementation for security, SNMP Enabled, integrated with FCAPS software and are available to the customers on both the terrestrial as well as the satellite network with same performance metrics.

Related story on www.ciol.com at http://www.ciol.com/technology/networking/news-reports/hughes-unveils-new-tariff-plans/2609120404/0/

Subex Launches CoE For Managed Services

2009-06-02T11:56:00.000+05:30

On www.efytimes.com on 02 June 2009

Tuesday, June 02, 2009: Subex Limited has launched its Managed Services (MS) Center of Excellence (CoE). The CoE will be responsible for delivering a wide range of Managed Services offerings covering the entire spectrum of its OSS/BSS solutions portfolio. This service package offering will enable communication service providers (CSPs) to focus on their ‘core’ business functions while mission-critical operational functions are managed by Subex.

The company’s 50 MS implementations across 24 customers around the world, process more than 20 billion CDRs (Call Data Records), with applications running on more than 100 servers, in a month. This is a clear indication of how Subex’s solutions provide telcos with services that respond to the changing marketplace.

The CoE will leverage Subex’s global spread in delivering best-shore and offshore services, and help consolidate the company’s existing experience and expertise across all its global locations.

“Many of our customers have reached out to us in recent times echoing these sentiments. This strong need for Managed Services coupled with our long standing expertise in MS prompted us to launch the Center of Excellence for Managed Services,” said Subash Menon, founder chairman, managing director and CEO, Subex Ltd. “The Subex Managed Services offering aims to add strategic and tactical value to a communication service provider’s operations and enable it to provide better customer experience, achieve competitive advantage while also enhancing their operational efficiency and profitability.”

The CoE will offer customised packages across Subex’s MS portfolio catering to the varied operational needs of telcos, from specific applications/business processes to end-to-end business process outsourcing (BPO) and/or knowledge process outsourcing (KPO).

The Subex MS proposition consists of the entire range of services across Revenue, Billing and Network Asset Management, Application Management and Support, Infrastructure Management, Data Center Operations, Full Hosting, Operational Support (BPO/KPO) and Consulting.

Airtel user base swells by 2.8 mn in April

2009-06-02T11:25:00.003+05:30

2 Jun 2009, 0142 hrs IST, Durba Ghosh, ET Bureau

NEW DELHI: Leading GSM operators Bharti Airtel and Vodafone Essar have added 2.8 million and 2.7 million subscribers in April, continuing their respective growth momentum. The second-largest mobile operator Reliance Communication added just over 2-million subscribers last month, according to data released by telecom regulator Trai on Monday.

GSM operator Aircel added about 1.1 million new subscribers in April taking its total subscriber base to 19.5 million. Tata Teleservices, a CDMA operator, added about 0.6 million new users in the given month taking its subscriber base to 35.7 million. Idea Cellular and Spice Communications together added a notch over 1-million subscribers in April. State-owned telco MTNL added 47,045 new subscribers in April.

RCOM, the country’s largest telecom operator on CDMA technology platform, had launched GSM-based services in January with schemes providing free talk time up to Rs 900 and this resulted in its subscriber numbers surging between January-March. The free scheme was taken away by March-end, which resulted in subscriber additions falling in April.

RCOM had outperformed the industry in these three months, it added 5-million new users in January and over 3-million new subscribers in February and March. In comparison, the largest mobile operator, Bharti, added 2.7 million new users each in January and February 2009 and 2.8 million in March.

RCOM now has a mobile subscriber base of 74.8 million and Vodafone Essar's total subscriber base stands at 71.5 million, while Bharti Airtel leads with 96.7 million total subscribers. Vodafone Essar also saw a drop of about 0.07 million users in its monthly additions in April and the telco added just over 2.7-million subscribers as against 2.84 million in March.

With this, Bharti Airtel regained the number one position in terms of subscriber additions by a few thousand users as it increased its customer base by 2.8-million users in April.

In March 2009, Vodafone Essar had beaten Bharti Airtel in monthly subscriber additions for the first time. Trai also said that India's mobile base had crossed the 400-million mark in April, inching close to the target of 500-million users by 2010, set by the Department of Telecom (DoT).

The total wireless subscriber base now stands at 403.66 million, while the total telecom base, which includes that of landline is 441.47 million, Trai added. But, the number of new mobile connections added in April saw a 23% drop compared with 15.64 million new additions in the previous month.

Tata Tele to now enter GSM space

2009-06-02T11:20:00.003+05:30

2 Jun 2009, 0151 hrs IST, Rashmi Pratap, ET Bureau

MUMBAI: For the Tatas, offering mobile services on the global system for mobile (GSM) platform is a "compulsion" and not a choice. The absence of spectrum roadmap for code division multiple access (CDMA) operators and the limited allocation of airwaves has forced Tata Teleservices (TTSL), the group’s flagship telecom company, to offer services on the GSM platform as well.

"If one can't grow, one will have to find alternative means to exist. It is the entire policy around allocation of spectrum that caused us to look at other means," TTSL MD Anil Sardana told ET.

Spectrum refers to airwaves on which the communications signals travel and it is the raw material for operators. "In the Indian situation, we need to keep the aspect of spectrum availability in mind. The spectrum allocation for CDMA operators is only 800 MHz and no extra spectrum is available beyond what is already allocated to us. Since there is no roadmap, it is from that compulsion that one has to look at alternatives to grow," he added.

GSM and CDMA are rival technology platforms for offering voice and data services. CDMA heavyweights, Reliance Communications (RCOM) and TTSL, joined the GSM bandwagon by applying for dual technology licences in late 2007. While RCOM has already rolled out GSM services across India, Tatas are slated to start operations in a few weeks.

Incorporated in 1996, TTSL was the first to launch CDMA mobile services in India with a foray into the Andhra Pradesh circle.

"It was a conscious and deliberate decision and it was predicated largely on data capabilities of CDMA. We continue to be committed to CDMA," said Mukund Govind Rajan, MD, TTSL (Maharashtra), the listed arm of TTSL offering services in Mumbai and rest of Maharashtra.

In March, TTML rolled out 'Photon', its high-speed Internet service offering speeds of up to 18mbps. Due to efficient data services, CDMA players witness higher contribution to reveunes from data. For TTSL, data brought in 10% of the revenues in FY08 and it grew to 14% in FY09. For GSM operators, the figure is an average of around 9%.

Dr Rajan said, "I do believe that India is getting ready for many of those data services and the choice of CDMA platform was right, but the other issue of availability of essential raw material — spectrum — has been a question mark."

According to Mr Sardana, it is often argued that CDMA is more efficient and requires half the spectrum compared to GSM. "But seeing from a shareholders perspective, one has to build double the networks to sustain and that is a cost both in terms of capex and opex. Therefore, efficiency is no arguement; it's a perpetual pain that is experienced," he said.

"We spend twice in terms of rollout and its hurts shareholders' interest. We have discussed it with every government committee that was set up to look into spectrum," Mr Sardana added.

KT Corp may not have to pay tax here

2009-06-02T11:17:00.001+05:30

2 Jun 2009, 0224 hrs IST, M Padmakshan, ET Bureau

MUMBAI: KT Corporation, a South Korean telecom major, has secured a favourable judgement from the Authority for Advance Ruling (AAR), a quasi judicial body on tax matters, that will have a bearing on the company’s tax liability in India. The AAR ruling can support its case for not paying tax in India.

AAR, in an order passed on May 29, held that KT Corporation's liaison office (LO) in India, which is a fixed establishment seemingly conducting business activities, cannot be construed as a Permanent Establishment (PE) in India.

PE, a fixed place for a non-resident entity to conduct business in India, is a parameter critical in deciding whether the Korean company needs to pay tax in India at all. According to the facts of the case, LO was set up in India prior to an agreement that KT Corporation signed with domestic telecom player, Vodafone Essar South (VESL), for purchasing and providing services.

KT Corporation told AAR that it opened its liaisoning office way back in 2004 only for the purpose of communicating between the head office in South Korea and its clients in India. No business activity was conducted through its LO.

It was agreed between KT Corporation and VESL that the former would bear the investment cost in addition to the connection and maintenance costs to link up the facilities between its network and VESL’s foreign Point-of-Presence (POP) at various locations. In return, VESL would bear the investment cost, provisioning and maintenance of connecting facilities in India among other expenses.

One party will send the other an invoice of all traffic terminated on its side every month. In line with the terms and conditions agreed between them, the invoiced party will make payments to the invoicing party. AAR examined in detail the functioning of LO and accepted the claim of the South Korean company that it did not carry out any business activity using LO.

3G auctions may be cleared by Cabinet

2009-06-02T11:11:00.002+05:30

2 Jun 2009, 0232 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: The proposal for auctions of third generation (3G) spectrum, vital for high-end services such as video-conferencing and high speed Internet on the mobiles, , may directly be considered by the Union Cabinet for clearance rather than be routed through the Group of Ministers (GoM).

The Department of Telecom (DoT) has told the Cabinet Secretariat that since the auctions were a priority of the new government, the approval of the Union Cabinet be sought directly on this issue. The Cabinet can consider the earlier submission the communications ministry had made when re-examining the proposal for 3G auctions, DoT added.

DoT, in its 3G policy and its submissions to the Cabinet in January 2009, had said that the base price for pan-India 3G spectrum would be Rs 2,020 crore while that for broadband access technologies such as WiMAX would be Rs 1,010 crore.

But, the finance ministry had objected to this proposal and demanded that the floor price be doubled. Differences between several ministries over the floor price for the auction of 3G airwaves and also over the number of players to be allowed to offer these high-end services in an area had forced the Cabinet to refer the matter to a Group of Ministers just prior to the general elections. The auctions could not be held prior to the polls as GoM failed to meet to find a solution to these issues.

The issue got further complicated as the planning commission, the department of industrial policy and promotion and the IT ministry opposed doubling of the base price.

Last week, DoT was asked by the cabinet secretariat to review the constitution of the GoM. DoT was also asked to submit a proposal on the current constitution of the GoM, the proposed time frame for the completion of its mandate and also suggestions for its reconstituting the same.

But, the communications ministry in its reply has told the Cabinet Secretariat that its earlier proposal which involved five players per circle and a base price of Rs 2,020 crore as the base price for pan-India 3G spectrums be retained. It has also added that the Union Cabinet under the new UPA regime must take a final call if the entire issue needs to referred to a GoM again.

The communications ministry has also decided to oppose the finance ministry’s demand of doubling the 3G auction base price to Rs 4,040 crore. The DoT has already told the prime minister’s office that the base price must not be higher than Rs 2,020 crore for pan-India 3G spectrum.

(Possible Priorities) Taking a call on telecom that’s missing clear signal

2009-06-02T11:04:00.002+05:30

2 Jun 2009, 0307 hrs IST, M V Ramsurya, ET Bureau

Even as the new government has said that it would seek telecom regulator Trai’s views on allocation of additional airwaves, delinking spectrum allocation from subscribers base is a vital route to develop the telecom sector and move operators away from the restricted focus of a volumes-alone thrust.

India is the only country that still follows the outdated practice of allocating spectrum based on subscriber base, instead of the internationally-accepted practice of auction system. Apart from raising revenue, the competitive bidding process helps assign licenses to firms smoothly and also works toward avoiding monopoly in the highly competitive market. The most important argument in favour of the auction process is that it would allow the government to know how licenses are valued by participating companies.

In fact, a recent report by the specially-constituted spectrum panel advocated the auction route for issuing additional airwaves to telcos. The panel, comprising government representatives and telecom technology experts, said only the start-up spectrum — the minimum amount of radio frequencies required to launch mobile services — be given for free to existing telcos, while a competitive bidding process be opted for all subsequent allocations.“Delinking of spectrum allocation from subscribers could lead to sanity in the market place and get the operators away from volume growth to value growth,” says AT Kearney senior principal Mohit Rana.

Among the other stalled initiatives that need to be taken up by the new government is the clearance for mobile virtual network operator (MVNO) that will allow companies with strong retail networks and brands of customer segment ownership to enter the telecom space. Such operators typically don’t own their spectrum and neither do they have their own network infrastructure. Having such a concept, which has so far been popular in Europe and the US, will lead to a significant impact on the business plans of new operators which need much longer time to market.Mobile number portability is yet another move that could likely to see some action soon. While globally it has received a mixed reaction, in India, it may help provide opportunities to late entrants to take away high value customers from established players. Also, in conjunction with 3G, mobile number portability offers an opportunity for players with 3G license to add customers. Work on infrastructure creation for 3G may be started once policy guidelines are clear.

The auction of 3G spectrum will be closely watched as though being one of the fastest growing telecom markets in the world, the auction has been delayed since 2007. Consensus on the base price for airwaves is needed here as it would not only clarify the situation for the sector and its players, but also project a unified approach from all ministries concerned, including the finance and communications.

In all, there is a long list of things to be done by the new government if the larger target of 700 million subscribers by 2012 is to be achieved.

Mobile subscriber base crosses 400 million

2009-06-02T10:56:00.004+05:30

2 Jun 2009, 1419 hrs IST, AGENCIES on www.economictimes.com

NEW DELHI: The number of mobile subscribers in India crossed the 400 million mark in April, official data showed Tuesday, putting the country on track to reach it's goal of 500 million customer by next year.

Some 11.90 million subscribers were added in April compared with 15.64 million during the previous month, figures posted on the Telecom Regulatory of India (TRAI) website said. The rise took India's total wireless subscriber base to 403.66 million, TRAI said.

The slowdown in subscriber growth came after cellular operators withdrew special deals on offer during the final months of the fiscal year to March when the firms sought to boost revenues to help their annual accounts.

But India remains the world's fastest-growing mobile market and analysts say the government's target of 500 million mobile phone users could be reached ahead of schedule.

The total telecom subscriber base made up of wireless and landline customers stood at 441.47 million at the end of April compared with 429.72 million in March, TRAI added.

Total penetration stands at close to 38 telephones for every 100 people, TRAI said. India has nearly 1.2 billion people.

India has said it will stage its much delayed auction of third-generation (3G) wireless spectrum by year end.

Third-generation wireless service allows voice, data and video to be sent at high speeds to mobile devices and is viewed as the next major booster driving growth in India's telecoms market.

The Congress-led government had forecast the auction could raise 400 billion rupees (8.5 billion dollars).

But since its re-election last month, it has backed off that forecast, saying the global financial crisis could reduce the windfall.

India's newly reappointed telecoms minister A. Raja has also said he will seek to push cheap local mobile call rates even lower to spur cellular growth. Local mobile calls now cost as little as one cent a minute while long-distance rates vary from two cents to four cents a minute.

Raja says he wants to cut the local rate to less than half a cent a minute and long-distance rates to about a cent a minute.

Story in Financial Express on 1 June 2009

New Delhi: The country's wireless subscriber base has crossed the 400-million mark in April this year with an addition of 11.9 million new users.

About 11.90 million wireless (GSM, CDMA and WLL(F)) subscribers were added in April 2009 as against an addition of 15.64 million during the previous month, taking the total subscriber base to 403.66 million, Telecom Regulatory Authority of India (TRAI) said in a statement on Monday.

The total telecom (wireless and wireline) subscriber base stood at 441.47 million at the end of April 2009 as against 429.72 million in March 2009, it added.

It now looks like the target of 500 million phones by 2010 (set by Department of Telecom) is very much achievable, even before the target period.

Total additions (wireless and wireline) in April stood at 11.75 million as compared to 15.87 million new connections in the previous month.

The wireline segment saw a slight decrease of 0.15 million in subscriber base to 37.81 million in April against 37.96 million wireline subscribers in March 2009, TRAI said.

TRAI added that the overall tele-density has reached 37.94 at the end of April as against 36.98 in March 2009.

Tele-density means the number of people having phones per a population of 100.

Aircel awards multi-million-dollar contract to Telcordia

2009-06-02T10:50:00.005+05:30

2 Jun 2009, 1528 hrs IST, IANS on www.economictimes.com

NEW DELHI: Telecom operator Aircel has awarded a five-year multi-million-dollar contract to Telcordia, a global communication software service provider, or implementing its real-time charging solution, the company said on Tuesday.

Aircel is a joint venture between Malaysia's Maxis Communications and India's Apollo Hospitals Group.

"Aircel has awarded Telcordia a five-year, multi-million dollar contract for Telcordia Real-Time Charging, a flexible charging and policy control solution for their mobile prepaid subscribers," the company said in a statement.

Earlier Telcordia had deployed the solution in just five months on a trial basis, powering Aircel's pan-India network rollout and supporting the introduction of interactive real-time services and tariff plans.

"We selected Telcordia's leading edge solution because it provides us with the reliability and scalability we need to support our business strategy of delivering service innovation to millions of subscribers," said Gurdeep Singh, chief operating officer Aircel Cellular.

"Telcordia implemented the entire solution in record time. The prepaid solution is flexible and vendor agnostic, which means that we are able to easily and quickly implement new service offers, which will attract more customers and build our market share," he added.

The real-time charging solution is emerging as a market leader for next generation prepaid services in high growth and highly competitive markets.

India's wireless user-base crosses 400-mn mark

2009-06-01T19:25:00.006+05:30

On Hindustan Times on June 1, 2009

The country's wireless subscriber base has crossed the 400-million mark in April this year with an addition of 11.9 million new users.

About 11.90 million wireless (GSM, CDMA and WLL (F)) subscribers were added in April 2009 as against an addition of 15.64 million during the previous month, taking the total subscriber base to 403.66 million, Telecom Regulatory Authority of India (TRAI) said in a statement on Monday.

The total telecom (wireless and wireline) subscriber base stood at 441.47 million at the end of April 2009 as against 429.72 million in March 2009, it added.It now looks like the target of 500 million phones by 2010 (set by Department of Telecom) is very much achievable, even before the target period.

Total additions (wireless and wireline) in April stood at 11.75 million as compared to 15.87 million new connections in the previous month.

The wireline segment saw a slight decrease of 0.15 million in subscriber base to 37.81 million in April against 37.96 million wireline subscribers in March 2009, TRAI said.

TRAI added that the overall tele-density has reached 37.94 at the end of April as against 36.98 in March 2009. Tele-density means the number of people having phones per a population of 100.

The total broadband subscriber base has reached 6.28 million by the end of April 2009 as compared to 6.22 million by the end of March 2009.

India, where local call rates are going as low as 50 cents, has been adding huge mobile subscribers as telcos like Bharti and Vodafone Essar are offering innovative tariffs to attract more customers.

The country is already the fastest growing country in terms of wireless-user addition.

Bharti Airtel, the country's largest mobile company by users, alone has 100 million customers.

Related story on www.ciol.com at http://www.ciol.com/technology/mobility/news-reports/indias-wireless-user-base-crosses-400mn/1609120368/0/

Number of new telecom subscribers dips in April

2009-06-01T14:44:00.005+05:30

1 Jun 2009, 1321 hrs IST, PTI on www.economictimes.com

NEW DELHI: The Indian telecom industry saw a dip in the number of new subscribers in April - 11.75 million telephone connections were added, compared to 15.87 million in March, an official statement said here Monday.

The number of telephone connections reached 441.47 million in April from 429.72 million a month before, Telecom Regulatory Authority of India (TRAI) said in a statement.

Overall tele-density reached 37.94 from 36.98.

The total wireless subscribers (GSM, CDMA and wireless local loop-fixed) base stood at 403.66 million with addition of 11.90 million subscribers in April, the statement said.

Additions to the number of wireless subscribers also dipped after reporting a record 15.64 million new connections in March.

In the wireline segment, the subscriber base decreased 0.15 million to 37.81 million in April from 37.96 million.

However, the number of broadband subscribers grew from 6.22 million to 6.28 million.

Additional story in The Hindu Business Line on 02 June 2009

Telephone subscriber growth rate dips in April

New Delhi, June 1 Telecom operators reported a dip in telephone subscriber growth rate with 11.75 million new users in April compared with 15.87 million in March.

According to the Telecom Regulatory Authority of India, the total number of telephone connections reached 441.47 million at the end of April compared with 429.72 million in March. With this growth, the overall tele-density has reached 37.94 per cent.

The dip in subscriber growth rate was primarily due to a slow down in the uptake of cellular usage. The total wireless subscribers — GSM, CDMA & WLL-F — base stood at 403.66 million. A total of 11.90 million wireless subscribers have been added during April against 15.64 million added during March.

In the wireline segment, the subscriber base has decreased to 37.81 million in April against 37.96 million in March, registering a slight decrease of 0.15 million.

According to market watchers, the dip in subscriber base may be because operators clean up their list of subscribers who may have given up their connection but they continue to show as a user. This usually happens in the months of March-April.

The total broadband subscriber base reached 6.28 million by April-end compared with 6.22 million in March.

Indian telecom industry grew 24% to top $24 bn: Survey

2009-06-01T11:48:00.005+05:30

1 Jun 2009, 1534 hrs IST, IANS on www.economictimes.com

NEW DELHI: Despite the overall slowdown and driven by unprecedented demand for mobile phone connections, the Indian telecom equipment industry grew 20% last fiscal to top $24 billion in revenues, says a new survey.

Interestingly, though, the market for mobile and fixed-line handsets grew just 6 percent because of crashing prices and focus on rural market, said the annual survey by Voice and Data, a telecom industry journal of CyberMedia group.

"We've seen this before," said Prasanto K. Roy, chief editor of Voice&Data. "In a downturn, telecom gains, as businesses deploy cost-saving tech," Roy told IANS.

"In the last downturn, internet telephony got a boost. This time, it's video-conferencing, including high-spend areas such as tele-presence."

According to the survey, Finnish mobile and equipment maker Nokia retained the number one ranking among telecom equipment players. Sweden's Ericsson, Nokia-Siemens Networks, Alcatel-Lucent and Chinese vendor Huawei made up the other four in the list.

"Despite all the noise about the national security angle of Chinese vendors who are doing extremely well in most other global markets, they have been able to establish themselves as big and acceptable players in India," said the magazine.

The survey also revealed that the fixed phone market has actually fallen by a third, losing out to the mobile market segment in recent years, which expanded by 7.9 percent in 2008-09.

"Availability of affordable feature-rich mid-range handsets in the market is the secret behind the explosive number growth in the mobile industry," the survey said.

"With more mobile operators launching services, and established players turning their attention to low tele-density markets, mobile telephony is only likely to continue its growth run."

The survey says even though the overall telecom sector's story had been good during the last fiscal, the last few months had its share of challenges too, for which the industry blamed on the government and pressure from vested interest groups.

But the industry hopes that Prime Minister Manmohan Singh will intervene himself, as part of his stated plan to review the performance in key ministries, and ensure that all bottlenecks are removed and the telecom industry continues to log high grow.

StanChart may back up to $5 bn for Bharti-MTN deal

2009-06-01T11:45:00.002+05:30

1 Jun 2009, 1545 hrs IST, REUTERS on www.economictimes.com

HONG KONG: Standard Chartered Bank could underwrite up to $5 billion to back Bharti Airtel Ltd's $23 billion tie-up with South African telecom operator MTN Group Ltd., bankinig sources said.

The sources said that StanChart was expecting to underwrite the full amount of the financing for the proposed deal, or as much as $5 billion. If it materialises, StanChart is expected to syndicate it, the sources said.

3G spectrum auction by 2009 end: Raja

2009-06-01T11:41:00.004+05:30

1 Jun 2009, 1706 hrs IST, REUTERS on www.economictimes.com

NEW DELHI: India will auction third-generation wireless radio (3G) spectrum by the end of this year, Telecoms Minister Andimuthu Raja said on Monday.

"Definitely... in 2009 itself," Raja told reporters when asked about the time-frame for the long-awaited 3G auctions.

Raja declined to say how much the government expected to raise through the sale. India was to auction the 3G telecommunications spectrum in January, but the sale was delayed.

The telecoms ministry had earlier expected the auction to raise 300 to 400 billion rupees ($6.4 to $8.5 billion), but the finance ministry in February estimated the sale could bring just half of that.

Third-generation services allow voice, data and video to be transmitted at high speeds to wireless devices, and are seen as the next growth driver for telecoms firms in India, the world's fastest growing mobile market.

Additional material from

Reuters at http://in.reuters.com/article/domesticNews/idINBOM47305220090602
Financial Express at http://www.financialexpress.com/news/india-to-auction-3g-spectrum-by-2009-end-raja/469634/

Raja puts BSNL-MTNL merger on back-burner; BSNL may be listed

2009-06-01T11:37:00.003+05:30

1 Jun 2009, 1939 hrs IST, PTI on www.economictimes.com

NEW DELHI: Telecom Minister A Raja on Monday virtually ruled out the BSNL-MTNL merger saying it is difficult due to lack of identical factor between them. "Identical factors are not there legally for BSNL-MTNL merger," Raja said.

The Minister, who assumed charge today, however, said the Department was keen on listing of BSNL and advised PSU management to start talks with the Employees Union for taking the company public. The union has been opposing the listing.

Late Communication Minister Pramod Mahajan had proposed the merger and was revived by Raja's predecessor Dayanidhi Maran for synergy purpose. Government holds 56.25 per cent in MTNL and it is listed in NYSE and in India. BSNL is 100 per cent owned by government.

MTNL provides telecom services in Delhi and Mumbai, while BSNL serves the rest of India.

On plans to list BSNL in the bourses, Raja said the management has been advised to initiate talks with the employees union.

"We want to list BSNL... We want to create a consensus for it. We have asked the BSNL management to talk to the union", said the Minister. Estimates suggest that BSNL is worth 100 billion dollars and dilution of 10 per cent stake would help the company raise 10 billion dollars (about Rs 48,000 crore).

Story in The Hindu Business Line on 02 June 2009

Decision on BSNL listing after talks with unions

New Delhi, June 1 The Communications and IT Minister, Mr A Raja, on Monday said that decision related to listing of Bharat Sanchar Nigam Ltd will be taken after discussing it with the company’s employee unions.

While BSNL had approached the Government seeking permission to go for an initial public offering, the employee unions had objected to it. The PSU is planning to offload about 10 per cent stake to the public. “We have to build a consensus around it,” Mr Raja said.

Mr Raja also ruled out the possibility of merging the two PSUs – BSNL and MTNL.

On the issue of auctioning spectrum for 3G services, the Minister said that he will seek approval from the Cabinet Committee on Economic Affairs.

The previous Government had referred the matter to a Group of Ministers but since some members of this GoM is not in the new Cabinet, the policy for 3G could be reverted back to the CCEA.

“We need to be clear on whether to get the approval from the CCEA or for a new GoM,” Mr Raja said.

DoT against lock-in for promoters equity; mergers on cards

2009-05-31T11:32:00.004+05:30

31 May 2009, 1053 hrs IST, PTI on www.economictimes.com

NEW DELHI: The fast growing telecom sector is set to witness another round of mergers and acquisitions with the DoT recommending against lock-in of promoters' equity, saying this would only hamper growth and competition.

The committee for finalising the views of the Department of Telecom (DoT) on lock-in period for promoters' equity is understood to have submitted its report in this regard.

"Despite exponential growth and intense competition, the telecom industry even after 15 years of operation is cash flow negative. Capital efficiency of the sector is an important pre-requisite for achieving consumer interest in a sustainable manner.

"Further growth and coverage of the rural and remote areas would entail huge investments. Against the backdrop of economic downturn, it is a challenge to raise investible funds, and there is a need for valuable foreign investments," the committee said.

"The lock-in period will only hamper growth of telecom market and competition," it added.

The issue of lock-in period was raised as some of the new players inducted new partners to garner funds for rolling out network across the nation.

If accepted, this would lead to consolidation of telecom industry and according to analysts the business of mobile services may not be commercially viable in case there are more than four or five operators in a circle.

At present, there are eight to nine mobile operators in each circle and with the teledensity especially in the urban areas crossing 30 per cent, the commercial viability of players is at stake.

The committee also observed that the concept of fly-by-night operators has not been experienced in the telecom arena so far, the report of the committee said.

To call some licencees as fly-by-night operators for undertaking transactions, which are well within their licence terms, "is unfair and there is no need to impose any new condition on any of the access services providers," it added.

The paid-up capital and networth requirement are prescribed to avoid non-serious and fly-by-night operators.

The committee, thus, recommended that there should not be any new condition regarding Lock-in of promoters equity on any access services licensees for development of telecom sector in India.

Although some of the new players like Unitech and Swan telecom have raised funds by issuing fresh equity to foreign partners but with this recommendation, if accepted, would help others including Datacom and Loop telecom to achieve roll out obligations faster.

BSNL scouts for pvt partners for Internet Data Centres

2009-05-31T11:04:00.009+05:30

The Hindu Business Line on 31 May 2009

Thomas K. Thomas

New Delhi, May 30 Bharat Sanchar Nigam Ltd has invited bids from private players to set up Internet Data Centres (IDCs) in various parts of the country on a revenue sharing basis.

The centres are expected to be set up over the next six months after which the PSU will go for outsourcing contracts for services such as Web hosting, co-location, data warehousing and Internet managed services.

A data centre is a facility where customer can outsource the management and day-to-day operations of their Web sites or other IP connected applications. Customers can purchase the server hardware, rack space, bandwidth and network equipment. In addition, customers get a secure place to physically house their equipment with regulated power, dedicated Internet connection, security, and fire detection equipment.

Although some companies have chosen to address their requirements in-house and to maintain complete control over their Internet Infrastructure, the pressures of provisioning IT Infrastructure are increasingly leading a lot of corporate houses to consider outsourcing their e-business infrastructure requirements.

Private telecom players such as Reliance Communications and Tata Communications are already offering such services. Then there are Internet Service Providers such as Sify which are also in this segment. These private players may bid for the BSNL project.

According to the expression of interest floated by BSNL, the private partner will have to invest the entire amount required to set up the IDCs. BSNL will provide its national communication infrastructure as the backbone for the proposed centres.

As part of the shared hosting services, BSNL plans to bundle in free email accounts, depending on the package customer subscribes to.

“Outsourcing the management and monitoring of mission-critical Internet operations is crucial for stability in an increasingly complex networking environment. Beyond the sheer complexity of infrastructure itself, the uncertainties of ever-changing relationships with telcos, Internet Service Providers (ISPs), and rapidly changing technologies often render it difficult for businesses to make the best choices. BSNL’s managed services will provide cutting-edge industry expertise to speed up the time-to-market, in the most cost-effective manner,” said a BSNL official.

The PSU is also planning to offer messaging solutions which will enable customers to outsource their entire e-mail operations.

BSNL has been increasingly adopting the public-private partnership model for its new services. It has, for example, partnered with Soma Networks for offering WiMax based broadband services in three States. Similarly, the PSU has roped in HFCL to roll out its IPTV services.

Analysts said that the franchisee model lowers the risk and cost for the PSU since the private partner invests all the money required for the project.

Atom technologies Ties Up With Sahayata

2009-05-30T18:08:00.001+05:30

From www.efytimes.com on 30 May 2009

Saturday, May 30, 2009: atom technologies has announced the formalisation of its association with Sahayata, a micro-finance institution (MFI) headquartered in Udaipur, Rajasthan recognised for working in the area of socio-economic development of women from weak economic backgrounds. atom’s m-collections solution model will provide Sahayata with a fully developed mobile solution for distributing loans and managing collections of loan repayments.

Sahayata provides micro loans to rural women, who women are self-employed and operate small businesses to support there livelihood. As these women are located in deep rural areas, it’s very difficult for Sahayata to reach them for disbursal tracking and loan repayment collection. atom’s mobile based m-Collections solution provides better reach to these geographical locations by using mobile connectivity.

Sahayata’s employees i.e. Sahayaks carry Java MIDP 2.0 mobile handsets with m-collection application loaded in it. This application helps them connect directly with the backend operations of Sahayata for real-time transaction recording to speedup the process.

“I am sure our m-collections application will help Sahayata reach out efficiently in those rural areas, who are really in need of micro-credit for their continuous livelihood,” said Dewang Neralla, director, atom technologies.

“We are happy to be associated with the dedicated and intellectually gifted team at atom technologies, and look forward to optimally utilising their customised mobile solutions for microfinance to the benefit of our customers by providing them with a best-in-class service experience,” explained Ajay Verma, managing director and CEO, Sahayata.

MVNOs get nod to start ops

2009-05-30T12:49:00.004+05:30

30 May 2009, 0010 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: The Telecom Commission, the highest decision making body of the communications ministry, on Thursday cleared the proposal to allow Mobile Virtual Network Operators (MVNO) to launch operations in India.

MVNOs offer mobile services without owning cellular networks or airwaves (spectrum) on which telecom signals travel. Their business model involves buying airtime from existing operators that own telecom infrastructure and selling it to consumers under their own brand. Companies, such as the UK-based Virgin Mobile, British Telecom and Japan’s KDDI, have based their telecom strategy on MVNO model. Currently, there are over 300 MVNOs operating globally. The entry of MVNOs is set to further increase competition in the world’s fastest growing mobile market.

Following the commission’s approval, the government will soon issue a formal notification along with guidelines for MVNOs to operate in India. In August 2008, Trai asked the government to permit MVNOs and said that entry of such players would be a ‘natural progression towards enhancing free market principles and contributing to the efficient use of existing telecommunication infrastructure’.

So far, the communications ministry had been unable to release the guidelines for MNVOs, as the department of telecom (DoT) and regulator Trai had not found consensus on key issues. The commission, while clearing the proposal, has said MVNOs cannot go for multiple parenting in India. This means, an MVNO can tie-up with only an operator in an area for their services. On the other hand, an existing operator can tie-up with any number of MVNOs.

The commission also said that MVNOs would be given licences for a 20-year period.

DoT executives had earlier told ET that several MVNOs from across the world had shown interest in launching operations in India. The auctions of 3G spectrum and the launch of these high-end services is expected to serve as a catalyst and attract virtual operators to India, as many players that operate in this space globally specialise in high-end value-added services. Many of the new telecom companies, who were granted telecom licences last year, may partner with MVNOs, as it would bring them additional revenues and help contribute towards the creation of sizeable capital value especially in a sector where margins are razor-thin and further reduction of tariffs is not feasible.

Telecom policy awaits TRAI nod

2009-05-30T12:40:00.003+05:30

30 May 2009, 0029 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: The communication ministry will seek telecom regulator TRAI’s endorsement before going ahead with the new policy, which will determine the allocation of additional airwaves to all existing telecom companies, a top government official said.

The spectrum panel, in its report submitted last month, had said that all telcos should be allowed to buy, sell and transfer airwaves for a fee, while adding that the country should adopt the internationally-accepted auction system for issuing additional airwaves to telcos. The panel comprised representatives of the government, telecom regulator TRAI, telecom technology experts and industry executives.

“We will send the panel’s report to TRAI. Since TRAI had earlier made recommendations on the issues addressed by the panel, we feel that their views should be sought on the report too,” telecom minister A Raja told ET. The panel had also suggested several changes in India’s telecom M&A norms to allow consolidation and had criticised the current policy stating that it had led to fragmentation of the sector by allowing about 15 players per circle.

Currently, India follows a controversial practice of allocating spectrum based on companies’ subscriber base, and is the only country in the world that follows this method. The panel had said that only the start-up spectrum, which is the minimum amount of radio frequencies that is required to launch mobile services, should be given for free to existing telcos.

All subsequent allocations should be only through auctions, it said. As per the current policy, all telcos share 2-6% of their annual revenues with the government as a fee for using the radio frequencies allotted to them. The committee had said this fee should be a flat 3% irrespective of the quantity of radio frequencies that is held by a telecom company.

In another development, the communications ministry has also decided to oppose the finance ministry’s demand of doubling the 3G auction base price to Rs 4,040 crore. DoT has told the Prime Minister’s Office that the base price must not be higher than Rs 2,020 crore for pan-India 3G spectrum.

Differences between several ministries over the floor price for the auction of 3G airwaves and also over the number of players to be allowed to offer these high-end services in an area had forced the cabinet to refer the matter to a Group of Ministers just prior to the general elections. The auctions could not be held prior to the polls as GoM failed to meet to find a solution to these issues.

While DoT in its 3G policy has said that the base price for pan-India 3G spectrum would be Rs 2,020 crore and that for broadband access technologies, such as WiMAX, would be Rs 1,010 crore, the finance ministry had demanded that this price be doubled. The issue got further complicated as the planning commission, the department of industrial policy and promotion and the IT ministry opposed doubling of the base price.

RCOM joins the QIP queue

2009-05-30T12:35:00.002+05:30

30 May 2009, 0136 hrs IST, ET Bureau

MUMBAI: Reliance Communications (RCOM) has joined the list of companies planning to raise funds through the Qualified Institutional Placement (QIP) route.

The country’s second-largest mobile service provider said on Friday that it will seek shareholder approval to garner funds from qualified institutional investors.either through a share sale or an issue of a variety of instruments including fully convertible, partly convertible or non-convertible debentures with warrants or any other security, it said in a statement to the stock exchanges. Although the company did not say how much it planned to raise sources close to the development said it may be around $500 million.

RCOM said the funds will be raised in one or more tranches. The proposed exercise shall not result in increase in the company’s paid-up capital by more than 25%, it said. RCOM said the funds may be utilised to finance the company’s plans to participate in the upcoming auction of frequency spectrum for 3G and Wi-Max services. A banking source said Reliance Infrastructure, another firm which is part of the Anil Dhirubhai Ambani Group (ADAG), may also opt for a similar exercise. A spokesperson for the group, however, denied any QIPs by RCOM and R-Infra when ET had sent him a query on last Friday.

HC slams spectrum allocation policy

2009-05-30T12:31:00.002+05:30

30 May 2009, 0233 hrs IST, TNN on www.economictimes.com

NEW DELHI: The Delhi High Court on Friday slammed the government's first-come, first-serve spectrum allocation policy in the telecom sector and equated it with selling "cinema tickets."

Days before telecom minister A Raja is to take charge for the second time in Sanchar Bhawan, a division bench comprising Justice Mukul Mudgal and Justice Valmiki Mehta expressed deep reservations with the telecom policy. While hearing a petition challenging the spectrum allotment policy of the government, the HC said, "prima facie we find that spectrum has been allocated in a worst manner and public exchequers have lost thousands of crores (rupees)."

Its observations came after the DoT counsel failed to give satisfactory reply to the question, as to how much spectrum the government has allotted and how much remained with it. "We find it very strange that public exchequer and valuable resources have been involved and misused in this way. ... We are completely astounded," the judges remarked, clearly unhappy with the manner in which the policy was framed.

The ministry has been in the eye of storm for allocating spectrum on first-com e, first-serve basis.

Telecom tower cos find it futile to go solo

2009-05-30T11:15:00.013+05:30

30 May 2009, 0308 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: The days of standing tall are virtually over. India’s standalone telecom tower companies are crumbling under the crushing weight of a credit crunch, few new orders, and competition from the gigantic tower networks owned by mobile phone companies themselves.

A spate of mergers and acquisitions will certainly help a few standalone tower companies survive to tell the tale. But market watchers say without a serious makeover of their business model, it may be hard to ring in sustained profits.

Just a year ago, standalone tower companies were enjoying exceptional good fortune in the world’s fastest-growing telecom market. Backed by foreign private equity funds in a two-year-old sector, these companies had enough cash in their war chest to start looking for acquisitions and even expanding overseas.

But the global economic recession, which began to make itself felt from the start of 2009, rudely brought this dream run to a halt. Capital is now hard to come by in this investment-intensive sector, forcing smaller players to look for mergers and sellouts.

The M&A list is getting longer by the day. Xcel Telecom, which was incubated by Dallas-based $4-billion multi-strategy fund Q Investments, is looking for the exit door. Xcel itself had acquired Tics Telecom, a Punjab-based telecom infrastructure firm, for an undisclosed sum before selling out to Nasdaq-listed American Towers (ATC) for Rs 700 crore.

ATC is also in talks with Gurgaon-based tower company Independent Mobile Infrastructure that is present in 10 circles with 400 towers.

Essar Telecom Infrastructure, the country’s second-largest independent mobile tower company, has also approached ATC for a possible merger or even a complete sellout. This is not the first time, though.

Earlier, ETI, which owns over 4,500 towers, was talking with Tata-Quippo for a merger, but could not make much headway. Last year, ETI was on the verge of sealing a merger deal with GTL Infrastructure, but the $2-billion deal fell through at the last minute.

Even Quippo Telecom Infrastructure, which till recently was vying with GTL Infrastructure to be the country’s largest independent tower company, had to merge with the tower arm of Tata Teleservices in December 2008 to take on larger players. The newly-created company could boast of over 18,000 towers and commanded an enterprise valuation of about Rs 13,000 crore ($2.6 billion).

Other standalone tower firms too are headed this way. Executives in the tower business say, South India-based firms such as Aster Teleservices & TVS Interconnect Systems are also reportedly on the block. But earlier this week, an executive with private equity firm New Silk Route, which owns majority stake in Aster, denied his company was exiting the tower company.

So what went so spectacularly wrong? Has this sale season been triggered by a mere cash crunch or is it the symptom of a deeper fault line in the business that has cracked open with the first tremors of a crisis?

BK Syngal, senior principal, Dua Consulting, and former chairman of VSNL, says the primary reason is that the business model of small players has failed.

“Over the past two years, all major telecom operators have hived off their towers and other related infrastructure into separate companies. Standalone players who have between 3,000 and 5,000 towers cannot compete with the hived off tower arms of the telcos in terms of scale,” he said.

“Scale is precisely the reason why Quippo and the Tatas merged their tower arms. From about 22,000 towers currently, we are looking at a portfolio of over 60,000 within the next two years. No player with less than 60,000 will be able to survive in the market,” said QTIL group president and MD Arun Kapur. “You need such numbers to cover about 70% of the country’s geographical area,” he said.

It may be a Herculean task. Indus Towers, a three-way joint venture between Bharti Airtel, Vodafone Essar and Idea Cellular, has over 100,000 towers, making it the largest tower firm in the world.

Bharti Infratel, which holds Airtel’s towers in circles where Indus is not present, has close to 30,000 towers. Reliance Communications has consolidated its 48,000-plus towers in a new entity called Reliance Telecom Infrastructure while the recently established Quippo-Tata combine has over 21,000 towers.

New entrants in the mobile phone business prefer to tie up with these larger established players rather than sign on standalone tower companies as it reduces risk as well capital investment.

According to industry estimates, this model can reduce capex by up to 60% and rollout can be much faster. For instance, Telenor, which picked up 60% stake in Unitech Wireless, entered into a tower sharing deal with the Quippo-Tata combine. The latter is also talking to other new players Sistema-Shyam and S Tel for similar deals.

QTIL’s Kapur says new entrants choose larger players because it brings down costs significantly. “We are perhaps the only completely independent tower company that is not linked to any operator. We already have committed business from the Tatas, Telenor and several other players. The higher the tenancy rate, the larger the savings for telcos as the overall costs come down. When costs are down, we can invest more in technology, R&D and increasing efficiency,” he said.

But this has been a huge blow for standalone tower companies. The new orders they were banking on, did not arrive after all.

An senior executive, who recently quit an independent tower company, says the slide started in the second half of last year. “We rolled out towers and then waited for telcos to sign on. But over the past six months, telcos have chosen to go with established larger players to minimise risk,” he said.

The scramble by small and medium tower companies to sell out or seek mergers will only intensify in the days ahead. Industry analysts say the market will soon shrink to four or five large players who are backed by service providers. For smaller players, the dream of cashing in on the Indian telecom success is turning out to be shortlived.

Interview with the new Telecom IT Minister

2009-05-30T11:11:00.002+05:30

From The Hindu Business Line on 30 May 2009

New Delhi, May 29 The Communications and IT Minister, Mr Andimuthu Raja, expects telephone tariffs to come down to as low as 10 paise a minute for local calls and to 25 paise a minute for domestic long distance calls as a result of the decisions taken by him in the previous tenure.

Mr Raja, who has been appointed as the telecom minister for the second consecutive time, said that auction for third generation spectrum is on top of the agenda and should be completed in two months.

The Minister said that the decisions taken by him during the previous tenure to bring in more mobile operators should lead to lower tariffs. “Local calls at 10 paise a minute and inter-State calls at 20 paise a minute is my motto. I would work towards enabling world class telecom services to the masses at competitive and affordable rates,” Mr Raja said.

On the issue of auctioning 3G and broadband spectrum, Mr Raja said that he will soon take the policy to the Cabinet. He added that he expected higher revenue generation from 3G auction as a result of a revival in the markets.

For the IT sector, the Minister said that he will speak to the Prime Minister and the Finance Minister to extend tax incentives under Software Technology Park of India until 2012. Introduction of IT at the lowest level of governance will also be on the Minister’s agenda. “I want to make the functioning of the government offices paperless through the introduction of technology,” Mr Raja said. He said that his Ministry will promote manufacturing of electronic hardware in the country and encourage investments under the new semiconductor policy.

On the revival of postal services, the Minister said he will take measures to bring India Post at par with the global standards. Mr Raja will be assisted by two Ministers of State, Mr Sachin Pilot and Mr Gurdas Kamat.

Industry reacts positively

The industry reacted positively to Mr Raja’s appointment. Mr T.V. Ramachandran, Director-General, Cellular Operator’s Association of India, said, “There will be continuity in the positive measures which were being planned by the Communications Ministry. We are sure that Mr Raja will take effective measures to take Indian telecom sector to the next level of growth.”

Mr S.C. Khanna, Association of Unified Telecom Services Providers of India said, “We have always been supportive of Mr Raja’s policies. We hope that he will continue to enable new players to emerge in the market. He should allocate up to 6.2 Mhz of spectrum to the new players instead of 4.4 Mhz as is being suggested.”

The Internet Service Providers said that the Minister should re-look at opening up net telephony because it is in line with the stated objective of bringing affordable communication to the masses.

“It is good that Mr Raja has got another innings as the telecom minister. He understands the sector well and knows what needs to be done from day one. Any new person would have had taken time to study the various reform measures required for this sector,” said Mr Rajesh Chharia, President, Internet Service Providers Association of India.

Mr Raja is expected to take charge of the Ministry next week as he along with other Cabinet Ministers from the DMK party have gone to Chennai.

India To Have 492 Million Mobile Phone User By End-2009 - Indus Body

2009-05-29T20:20:00.002+05:30

From www.nasdaq.com on 29 May 2009

NEW DELHI -(Dow Jones)- A cellular industry body Wednesday said it expects India to have some 492 million mobile phone users by the year-end, compared with 392 million at the end of March.

The Cellular Operators Association of India - which represents more than a dozen telecommunications companies offering GSM services - expects the industry's mobile subscriber base to reach close to 900 million by 2012.

GSM is short for global system for mobile communications technology, and three of four of India's 391.76 million users are on this platform.

"Even with the subscriber base of 900 million, the teledensity would be just 72.4%," COAI said.

Bharti Airtel Ltd., India's largest telecommunication service provider by number of subscribers, had some 96.73 million users at the end of April.

FRC 101: RCom's New Scheme For GSM Subscribers

2009-05-29T17:36:00.002+05:30

On www.efytimes.com on 29 May 2009

Friday, May 29, 2009: Reliance Mobile GSM Service has launched a new FRC priced at Rs 101 for all new GSM subscribers in Karnataka. The Rs 101 FRC is bundled with a core talktime of Rs 75 along with additional 100 local SMS with a validity of 30 days.

The launch of Rs 101 FRC is part of Reliance Mobile's ongoing Customer Experience Programme. This offer provides special tariff to its subscribers offering calls to any Reliance Mobile GSM and CDMA at 30 paise/min, calls to other network at 60 paise/min and STD calling at Re 1.

The new Rs 101 FRC also offers Reliance Mobile GSM subscribers night calling to Reliance GSM or CDMA network at 5 paise/min applicable between 11pm and 6am. This FRC 101 is available until the end of June.

Tata Comm's Prateek Pashine Joins WiMAX Forum Board

2009-05-29T17:28:00.006+05:30

On www.efytimes.com on 29 May 2009

Friday, May 29, 2009: The WiMAX Forum has added Tata Communications as a new member to its board of directors. Prateek Pashine, chief operating officer, retail broadband unit, Tata Communications, will serve as the representative to the WiMAX Forum board.

"Electing Tata to the board demonstrates the WiMAX Forum's commitment to the Indian market and signifies the company's importance to the WiMAX ecosystem worldwide," said Ron Resnick, president and chairman, WiMAX Forum. "As one of the leading global Internet and voice operators, Tata Communications has demonstrated its confidence that WiMAX is the leading 4G technology, and they have articulated their plans to bring broadband services to consumers in India through WiMAX."

"The strong representation by global operators to the WiMAX Forum board shows how evolved the WiMAX ecosystem has become," added Pashine. "Various researches have predicted that India will play an important role in the development of the Global WiMAX ecosystem, and we will bring that perspective to the forefront within the Forum. Markets like India have unique product and business model needs which we expect would lead the way for other markets and operators around the world."

"I believe that India can soon be the largest market for WiMAX worldwide. Our goal is to develop a profitable business model and offer a range of affordable devices and services to our customers. As a member of the WiMax Forum board, Tata Communications can encourage accelerated development of low cost WiMAX technologies products," added Pashine.

Prateek Pashine, COO, retail broadband unit, Tata Communications has been with the Tata Group since 1995. He is also currently the chair of the Wireless Broadband Alliance which is a global body involved in the expansion of roaming data services.

Currently, Tata Communications is an active member of the WiMAX Forum India Chapter (WFIC) and holds leadership positions in three of the chapter's four working groups.The WiMAX Forum's membership base represents a WiMAX ecosystem which supports the more than 472 WiMAX network deployments in 139 countries.

RCom may rope in Hrithik as brand ambassador

2009-05-29T13:05:00.000+05:30

From Financial Express on May 29, 2009 at 1734 hrs IST

New Delhi: Anil Ambani-led Reliance Communications is planning to launch a Rs 150-crore advertising campaign for its nation-wide GSM services and is believed to be on the verge of signing Bollywood star Hrithik Roshan as its brand ambassador.

According to sources, Reliance Communications is planning a Rs 150-crore media campaign for its GSM services featuring its new brand ambassador, Hrithik Roshan.

Sources said the company is in the final stages of signing an endorsement deal with Hrithik, who would be the official face for the company’s mobile, data and DTH businesses.

When contacted, the company spokesperson declined to comment.

The three-year deal with Hrithik is believed to be worth over Rs five crore annually and excludes the fees payable for appearances and events, sources said adding the overall deal could touch Rs 10 crore annually. The new campaign is expected to be on air in the first week of June.

This is Reliance Communications' first advertising campaign for its GSM service, which was launched on commercial basis in January 2009 and has since then added over 13 million subscribers.

Tata Tele says 'Yes' to M-commerce

2009-05-29T12:37:00.003+05:30

On http://www.ciol.com/ on 29 May 2009

NEW DELHI, INDIA: Tata Teleservices has announced its partnership with ICICI Bank to offer mobile banking services to Tata Indicom subscribers registered for mobile banking with ICICI Bank. Now these customers can avail of banking services with just a click of the button. The subscribers can now manage their finances while on the move using their Tata Indicom mobile phone via iMobile, a Brew based application.

Elaborating on the tie-up, Zubin Jimmy Dubash, assistant Vice president, Tata Teleservices Limited, said: "By having the largest private Bank – ICICI Bank we have just moved one step further towards Mobile commerce. We are glad to partner with ICICI Bank to explore a highly efficient value added service for all our Tata Indicom customers. The mobile phone has enormous potential when used as a tool for financial services, it is likely to revolutionize the sector in a similar manner that the ATM did for banking and cash, years ago."

With the initiative we aim at offering convenience of currently accessing ICICI Bank's financial services with the help of Tata Indicom mobile. We are confident that, mobile banking will accelerate significantly in the coming years." he added.

Tata Indicom through mobile banking application will allow its subscribers to transfer funds to any Bank account, Pay bills, top up prepaid mobile recharge. View account balances, last five transaction history, presented bills, credit card payment due date, etc. Not only this, the customers can also, locate an ICICI Bank branch, ATM and phone banking numbers. The service also provides the subscribers the opportunity to access the credit card, demat and Loans services, to name a few.

The iMobile application can be downloaded onto the handset through, BREW catalogue on our server on all the handsets. The customers need to have a data enabled handset that supports this application. The current handsets supporting the application are Samsung T Nimbus, Samsung Bliss, Samsung NX1 LG 6335, and Pantec 715, Samsung Max.

India is 2nd-largest CDMA market

2009-05-29T12:22:00.003+05:30

29 May 2009, 0004 hrs IST, ET Bureau

MUMBAI: India has become only the second country in the world to have more than 100 million CDMA-based (code division multiple access) mobile phone subscribers after the US, which has 157 million CDMA users, according to an industry body.

While India overtook China to become the second-largest CDMA market, the country’s leading service provider Reliance Communications (RCOM) has become the second-largest CDMA service provider behind the USA’s Verizon Wireless, the CDMA Development Group (CDG) said here on Thursday. Tata Teleservices is ranked fourth in the list of top global players, behind China Telecom.

It took CDMA, which competes with the GSM (global system of mobile communication) platform globally, six-and-a-half years to reach the 100 million mark in India after being introduced in December 2002. GSM is much more popular, accounting for 80% of the global market, according to its promoter GSM Association. While there are 475 million CDMA users in the world, GSM standard is being used by over three billion people. In India, the GSM user base is close to 300 million.

CDG executive director Perry LaForge attributed the rapid growth of CDMA users in India to a wide selection of affordable devices and technologies offering CDMA voice and data services in urban and rural areas. “CDMA allows a rich telecom experience, especially on the data side, and we are confident that experience will only get better, especially as 3G arrives and we are able to unleash the full potential of applications and services,” Tata Tele MD Anil Sardana said.

In March 2009, both RCOM and Tata Teleservices launched high-speed mobile broadband services. “As we look to the next 100 million subscribers, CDMA mobile broadband is already satisfying the demand for affordable high-speed wireless data services while CDG initiatives will further increase the selection of CDMA voice and data devices,” Mr LaForge said.

Qualcomm, the makers of the CDMA standard, will bring the benefits of advanced CDMA technologies to India, its senior vice-president (India and South Asia) Kanwalinder Singh said.

Datacom, Sistema to offer $300 mn IT deals

2009-05-29T12:10:00.004+05:30

29 May 2009, 0008 hrs IST, Jessica Mehroin Irani & Ranjit Shinde, ET Bureau

MUMBAI: Datacom and Sistema Shyam TeleServices, two new entrants in the telecom space, have shortlisted Wipro, Tech Mahindra and IBM for an IT outsourcing contract of close to $150 million each. This is a boon for the IT service providers at a time when the slowdown has resulted in a drop in the number of books.

Videocon-promoted Datacom has received licences in all the 22 telecom circles in India and is in the process of launching its operations. “Yes, the three (IT vendors) have been shortlisted and are competing for the contract. The deal value has not been finalised,” said VN Dhoot, chairman of Videocon group.

Sistema Shyam TeleServices, a joint venture between Russia’s telecom giant Sistema and India’s Shyam group, is in the process of launching CDMA operations in 18 circles. Though the company did not confirm the names of IT firms, a source in the know said that it has invited bids from the three IT vendors mentioned earlier for IT infrastructure-related services in these circles. Sistema Shyam has recently launched operations in Kolkata taking its total number of active circles to four.

While IBM and Tech Mahindra declined to comment on the development, Wipro officials were unavailable for comment. On the exact structure of the contracts, it was not possible to ascertain that from Datacom. However, Sistema Shyam in an e-mail response, said that it would be a fixed value, short-term contract wherein the IT assets would not be obtained on a lease, but would be acquired by the telco. The scope of work broadly includes data centre construction, applications management services and infrastructure hardware supply and support.

Sistema-Shyam has already outsourced its IT requirements for its existing four circles. “Key vendors, who are working on our various IT projects, are Sitronics, Tech Mahindra, IBM, HP, Wipro and Oracle. Since our IT is based on a centralised model, the projects are uniform for all circles and are not taken separately,” CEO Vsevolod Rozanov told ET.

The new domestic telecom operators have kept the order book running for IT companies that have been hit by the slowdown. Earlier, Wipro had bagged a large full IT outsourcing project from Unitech Wireless worth approximately Rs 2,500 crore over a nine-year period. Most of the new service providers are expected to launch their services in the next 12 months. “We expect operators, such as Unitech, Swan and Datacom to commence by July 2010 given the regulatory pressures,” said India Infoline’s telecom analyst Bhavesh Gandhi.

Govt to step up rural wireless connectivity

2009-05-29T11:55:00.004+05:30

29 May 2009, 0050 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: The communications ministry has drawn up detailed plans to spend part of the Rs 25,000 crore in the Universal Service Obligation Fund (USOF).

The plans include setting up over 5,500 telecom towers in far flung areas, providing wireline broadband connectivity to all rural kiosks, rolling out WiMAX services in rural India, augmenting the optic fibre cable connectivity of the country and funding technology innovations.

From 2002, all telecom operators have been paying 5% of their annual revenues towards this fund, and so far, the unutilised amount in the USOF has crossed the Rs 25,000 crore.

Every consumer, who makes a phone call (mobile and landline) contributes towards the USOF. It has been a long pending demand of the industry to reduce or do away with the levy especially since studies by sector regulator Trai has shown that it would not cost more than Rs 12,000 crore to connect the whole of rural India.

The department of telecom (DoT) will soon invite bids from companies who run long distance networks where the government will fund up to 40% of the optic fibre expansion plans of successful bidders.

All telcos have long distance arms that carry STD traffic on optic fibre. An STD call on the mobile is first carried to the nearest telecoms tower and transferred along the optic fibre to the tower that is closest to the person who receives the call. But, telcos who receive support from the USOF for setting up towers and laying fibre must compulsorily share their infrastructure with other operators.

The DoT has also decided to fund the commercial rollout of products linked to improving quality of services or making telecom operations more economical. It has shortlised about 10 companies who have been asked to demonstrate their products on a pilot basis in rural India, following which it will fund the commercial rollout of successful pilots.

These companies include Telsima Communication for WiMAX services, Artheon Electronics, STM Softech, Radio Innovation Sweden, Vanu, Tulip IT services, Param Hasna System and software, Vedekon from Ukraine and Measurement & Controls India Ltd. Radio Innovation Sweden has been shortlised for its solutions that enable super economical coverage of GSM, Vanu for its multi-operator shared telecom towers concept, Vedekon for its WiMAX solutions.

The communications ministry is of the view that these new avenues to disburse this fund will help increase the country's tele-density, especially in rural India. While the overall tele-density of the country is just under 40%, rural tele-density is still under the 10% mark.

Axiata rules out Idea stake hike

2009-05-29T11:32:00.004+05:30

29 May 2009, 0157 hrs IST, ET Bureau

MUMBAI: Malaysia’s Axiata group (earlier Telekom Malaysia) is not looking at raising its stake in Idea Cellular. Any increase in Axiata’s stake beyond 20% will require the consent of promoter Aditya Birla group under the terms of the agreement signed by the parties in June last year.

“We are not in any way raising our stake in Idea Cellular. We are working together with the Idea management and the Birla group for growing the company. We are not mulling any open offer as well,” Axiata group executive director and CFO Yusof Annuar Yaacob told ET on phone from Kuala Lumpur.

Mr Yaacob said, “Our focus at the moment is to complete the merger between the two entities Spice and Idea. Once completed Axiata’s stake will be raised to about 20%. The existing agreement between Axiata and Aditya Birla group clearly stipulates that we can only increase our shareholding in Idea Cellular with prior consent from the Birla group.”

The two sides are awaiting court approvals for the merger, which is expected to be completed in the next four-five months. There have been reports that Axiata, post merger, will go for an open offer to increase its stake to 26%, which will give it veto powers. “There is no basis for this speculation,” a top Idea Cellular official said.

Idea scrip closed at Rs 78.65 on BSE on Wednesday, almost unchanged over the previous close of Rs 78.85. Axiata entered Idea after BK Modi-led Spice Communications agreed for a merger with the telco. Axiata held 39.8% in Spice. Idea acquired Spice in a three-step transaction, beginning with purchase of 40.8% from Modi group for Rs 2,700 crore. It, along with Axiata, then made an open offer to acquire 20% stake in Spice from other shareholder. Idea is also taking over 39.8% from Axiata by exchanging 49 Idea shares for 100 Spice shares.

Meanwhile, Axiata has acquired a 14.99% stake in Idea Cellular for Rs 7,300 crore. It would further increase the stake by about 4.3% on account of share swap and will end up with about 19.3% stake in Idea. Spice Communications will be de-listed post the completion of the merger. After the equity infusion from Axiata and merger with Spice, the Aditya Birla promoter group stake will come down from 57.7% to 46.5%.

Unitech Wireless awards $500m network contract to Ericsson

2009-05-29T11:20:00.003+05:30

29 May 2009, 0715 hrs IST, Sanjeev Choudhary, ET Bureau

NEW DELHI: Unitech Wireless, a joint venture between Norwegian telco Telenor and Gurgaon-based realty firm Unitech, has awarded a $500 million (Rs 2,500 crore) to supply and manage all network equipment for its rollout of mobile phone services in three telecom circles.

Ericsson will be responsible for managing the network for five years in service areas of Bihar, Eastern and Western Uttar Pradesh, said a Unitech Wireless executive, who asked not to be named. Ericsson and Nokia Siemens Networks were the front-runners for the contract.

Unitech Wireless, which is 67% owned by Telenor, has licences to operate in all 22 telecom circles across the country. The company will miss the July deadline for the launch of its telecom services, as it still doesn’t have the infrastructure in place.

“We have tied up for towers and equipment. But our marketing and distribution set up is still not in place,” said Unitech Wireless chairman Sanjay Chandra. The services will be launched by the year-end , he said.

Ericsson operates in 175 countries and reported a revenue of $27 billion in 2008. It builds and manages the networks of Bharti Airtel in large parts of the country.

Earlier, Unitech had awarded a fiveyear equipment supply and management contracts to French telco Alcatel-Lucent for about $150 million for Kerala and Orissa. Unitech’s $225 million contract for Karnataka, Andhra Pradesh and Tamil Nadu circles had gone to Chinese telecom equipment manufacturer Huwaei.

Unitech Wireless recently awarded a nine-year IT outsourcing contract to Bangalore-based Wipro for around Rs 2,500 crore. It has also signed an agreement with Tata Teleservices for the sharing of towers.

BlackBerry gets an Indian rival

2009-05-29T10:58:00.005+05:30

29 May 2009, 1008 hrs IST, IANS on www.economictimes.com

MADURAI: The little-known maker of Red Chery - a mobile application used for receiving mails from free and corporate email accounts - is dreaming big: eating into a market straddled by BlackBerry of Canada's Research In Motion and other similar service providers.

To make this happen, the Rs 15-crore software product company, AJ Square Consultancy, is banking on an aggressive pricing strategy, and hoping to rope in two million (20 lakh) subscribers by this fiscal-end.

"With an average revenue per subscriber of Rs 110 per annum, which is about a tenth of what existing players charge, we hope to earn around Rs 22 crore from 20 lakh subscribers by the end of this fiscal. We may even offer this service free at a later stage," AJ Square managing director Boaz Augustin said.

Like other similar products, Red Chery is a mobile application used for receiving mails from any of the free email accoun accounts (Yahoo, Gmail, Hotmail and Rediffmail) and corporate email accounts (MS exchange and IBM Lotus servers) on a mobile handset.

"Red Chery is platform, telecom and mobile instrument independent. One can read emails like a short messaging services," Augustin added. AJ Square will be focussing on the corporate sector to push Red Chery. According to Augustin, the company will offer services in Singapore and Europe once it stabilises its Indian operations and gets venture capital to the tune of $25 million.

"We are open to dilute up to 45 per cent stake." The 200-employee Madurai-based AJ Square is into development of e-commerce and gaming software for European companies.

BSNL readies $10-b war chest for overseas buys

2009-05-29T10:54:00.001+05:30

From The Hindu Business Line on 29 May 2009

Our Bureau
New Delhi, May 28 Following moves by private telecom players to acquire international operators, State-owned Bharat Sanchar Nigam Ltd is readying a $10-billion corpus for its own global ambitions.

The company is scouting for a consultant to advise the PSU on the international plan. The PSU has also set up a separate business unit under a General Manager ranked officer to look aggressively for opportunities in foreign markets. While the other telecom PSU, Mahanagar Telephone Nigam Ltd, has invested in a few international markets such as Nepal and Mauritius, this is BSNL’s first real move to go beyond India. Though the company had expressed interest to bid for licences in Tunisia and Oman earlier it did not go through with the plan.

According to BSNL officials, the company is open to all forms of investments including merger, acquisition, strategic partnership, or buying new telecom licences for starting greenfield operations. While the company is looking for opportunities across all geographies, it is more interested in the African and Middle East markets.

BSNL sources said the acquisitions will be funded from the company’s cash reserves. The money raised through a possible IPO could also be used for the international move.

The biggest fixed line player in India with 35 million subscribers. BSNL is the fourth largest mobile operator after Bharti Airtel, Reliance Communications and Vodafone Essar. Most of the other big players in the country already have some investments in the international market.
BSNL’s revenues have been dipping the past few years owing to high competition and low margins.

BSNL would be among the few government-owned companies worldwide looking to go beyond their domestic turf. Chinese telecom operators are also targeting operators in the African continent.

According to analysts, BSNL has the advantage of operating in a low-cost market such as India. It could replicate the low-margin, high-volume business model in other emerging markets such as Africa.

BSNL has the experience of operating millions of rural telephone lines. Most African countries are similar to India in terms of the large rural population. BSNL also has about three lakh employees who can be deputed to manage networks of international operators post a successful foray.

SEBI issues norms for mobile trading

2009-05-29T10:48:00.003+05:30

On The Hindu Business Line on 29 May 2009

Our Bureau
Mumbai, May 28 Stock trading using the mobile phone is likely to get a push, with SEBI issuing on Thursday a draft framework for securities trading using wireless technology. SEBI said it is exploring, through these guidelines, the possibility of extending the existing framework for Internet trading to enable use of wireless technology for securities trading. The guidelines for Internet-based trading were put in place by SEBI in January 2000.

Quite a few brokers are already providing Web sites with low bandwidth to enable GPRS-based mobile phone users to access their Internet-based online trading platform.

According to SEBI’s proposed framework, brokers who provide Internet-based trading services are eligible to use wireless technology for the same. This would be subject to the broker/member providing this facility to obtain approval from the stock exchanges. The networth requirement of the broker is fixed at a minimum of Rs 50 lakh if the broker is providing Internet trading facility on his own. In case a service provider provides the Internet trading facility on behalf of a group of brokers, then the networth criteria as stipulated by the stock exchange will apply.

Security
The guidelines lay a lot of emphasis on user identification, network access control and network security, requiring brokers to maintain adequate back up systems and data storage capacity. SEBI has invited comments from market participants latest by June 15.

Securities trading through mobile phones is so far at a nascent stage. Reliance Money, which started this facility recently, records an average 3000 such trades a day, an official of the company said.

“A whole lot of people generally trade in the markets through brokers since they do not have access to online trading. Since mobile phone penetration in the country is many times higher than broadband connectivity, many of them will now be able to use their cell phones for trading,” Mr Sourabh Kaushal, Principal Consultant with advisory firm BDA Connect (India), said.

Pointer to the future (Bharti-MTN deal)

2009-05-29T10:32:00.006+05:30

On The Hindu Business Line on 29 May 2009

Thomas K. Thomas
The merger talks between Bharti Airtel and South African telecom company, MTN, is a pointer to an emerging trend in the Indian telecom growth story. Saturated urban markets, declining average revenue per user, tighter domestic acquisition laws and the desire to achieve global scale are driving Indian telecom operators to other emerging markets.

That the largest and most profitable mobile operator in the country is looking for markets elsewhere in the world is a clear indication that there is not much juice left in the Indian telecom market. This is similar to what Vodafone went through in the earlier part of this decade, when it decided to move out of its traditional, but saturated, European market to other emerging markets.

Growth rate
A recent report from the Department of Telecommunications leaves no ambiguity on what the policy-makers think about the future growth prospects of the Indian cellular market. The report states that though the mobile subscriber base is increasing at a scorching pace, the growth rate will taper off by the end of next year.

Using the S curve model of growth, the DoT has projected that the telecom sector will reach an inflexion point (the point at which maximum growth rate will occur) when the mobile density reaches 44 per cent. Considering that the current tele-density is close to 35 per cent, it is expected that the inflexion point will be reached by the end of 2010, after which growth rate of mobile subscription is expected to decline.

In addition, Indian operators have been struggling with falling monthly billings because the new additions are coming from semi-urban and rural areas where subscribers are not willing to spend more than Rs 100-Rs 200 a month on mobile usage. Therefore, even though the mobile user base is expected to increase from 400 million at present to 900 million by 2013, operators are not betting on a proportionate increase in revenue generation.

Mouth-watering proposition
In comparison, other emerging markets such as Africa, Latin America and West Asia offer a mouth-watering proposition. These markets are at the point where India was in 2003. The telephone penetration levels there are low which means huge potential in terms of higher subscriber addition. The African telecommunication market, for example, is estimated to grow at roughly 40 per cent and is expected to continue to show higher growth for much longer period after the Indian market stagnates.

Also, the average revenue per user is much higher at Rs 600 in these emerging markets compared to Rs 250 in India. By foraying into such territories, Indian companies can hope to cash in on higher margins.

The domestic merger and acquisition norms have also made it impossible for existing telecom companies such as Bharti and Reliance Communication to acquire other large operators within India. On the other hand, a deal with South Africa’s MTN will give Bharti access to nearly 100 million subscribers across 21 countries.

However, Indian companies also have to deal with challenges related to higher cost of acquisitions, different regulatory environments and competition from European and Chinese telecom majors which are also eyeing these emerging markets.

Mixed success
So far, Indian players have had mixed success in their attempts to go global. While Bharti Airtel, Tata Communications and Reliance Communications have had a fair share of success in the long-distance segment through acquisition of cable networks, including Tyco Global and FLAG, they have failed to acquire telecom licences in countries such as Qatar, Kenya and Saudi Arabia. The reason for the partial success has primarily been the pricing of the acquisitions. Most of the successes for Indian telecom players have come in cases where the deal came cheap.

For instance, both Tata Group and RCom acquired Tyco Global and FLAG respectively when the global undersea cable market was facing a bandwidth glut. In 2004, Tata paid just $130 million to acquire Tyco Global Network, which had 60,000 km of cable spread across three continents. Similarly, Bharti bagged licences for Seychelles in 1998 when mobile services were just beginning to reach consumers.

Competitive bidding
However, Indian telcos have lost out whenever competitive bidding has taken place. For example, Bharti and Reliance lost out in the race to acquire a licence in Saudi Arabia after Kuwait Mobile Telecom Company bid a whopping $6 billion. Indian operators also lost out to France Telecom when 51 per cent of Telkom Kenya was up for grabs. France Telecom coughed up nearly $400 million for 2.8 lakh fixed-line telephone subscribers.

Since Indian operators are already working on thin margins, given the low tariffs in the country, they cannot afford an expensive buy to maintain profitability. The other reason is that home-grown operators are still small in scale compared to global giants such as Vodafone, giving them a lesser chance of winning a competitive bid.

One advantage that Indian operators have is that they have mastered the game of working on high volumes, building economies of scale, and cost management through innovative outsourcing deals and infrastructure-sharing agreements.

Bharti’s talks with South African major MTN, if successful, will take the low-cost business strategy to a new level. Markets such as Africa are also similar to that of India — predominantly agriculture-based with a large rural population — which again works to the advantage of Indian operators. The Bharti-MTN deal, therefore, could show the way to other Indian players.

Companies such as Reliance Communications, MTNL and BSNL have been eyeing countries such as Tunisia, Egypt, CIS and the Gulf region to expand their footprint.

For a company such as MTNL, foreign markets offer an opportunity to go beyond Delhi and Mumbai. The PSUs profits have been dipping over the past few years and the company is, therefore, betting big on the foreign telecom forays.

Showing the way
But the window of opportunity is closing fast. Most of the emerging markets in the African continent, for instance, are already controlled by European players such as Vodafone and France Telecom. The Bharti-MTN deal would create a most formidable rival there. Other Indian operators looking for a similar deal still have options such as Kuwaiti-based Zain, which is in 24 markets across Africa and West Asia and may be a bid target. The Egypt-based Orascom, which has operations in 11 countries, could be another possible partner. Then there are regional players such as Telekom SA, which may be open to a possible alliance. Partnering with an Indian company will also give these foreign operators a foothold into the fastest growing market in the world.

Bharti Airtel’s $23-billion deal with MTN, if successful, may spark the consolidation of mobile phone markets across Africa and West Asia. But Indian operators may have to move fast if they want to continue the telecom growth story.

AP High Court asks BSNL to file response to Nokia Siemens

2009-05-29T10:23:00.002+05:30

From The Hindu Business Line on 29 May 2009

Our Bureau

New Delhi, May 28 The Andhra Pradesh High Court has asked Bharat Sanchar Nigam Ltd to maintain status quo in the tendering process for awarding to Huawei a contract for rolling out GSM network in the South zone.

The status quo will be maintained till the next date of hearing, June 3. The court has asked BSNL to file a response to a petition filed by Nokia Siemens challenging the tendering process. The Chinese vendor Huawei will be a party to the case.

The Andhra Pradesh High Court’s order will delay BSNL’s plans to roll out 93 million lines across the country. The project was divided into four zones. While Ericsson has been shortlisted for North and East zones, Huawei was chosen for South. Bids for the West zone were not opened by BSNL after the Intelligence Bureau raised questions about giving contracts to Chinese vendors in sensitive regions. Though the IB had raised objections to giving contracts in the South region to Chinese vendors, BSNL went ahead with Huawei.

Way2SMS launches e-mail alerts on mobiles

2009-05-29T10:15:00.002+05:30

From The Hindu Business Line on 29 May 2009

Our Bureau

Hyderabad, May 28 SMS service provider, Way2SMS.com, has lunched e-mail alerts on mobile. Any subscriber of http://www.way2sms.com/ can avail this free service, which works with any mail box that has forward option.

“We have made sure that this feature can be easily activated as there is no installation required. Alerts can be received from multiple mail boxes if subscriber wishes,” said Mr VV Raju, Founder-CEO, Way2SMS.com, said.

A subscriber could receive alerts for only those emails, which he wants. It is also possible to customise one’s preferences, the Hyderabad-based company said in a release.

RedChery to ‘push’ mail and pull Blackberry clientele

2009-05-28T20:44:00.004+05:30

28 May 2009, 1909 hrs IST, ET Bureau

CHENNAI: US headquartered ICT company AJ Square Consultancy Services, with its global development center at Madurai, Tamil Nadu, launched a patented 'push' mail product called Redchery for the global as well as Indian markets on Thursday.

The Rs.15-crore fully owned subsidiary of the manufacturing group – Madurai based Lords group of Companies, is planning to price its product at one tenth the rate charged by its competitors, thereby acquiring about 20 lakh subscribers in a year. “We are aiming at an ARPU (average revenue per user) of Rs.110 per annum, and so, an annual turnover of Rs.22 crore for this fiscal,” said AJ Square MD Boaz Augustine.

Redchery is an application that enables mobile users to receive their emails on their handsets via GPRS. It receives emails from free e-mail accounts like Yahoo, Gmail, Hotmail and Rediffmail, and corporate email accounts like MS Exchange and IBM Lotus servers. 95% of the product development was done in the 200-strong global development centre of the company located in Madurai.

Developed on a Java platform, it differentiates itself from the market leader in the field – Blackberry – by being network, operating system and handset independent. “However, the company is in talks with various handset manufacturers and mobile service providers in India for marketing partnerships during the commercial launch of its product sixty to ninety days away.

The company’s focus will be on corporate customers, who currently comprise majority of the close to 1 million ‘push’ mail or Blackberry market in the country. It will foray into the Singapore and European markets once it attains its targets in India. “We are looking at drawing venture capital up to $ 25 million and are open to dilution of up to 45 percent stake,” Mr. Augustine said.

Dial your doctor, pay by phone

2009-05-28T11:31:00.003+05:30

From The Hindu Business Line on 28 May 2009

Our Bureau

Bangalore, May 27

Patient-doctor link portal HealthcareMagic has said its subscribers now can not only consult a doctor on phone but also pay their fee by phone. The company has tied up with mobile payment service provider Atom Telecom to provide IVR-based payment option for the service.

“Patients can now interact with doctors by dialling a landline number to get medical assistance for their illness or common query,” a release by the Bangalore-based HealthcareMagic said. “The charges range from Rs 160 to Rs 999 and can be paid through mobile or landline using credit card.”

HealthcareMagic launched its ‘Doctor on Call’ and ‘Doctor on Click’ live chat service over a year back. The charges were collected online; now this extends to phone-based payment, a spokesperson said.

The option of paying over the phone will cover all 400 million telecom subscribers and 40 million landline subscribers across the country. It has tied up with insurance and telecom players including Reliance Telecom, BPL Mobile, Aircel, ICICI Lombard and Bajaj Allianz.

“Providing m-payment facility for our customers will definitely increase our subscriber base and smoothen the payment system. As the mobile penetration in India is more than the Internet, Atom’s technology will definitely help get more visibility” to the service, said Dr Abhilash Thirupathy, VP-Marketing & Business Development, HealthcareMagic.

Those seeking medical advice need to dial HealthcareMagic’s call centre number and choose from various packages. They would then be connected to Atom IVR to pay by credit card over the phone. Once the transaction is done, the customer is connected to a panel of doctors.

The service is initially available from 9 a.m. to 9 p.m. in English and Hindi. The company plans to make it available 24x7 in more languages, and also bring in advice from super-specialists.

“HealthcareMagic’s service-at-your-disposal is rapidly catching up as a concept in the country. With this tie-up, we are confident that the best of health care services will now be available on call instantly, thus benefiting entire population,” said Mr Dewang Neralla, Director, Atom.

Atom is the digital, retail initiative of the Financial Technologies Group and is said to have handled over 100 crore similar transactions in India and West Asia.

Deals by Sunil Bharti Mittal

2009-05-28T11:19:00.003+05:30

From The Hindu Business Line on 28 May 2009

BSNL’s vigilance officer seeks clarification on GSM tender

2009-05-28T11:12:00.001+05:30

The Hindu Business Line on 28 May 2009

Thomas K. Thomas

New Delhi, May 27 Bharat Sanchar Nigam Ltd’s internal vigilance officer has asked the company’s management to clarify allegations made by Nokia Siemens against the tendering process followed in short-listing bidders for the 93-million-line GSM contract. The vigilance department has asked BSNL to submit a report by June 5.

Meanwhile, BSNL on Wednesday submitted a written response to the Punjab and Haryana High Court explaining why it had disqualified the Nokia Siemens bid. The Finnish company has the option to take its appeal back to the High Court if it is not satisfied with the explanation.

Nokia Siemens had complained that the tendering process was not transparent and that BSNL may have changed the contract terms to favour certain bidders. The Finnish telecom equipment major was disqualified by BSNL on technical grounds. The PSU had short-listed Ericsson and Huawei for the $6-billion project.

Nokia Siemens had also sought the intervention of the Competition Commission of India and the Central Vigilance Commission on the issue. The CCI has, however, declined to investigate the matter on grounds that it was awaiting proper laws to be put in place by the Government.

Nokia Siemens has primarily raised an issue on its bid being rejected on technical grounds given that the Finnish company supplies equipment to operators worldwide, including BSNL and Bharti Airtel in India. The company has said that if its equipment was good enough for BSNL’s previous contracts then how it can be disqualified on technical grounds for the new 93-million-line project.

Nokia Siemens has also highlighted the lack of competition in the bidding process since BSNL’s technical committee qualified bids from only one equipment supplier in three of the four zones. BSNL may have lost out in getting the best price in the process.

(Valuation Process) Does Bharti-MTN deal signal a recovery?

2009-05-28T10:57:00.009+05:30

From The Hindu Business line on 28 May 2009

(The Indian market does not offer very much in terms of future growth. Fundamentally, the telecom story seems to have played out to a large extent)

Interview with VIVEK GUPTA, PARTNER, M&A PRACTICE, BMR ADVISORS

D. Murali

The first developing-nation foray into the ‘Big 5’ of the telecom world encompassing two fast-growing emerging wireless markets, India and Africa; consolidated post-deal financials, north of 200 million subscribers and revenues of $20 billion; one of India’s biggest cross-border deals, even relative to Tata-Corus or Hutch-Vodafone… These are some of the opening observations about the Bharti-MTN deal that Mr Vivek Gupta, Partner, M &A practice, BMR Advisors, New Delhi, shares with Business Line, during a quick email interaction shortly after the mega merger was in the news. “And the deal is slated to happen this time at fair sensible valuations – in a sense; it is good that the deal was not consummated last year,” adds Mr Gupta. Since May 2008, ignoring the last two days, Bharti’s capitalisation has declined over 5 per cent, while MTN fell over 32 per cent, he notes. “Given the deal terms that have emerged, it seems that the financial side is more or less stitched up, and thus, we believe the deal will likely go through this time.”

Excerpts from the interview:

What are the quantitative parameters of the valuation process, apart from the telecom companies’ subscriber base?

The deal envisages Bharti giving up 36 per cent equity — 25 per cent to MTN and 11 per cent to its shareholders — and $4.1 billion, in return for a controlling 49 per cent stake in MTN. MTN will become Bharti’s “subsidiary by governance structure.” I guess that Bharti may not have immediately pushed for a 50 per cent plus stake, due to regulatory issues around licences, but it does seem apparent that Bharti will be the controlling party.

A number of factors would have gone into the valuation discussions:

Bharti’s revenues of $7.5 billion vs MTN’s $12 billion.

EBIDTA (earnings before interest, taxes, depreciation and amortisation) margins around 40 per cent for both entities but finally, similar net profit numbers.

Bharti’s ARPU (average revenue per user) at around $6.5, with MTN at around $13.

Growth projections for both markets – Africa having relatively higher potential than India.

Relative market capitalisations of both listed entities, with Bharti carrying more generous market multiples.

Finally, the end result of all of these factors is a 30 per cent premium to MTN’s current market capitalisation — an EV/ EBIDTA in the region of sub 6 — a valuation that seems defensible, considering the large 49 per cent block of equity with a “governance structure” in Bharti’s favour.

India and Africa, are there similarities and differences of significance, from a telecom perspective?

Both are developing country markets and thus, have inherent similarities — number of subscribers, contribution of mobile subscribers to the overall telecommunication industry, etc. At the same time, they seem to be at different stages of their growth cycles. The African telecommunication market is estimated to grow at roughly 40 per cent. It is estimated that India will grow for the next couple of years and then will start stagnating, while Africa will potentially continue to show higher growth for four to five years.

On the ARPU front, Africa ranks better than India, at roughly $12 per subscriber as compared to $6 per subscriber in India. Also, as compared to India, in Africa, per-minute prices are higher, demand for SMS over voice is limited because of low literacy levels, and bottlenecks exist in sharing platforms between local operations on account of small populations in some countries, political issues, language barriers and lack of affordable cross-border connectivity.

By 2012-13, convergence is expected. The known factors should take over — increasing competition, price reductions and another wave of low-income customers should drive the ARPU levels down in Africa too. And Indian operators understand this game well — the game of working on high volumes, low margins, the game of building economies of scale, higher affordability and tight management of extensive outsourcing contracts.

Post meltdown, the deal space was barren for quite some time. Does the Bharti-MTN deal signal a recovery trajectory, leading to many more mega deals in other sectors, too?

One way to think about this deal is to really peg it as being independent of market conditions. The fundamental drivers have been there for a while. The lower markets and efflux of time may have helped the deal talks this time from the point of view of more flexibility on both sides to make the deal happen. And thus, we are hopefully in a situation where deal talks have progressed. For this reason, we do not necessarily believe that the announcement of this specific Bharti-MTN deal indicates a strong recovery trajectory in the deal space per se.

As an emerging market merger, does the Bharti-MTN deal have characteristics that may not be found in the developed markets?

The telecom industry has seen lot of transactions globally in the past. They have had different drivers. For example, in December 2006, AT&T acquired BellSouth. It was then estimated that the NPV of the expected synergies would be as high as $18 billion. In two other transactions which took place in 2005, SBC buying AT&T and Verizon buying MCI, the target was to save 20-50 per cent of their total operating costs by reducing the number of networks, thereby eliminating redundant switches, devices, people and buildings. Bharti-MTN is not entirely similar. The fundamental driver seems to be geographical expansion and along the way come benefits of scale and bargaining power.

The two companies could look to each other to add value to their operations and by sharing each other’s best practices. MTN should be able to use Bharti’s technology and techniques for rolling out networks inexpensively and quickly. Bharti will be able to diversify beyond India’s borders, where expanding its base means having to reach out to poorer consumers.

Put differently, from Bharti’s point of view, the Indian market does not offer very much in terms of future growth – 3G and some value-added services may carry some kickers but fundamentally, the telecom story has played out to a large extent. This foray probably is thus an attempt to carry the “telecom story” for the company further by expanding into another potentially high-growth market.

Any other points of interest?

This is the first really large deal that takes advantage of the recent change the Government has announced in what it considers foreign and domestic holding. Now, foreign shareholding in a majority Indian-owned and controlled company is not considered foreign for downstream investments and that offers much greater flexibility in opening up headroom for MTN and its shareholders to acquire stakes in Bharti.

Also, it’s interesting to see that the deal is structured in a way not to have to look at an open offer in India. That would have been a significant cost leakage, given that MTN was picking up more than the 15 per cent trigger limit. The Bharti release seems to indicate that the deal will happen through a Scheme of Arrangement, which means it will be taken to the High Court under Sections 391 to 394 of the Companies Act, 1956 and will thus, enjoy exemption from the Takeover Code. To a large extent, the deal’s success will be predicated on its being piloted successfully through the myriad regulatory and structuring issues governing a deal of this nature.

Bio:

Mr Vivek Gupta, who has worked in the M&A group of the tax practice at Ernst & Young for three years and Arthur Andersen for three and a half years, prior to joining BMR, has experience in mergers, acquisitions and business reorganisations, domestic as well as multi-jurisdictional, having participated in many cross-border and domestic transactions across diverse industries. He has advised a number of domestic and multinational companies on complex transactions which involve acquisitions, mergers, divestments and other business reorganisations and brings a blend of strategic, financial, tax, regulatory and commercial skills to such engagements. Mr Gupta, a Commerce graduate from the Delhi University and a Chartered Accountant, finds mention in the International Tax Review 2004, as a leading advisor on M&A transactions in India.

Govt to use mobile telephony to collect data of beneficiaries under NREGS

2009-05-28T10:49:00.003+05:30

From The Hindu Business Line on 28 May 2009
Our Bureau

Kolkata, May 27 The Panchayat and Rural Development Ministry Department, West Bengal, in association with Pixel Informatics, plans to use mobile telephony to collect data of beneficiaries under the National Rural Employment Guarantee scheme.

As a part of the pilot project, the Government has handed over 1,100 mobile handsets to members of Gram Panchayats and Panchayat Samity in a number of districts for collecting all available data on the rural beneficiaries, according to a press statement issued by Pixel.

Ever since the NREGS was introduced to ensure minimum 100 days employment to rural workers, its monitoring has come under strain largely due to inadequate data on daily attendance and wage disbursals given the hierarchical reporting structure filtering up from Gram Panchayats to the state headquarters.

This initiative would speed up the process of information collection and dissemination as the supervisors of NREGS working at rural fields would be entrusted with the job of collecting status of daily attendance and payment disbursal to wage earners to speed up information reaching the state headquarters, the release said.

GoM on 3G likely to be reconstituted

2009-05-28T10:20:00.000+05:30

From The Hindu Business Line on 28 May 2009

New Delhi, May 28 The Group of Ministers set up to decide the policy for auctioning third generation mobile spectrum may be reconstituted following the changes in the ministerial portfolios after the election.

The Cabinet Secretariat has asked the Department of Telecom to send to it the latest position on the policy within 10 days. The GoM was set up to finalise the reserve price for 3G auction as also the number of operators to be accommodated in each circle.

India has 100 mn CDMA subscribers; to add 100 mn in 2 yrs

2009-05-28T09:59:00.005+05:30

28 May 2009, 2306 hrs IST, PTI on www.economictimes.com

NEW DELHI: India, which is already the world's second-largest CDMA market, now has 100 million subscribers using mobile telephony based on the technology and it is expecting to add another 100 million subscribers in the next two years.

The CDMA Development Group (CDG) -- a trade association -- today said that there are now more than 100 million CDMA subscribers in India.

"The country has added 50 million subscribers in India in just two years. Going forward we expect to add another 100 million subscribers in the next two years," CDG executive director Perry LaForge said.

CDMA or Code division multiple access is a popular mobile technology. In India operators such as Tata Teleservices, Reliance Communications and Siestema Shyam Telelink offer mobile services based on this technology. The other popular technology is called the GSM.

Attributing this rapid growth to the availability of affordable devices and low tariffs, LaForge further said "Efforts led by CDMA operators, device manufacturers, technology enablers and the CDG introduced an array of entry-level handsets to the market while tariffs dropped by more than 40 per cent."

As a result, CDMA reached 50 million subscribers in India twice as fast as any competing cellular technology.

From Telecom Tiger on 30 May 2009

RCom and TTSL are now ranked among the world’s top 5 CDMA operators.

For telecom minister, 3G top priority

2009-05-28T09:31:00.004+05:30

28 May 2009, 0724 hrs IST, Shalini Singh, ET Bureau

NEW DELHI: The Department of Telecom (DoT) has made 3G auctions a top priority item for the telecom ministry as soon as the new telecom minister takes office by next week.

A senior DoT official told TOI that this matter will be discussed with the new minister immediately on his taking charge. “3G auctions will definitely be held this year and sooner rather than later”, he said. Confirming this, DoT secretary Siddharth Behura told TOI, “3G auctions also carry the all round support of policy makers, including the finance ministry which needs to bridge the fiscal deficit, one of the biggest drawbacks in India’s balance sheet”.

Since the government can’t raise taxes sharply during the slowdown or cut expenditures it is highly likely that the finance ministry will push for an early and global 3G auction to be held within the next few months. The interim budget has already factored in revenues of Rs 20,000 crore from 3G auctions, just half telecom minister A Raja’s projections of Rs 40,000 crore in August 2008.

Average pan-India 3G spectrum is expected to rake in over Rs 4,000 crore. The government plans to auction 2x5 MHz of spectrum in varying proportions except Rajasthan and North East (see chart).

This time, 3G auctions also carry wide-ranging support from the industry. T V Ramachandran, director general, COAI, said, “3G auctions will definitely take place this year. It is a strong way of alleviating the spectrum crunch faced by GSM operators”.

“It is clear that 3G will be a priority for the new government as the auction framework is already in place and there is increasing interest from the mass market with 3G phones at less than $100/set hitting the market by 2010,” said Manoj Kohli, chief executive office & Jt managing director, Bharti Airtel. At present only 6% of mobile phones in India are 3G capable.

Also 3G will also contribute significantly to mobile valueadded services (VAS), which has been growing at nearly 40% every year as against the overall annual telecom revenue growth of 20%. This will prop up the rapidly declining average revenues per user (Arpu) of telcos.

“It is critical for operators that 3G auctions are held quickly as with mobile number portability and new operators, better quality 3G networks offering both better voice quality and VAS will be the only differentiator to prevent high end customers from switching to competing networks”, says Kunal Bajaj, managing director of consulting firm BDA India.

3G is an attractive policy move even for rural development by being a strong potential catalyst for e-Education, remote health care and m-Banking. RBI is currently reviewing the regulations for m- Banking, especially keeping in mind the needs of rural India. The success of the 3G auctions will depend upon the speed, transparency of process as well as the government’s ability to put out non-discriminatory auction terms for the existing 14 and potential new global operators.

Earlier in the year, the government released an information memorandum, appointed auctioneers and held pre-bid conference in the run up to the proposed 3G auction in January 2009. However, since neither industry nor the political environment favoured 3G auctions, India had to miss its date with what is perhaps the most high profile auction of a scarce national resource in this decade.

Indian Telco M&A Growth story

2009-05-27T16:02:00.003+05:30

From Times Of India, 27 May 2009

Telecom M&As set to touch $50 billion within a span of four years

2009-05-27T15:22:00.009+05:30

27 May 2009, 0408 hrs IST, SHALINI SINGH, TNN on http://www.economictimes.com/

NEW DELHI: If Bharti Airtel’s proposed $23 to $29 billion merger with South African operator MTN goes through, India's telecom M&A market will come of age either crossing or getting close to the $50 billion mark within a span of four years.

The telecom sector has seen greater M&A deals than any other segment in the country. Since 2005, 15 M&A deals have been struck, crossing a value of $25 billion. If Bharti pulls off a marriage with MTN, this number can cross $50 billion.

This also reveals that the size of Bharti-MTN deal will be roughly equal to or more than the last 15 telecom M&A deals in the country, though it is different since the transaction size is driven by share-swap rather than pure equity sale.

M&As in the Indian telecom sector started in the late 90s with companies like Bharti, Hutchison (now Vodafone), and Birla-AT&T (now Idea) starting to buy out smaller cellular operators with one or two circle operations. The first large M&A deal began with Tata Cellular merging with Birla-AT&T. This was followed by their acquisition of Escotel and RPG.

Bharti made multiple acquisitions in the late 90's to 2002. Hutchison first acquired Facel in Gujarat, and then BPL, to expand its footprint in Maharashtra, Tamil Nadu and Kerala.

Of the 15 M&A deals struck since 2005, the largest was Vodafone 67% acquisition of Hutchison Essar for $13.66 billion which placed the enterprise value of Hutchison's mobile footprint in India at $18.8 billion in 2007.

The second largest deal in terms of valuation was more recently, in December 2008, when NTT DoCoMo bought 26% of Tata Tele for $2.7 billion, representing an enterprise value of $10.38 billion for Tata Tele.

Many Indian companies have sold stakes on more than one occasion, and between 2005 and 2008 the valuations of these companies have steadily gone up. Tata Teleservices, which received a valuation of $10.38 billion from DoCoMo in 2008, was valued at a mere $1.27 billion by Temasec in August 2006 when it parted with 9.9% stake.

Similarly, Providence and TA Associates valued Idea Cellular at approximately $3.9 billion at 2006-end. Subsequently, in mid-2008, Telecom Malaysia gave Idea an enterprise value of $7.6 billion and acquired 14.9% stake.

Two of the most recent acquisitions include Telenor in Unitech and Etisalat in Swan neither of which had, at the time of the acquisition, any subscribers or operations in India. These deals were valued at $1.7 billion and $2 billion respectively.

It is clear that India is one of the most attractive markets representing huge growth potential over the next five years. DoT, in its latest spectrum report, has forecast one billion mobile consumers by 2014. This would mean an average addition of 10 million subscribers per month for the next five years.

It is also clear that no market in the world can sustain 12 to 13 operators per circle which is currently the case in India. It is expected that in line with the M&A deals over the last three years, further consolidation is on the cards in the near future. Most telecom experts forecast three to four national players with two or three regional operators over the next two to three years as average revenues per user decline, markets start to slowly saturate, and mobile telephony moves from the current land grab mentality to a fight for switching high-paying customers between competing mobile networks.

It is, however critical that for India to move to an efficient number of market players from the present overcrowding, the government immediately start to review its April 2008 telecom M&A guidelines which place severe restrictions on inter-circle mergers within the first three years.

Telecom boom may ring in mega BPO deals

2009-05-27T15:19:00.001+05:30

27 May 2009, 0250 hrs IST, N Shivapriya, ET Bureau

MUMBAI: BPO revenues from Indian telecom players have tracked the exponential growth of the telecom industry and rapid rise of new corporate giants, including Bharti Airtel. Outsourcing revenues from the telecom sector in India are set to grow at a CAGR of 31% in the next few years to nearly $2 billion in 2012, according to a study on the potential of the domestic BPO industry by Ernst & Young.

Bharti has been growing at CAGR of 41% in the past two years. The telecom industry has been adding around 10 million subscribers every month with a subscriber base of 375 million in 2008-09. India’s largest mobile service provider, Bharti Airtel, which played a pioneering role by outsourcing many of its non-core functions in 2005, is changing the way Indian firms have traditionally run business and putting pressure on others to follow suit, the consultancy said in the study. Telecom revenues made up 50% of the domestic BPO revenues at $661 million in 2008.

“This domain (telecom) has already witnessed a couple of large outsourcing deals in recent months and the trend is expected to continue,” said Milan Sheth, partner, Ernst & Young. The trend started in August 2005 with Bharti Airtel signing a $272.2 million deal with four global BPO companies — IBM Daksh, MphasiS, Teletech and HTMT —to outsource its call centres.

The key driver for BPO in telecom is demand for customer care and sales and marketing services, according to the report. Customer service is becoming the key to telecom service providers because it can be a differentiator in the marketplace — more so, because technology is uniformly accessible to all providers.

BPO for telecom is also a huge job creator, employing over 1,22,440 people in BPO firms in 2008 — a number that is set to more than double to 2,94,444 in 2012. After telecom, banking is the biggest employment generator for domestic BPO firms.

According to the figures put out in the report, the banking sector employed around 70,100 people in 2008 and this is projected to go up to 2,25,900 in 2012. The two sectors combined contribute 80% of the domestic BPO revenues — which is tipped to reach $6 billion in 2012.

MTN's already wired to TechM, Subex

2009-05-27T15:15:00.002+05:30

27 May 2009, 0220 hrs IST, Nandini Sengupta & Deepshikha Monga, ET Bureau

NEW DELHI: African communications major MTN has another India connection, besides an Indian suitor. Indian IT firms Tech Mahindra and the Subex as well as India team of American software major IBM are already providing IT services to the Johannesburg-headquartered firm.

Tech Mahindra, which recently entered Indian IT’s big league with the acquisition of Satyam Computer Services, has been working with MTN for about two years in the areas of customer relationship management, business process management and business intelligence. Tech Mahindra’s Middle East & Africa VP Krishna Gopal said MTN is the largest client in Africa for the Indian IT firm.

Though revenues earned from MTN are not very significant compared with those from a typical outsourcing contract with an American firm, Tech Mahindra is betting big on growth in the region. “We are executing large projects for MTN in Nigeria and Cameroon, and we see West Africa as a market waiting to explode,” said Mr Gopal. Tech Mahindra is in the process of establishing a subsidiary in Nigeria to cater to West and Central Africa.

Similarly, telecom software product firm Subex has a fraud management and revenue assurance contract with various MTN Group firms. “We have been working with MTN for the past 3-4 years, and we work across markets for its companies,” Subex chairman, MD and CEO Subash Menon said. New Delhi-headquartered Lifetree, which was recently acquired by Nasdaq-listed Tecnomen Corporation, also provides billing solutions to MTN Group.

Last year, MTN outsourced its information technology support and services to IBM in a deal reportedly worth about $2 billion. The deal was modeled after IBM’s outsourcing engagements with Bharti Airtel, Vodafone Essar and Idea Cellular.

In fact, the IBM India team, which cut its teeth with the outsourcing contract from Bharti — the first one to award such a deal among the three Indian telcos — is playing a leading role in service delivery and support in the MTN deal.

With Bharti and MTN reviving talks to strike a deal, there could be vendor consolidation. IBM is Bharti’s main IT outsorcing vendor and has grown its business with the Indian telecom operator from the initial size of $750 million five years ago to over $2 billion now. Mr Gopal said any vendor consolidation will take time. “Whatever happens, it won’t happen immediately because any instance of vendor consolidation will take at least three years to pan out,” he said.

Etisalat-Swan gets DoT NoC to buy Allianz Infra

2009-05-27T15:09:00.001+05:30

27 May 2009, 0113 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: Telecom service provider Etisalat-Swan has bought out Allianz Infratech, marking the first acquisition among the new companies who were given telecom licenses last year. Etisalat-Swan has also got a ‘no-objection certificate’ from Department of Telecom (DoT) for the deal, which is estimated to be worth a few hundred crores.

Allianz had applied for telecom licences on a pan-India level, but was given permission to launch services in only two circles — Madhya Pradesh & Bihar. Swan, which has bagged licences to operate in 13 of the 22 telecom zones in India, is not present in these two circles. Allianz Infratech is promoted by four individuals — aviation entrepreneur Ajay Singh, Ashish Singh, Praveen Singh and Ashish Deora, who hold 25% each in the company. Last year, UAE’s Etisalat had picked up a 45% stake in Swan for $900 million.

ET had first reported in its edition on September 25, 2008 that the Swan-Etisalat combine would buy out the telecom licences held by Allianz Infratech. Following the deal, Etisalat-Swan, which is expected to launch services soon, will be able to provide telecom facilities in 15 circles covering over a billion people. Allianz has become the first of the new entrants to sell out. Its promoters have opted to sell out even as the government is debating lock-in clauses to prevent new entrants, who got licences at prices fixed in 2001, from cashing out.

Last year, Allianz Infratech failed to make the cut to bag a pan-India telecom licence as its net worth was lower than the mandated Rs 1,350 crore. It was later awarded licences for only two circles. There have been allegations that the DoT had given licenses in two circles to Allianz in order to allow Etisalat-Swan to buyout the company and expand its footprint.

While Allianz paid about Rs 30 crore as entry fee for these two circles, the value of these licences would be multiples of that amount. For instance, Swan paid about Rs 1,400 crore for its licences in 13 circles, but offloaded 45% stake to UAE’s Etisalat for $900 million (Rs 4,500 crore).

The DoT, in a communication to Etisalat, said that it was granting a ‘no objection certificate’ for the merger subject to both companies meeting all regulatory requirements. Etisalat-Swan will also get the 4.4 MHz of start up radio frequencies that is held by Allianz in both the circles. The DoT has also asked Etisalat-Swan to submit a fresh proposal for the merger after the deal has been approved by the High Court or tribunal.

Bharti gets $4 bn bridge loan for MTN deal

2009-05-27T15:03:00.002+05:30

27 May 2009, 0052 hrs IST, ET Bureau

MUMBAI/BANGALORE/NEW DELHI: Bharti Airtel is learnt to have received a commitment from Standard Chartered Bank to raise a $-4 billion bridge loan to finance its deal with MTN, said a banker close to the development.

The banker, who did not wish to be identified, said Standard Chartered has agreed to fully underwrite Bharti’s net acquisition cost. However, it has not yet been decided whether the UK-headquartered bank will put together a syndicate to finance the deal.

“Standard Chartered may or may not set up a syndicate of banks. It will take a call on this closer to the implementation of the deal which is a few months away,” he added. There is a strong possibility that a clutch of foreign banks will be interested in participating in the loan syndicate, should one be set up.

The $23-billion deal would see both companies offering equity stakes and cash to each other. In the end, Bharti Airtel will have to make a net cash payment of around $4 billion to acquire a 49% stake in MTN which will, in turn, pick up a 36% economic interest in the Indian telco.

Another banker said that the deal would be easy for Bharti, as it needs to raise 1.25 times its EBITDA (earnings before interest, tax, depreciation and amortisation) to finance the deal. The country’s largest telco’s EBITDA stood at $3.19 billion in the last financial year. Its net debt was $1.4 billion, while debt-equity ratio was 0.2 in FY09. The enterprise value — market cap plus debt, minus cash and cash equivalent — was $33.8 billion on Friday’s closing.

“It’s an easy deal for them to do financially. The regulatory challenges are far more complex than the financing one. For Bharti and its advisors, dealing with regulatory issues were the priorities while structuring the deal,” this person said.

These bankers said that it was possible Bharti might also use some cash from internal accruals. In that case, the bridge loan from Standard Chartered would come down proportionately. The bridge loan would have a one-year duration. Normally, a bank charges anything between 0.5% and 1%, as fees for underwriting such a big deal.

When contacted, a Bharti spokesperson said: “We have not yet decided on the specifics of funding for this proposed transaction. However, our debt requirement is quite low and we do not consider that funding will be onerous.”

The proposed deal will not trigger an open offer, as it will be implemented through what is referred to as a scheme of arrangement between the shareholders of both companies.This means both companies will need to obtain approval from their shareholders before going ahead with the deal. This is a departure from a plain-vanilla takeover, where no such permission is required by either the target or the acquirer, said a legal eagle who has been associated with many M&A deals.

One of the bankers quoted earlier said that while Bharti and its advisors had taken great care in structuring the deal, the only problems that could possibly emerge were regulatory ones. The transaction, as reported by ET, would need clearances from India’s Foreign Investment Promotion Board (FIPB) and the Reserve Bank of India (RBI). A number of Indian Cabinet ministers have publicly praised the deal in the past two days.

Standard Chartered is Bharti’s advisor, while Merrill Lynch and Deutsche Bank are advising MTN. SingTel is being advised by Goldman Sachs.

The cash-cum-share swap deal is comparable with last year’s three-way transaction between UK’s Scottish & Newcastle (S&N), Danish beer maker Carlsberg and Dutch beer firm Heineken which saw Heineken acquiring a 37.5% stake in Vijay Mallya’s United Breweries. Heineken was exempted from the mandatory 20% open offer in India as it acquired stake in UB through a scheme of arrangements between the companies. The legal expert said that such a deal normally requires court approval.

Telecom sector leads M&A activity in India

2009-05-27T14:47:00.003+05:30

Thomas K Thomas on The Hindu Business Line dated 27 May 2009

New Delhi, May 26 The telecommunication sector has been a significant driver of mergers and acquisitions (M&A) in India accounting for the highest share of deals at 18.6 per cent and 22 per cent during the last two years with values of $5.7 billion and $11 billion in 2008 and 2007, respectively. If the $23-billion Bharti-MTN deal goes through, then the trend is expected to continue this year as well.

Mr Bundeep Singh Rangar, Chairman, IndusView Advisors Ltd, says: “This one deal worth $23 billion will almost match the value of the 280 cross-border mergers and acquisitions last year at $25 billion. It marks the grand entry of India as an acquirer in the international telecom industry, just as previous years saw India Inc. buying into international steel, auto and IT industries.” The value of M&A deals during the first four months of 2009 totalled $2 billion.

There have been a string of investments in Indian telecom companies since last year. This includes the deals between Tata Teleservices Ltd and NTT DoCoMo, Inc.; Unitech Telecom and Norwegian telecom firm Telenor ASA at $1.36 billion; Swan Telecom and Emirates Telecommunications Corp (Etisalat) at $900 million; and Bahrain Telecommunications Co and S Tel Ltd for $225 million.

Next in line
The Bharti-MTN deal could trigger similar deals in the Indian telecom space. Other operators, including Reliance Communications, Loop Telecom, Datacom, Idea Cellular and Aircel, could be the next to strike a deal with a foreign player.

A number of international operators, including AT&T, Kuwait-based Zain Group, Qatar Telecom and Telecom Italia SpA, are looking to enter the fastest growing telecom market in the world. Analysts say that M&As in the Indian telecom space could pick up pace because on the one hand domestic players are looking at foreign money to fund expansion plans and on the other international operators are exploring ways to move into emerging markets with their home market reaching saturation.