India Mobile

Who is the Telecom Commission batting for?

noreply@blogger.com (TelecomGuru) — Sat, 05 Oct 2013 18:06:00 +0000

It took the babus in the Department of Telecommunications (DoT)30 days to pore through the recommendations of the Telecom Regulatory Authority of India (TRAI) on spectrum pricing. At the end of that, the Telecom Commission is doing everything it can to wipe the smiles off telecom operators. The nine-member panel of the Telecom Commission has endorsed the DoT suggestions. The suggestions go all out to favour just one company that has yet to formally launch services.

Despite the fact that there were no bidders in the March 2012 auctions, the Telecom Commission is not in favour of a sharp cut in the base price for spectrum. TRAI had recommended a 46.6 per cent cut in the base price for 5MHz of nationwide spectrum in the 1800MHz band. That makes eminent sense. What the TC should realise is that there is a world of a difference between the base price and the discovered price in the auction. What a lower price does is intensify competition. But then the babus are not known for their knowledge of economics, unless it relates to them personally.

Two, it has issues on a flat spectrum usage charge (SUC) of 3 per cent. DoT argues that since revenue from auctioned and non-auctioned spectrum cannot be segregated, it is impossible to do so. Currently operators pay anything between 1 to 8 per cent depending on the amount of spectrum they have. Considering that the country managed to clean up its import duty structure by reducing the levels, it can be done in telecom too. After all, one need not pander to the whims of one company.

Three, it has questioned the need to open the eGSM band for GSM services. That's surprising since the number of CDMA subscribers has been falling for years. What opening up eGSM will do is provide an additional 10MHz of spectrum in the coveted 900MHz band. It would ensure that people get better services. Choking the pipe will only raise the burden on operators. Not opening is a great idea if all that the government wants is one operator while all others shut shop.

What happens to consumers? And the amount of jobs lost in a slowing economy? It's time the TC thought about the needs of the country rather that of a couple of companies that have all along tried to bypass the system.

Isn't it time that the TC stood up for the needs of a billion people demanding better and faster connectivity?

Uninor on the rise

noreply@blogger.com (TelecomGuru) — Thu, 19 Sep 2013 13:01:00 +0000

The green shoots are beginning to show in the Indian telecom sector.

Uninor has achieved financial breakeven in two more circles--UP West and Bihar. After achieving breakeven in five of its six circles. Uninor has now achieved EBITDA break-even in UP West, UP East, Bihar (and Jharkhand), Andhra Pradesh and Gujarat. That leaves out only Maharashtra, which is expected to achieve the milestone by the end of 2013.

“Uninor is well on its way to meet a commitment of pan-India breakeven that was made 3 years ago when we started. In the process, we have been able to bust prevalent myths that efficiency needs scale and profitability needs high-end services with expensive tariffs,” said Yogesh Malik, CEO of Uninor

As of end-August, Uninor had 32.5 million mobile subscribers. While UP East had 7.7 million subscribers, Maharashtra had 5.8 million and UP West 5.3 million. The advantage that Uninor has is that its lower costs per minute (upto 40% lower) and sabse sasta tariffs (upto 60% cheaper)helped it achieve its financial break-even.

TRAIng to get telecom on track

noreply@blogger.com (TelecomGuru) — Wed, 11 Sep 2013 08:09:00 +0000

It was quite on the lines of what the doctor had prescribed for India's troubled telecom sector. In a landmark recommendation, the Telecom Regulatory Authority of India (TRAI) has cut through the red tape that has bogged the sector. It cut the base price for 5MHz of spectrum in the 1800MHz band by 46.6 per cent to Rs 7,480 crore. That will be a huge relief for bidders in the next auction. That was not all. It also recommended:

There be no reservation of spectrum for the renewal of licences in the 900/1800MHz band
Asked DoT to come up with a clear roadmap before the auctions
Should look at the adoption of the E-GSM band in a time-bound manner
Spectrum usage charge would be a flat 3 per cent of AGR for mobile and BWA services
Permit spectrum trading

Says Hemant Joshi, Partner, Deloitte Haskins & Sells: "The recommendation by TRAI in reduction of the spectrum price is a very welcome move considering the current market realities and recent failed auctions.We still believe that the DOT / Govt should consider starting with the floor price of zero and let the market forces decide the final price for the spectrum." However, companies that bid in the earlier auctions are not particularly happy about the reduction. Says Arvind Bali, Director & CEO, Videocon Telecommunications Ltd: "We hope the Government will recognize the importance of new players and support them. We strongly recommend that the excess money paid by us ie difference between the price paid by us and the successful bid price of the upcoming auction should be refunded back to us either in monetary terms or through additional spectrum”.

That's something that the Department of Telecommunications (DoT) has to sort out and that too quickly. However, the issue is not that complex as it seems to be made out. TRAI has not changed or marginally tweaked the base rates in 11 of the 22 circles. This includes all the six C circles and five of the eight B circles. It has gone ahead and lowered the base price in the four circles--Delhi, Mumbai, Karnataka and Rajasthan--which did not receive any bids whatsoever. That leaves just seven circles where rates have been lowered. That leaves seven circles--Kolkata, Andhra Pradesh, Gujarat, Maharashtra, Tamil Nadu, Haryana and UP West--where prices were lowered despite the bidding.

It remains to be seen how quickly the DoT can go ahead with the auctions. While the lower price for spectrum is great news for Bharti Airtel, Vodafone and Idea Cellular, they need to get cracking on the auction of spectrum in the 900MHz band if they need to retain the advantage. That's where the entry of Mukesh Ambani's Reliance Jio Infocomm could prove to be a area of concern.

Sunil Mittal back in the fray?

noreply@blogger.com (TelecomGuru) — Mon, 02 Sep 2013 05:06:00 +0000

It may be tough times for the Indian economy, but, the Indian telecom industry seems to be finally getting back on the growth track.

Currently, the Department of Telecommunications (DoT) is finalizing the M&A norms and the Telecom Regulatory Authority of India (Trai)is to come up with the base price for spectrum auctions later this fiscal. All this should be in place by mid-October.

Already, the first stirrings of M&A in the sector have begun in earnest. It is believed that Sunil Bharti Mittal led Bharti Airtel has emerged as the frontrunner to acquire Mumbai's Loop Mobile, that is owned by Kiran Khaitan and her husband IP Khaitan. Kiran happens to be the sister of Essar Group's Shashi and Ravi Ruia. The advantage that Loop Mobile offers is that it has 8MHz of spectrum in the 900MHz band. Bharti currently offers services in Mumbai on the 1800MHz band.

However, for the deal to fructify, the government has to come clean on the M&A norms. Loop's licence expires in end-2014. This is not the first time that Loop Mobile has been seeking a suitor. The companies that had sought to acquire it include Norway's Telenor, Malaysia's Maxis and Idea Cellular.

It is still early days for M&A to begin in the sector. But, the signs are all there. It will depend on how quickly DoT and TRAI can come up with their recommendations. It could well be the booster shot that the economy needs at this juncture.

Swapping spectrum

noreply@blogger.com (TelecomGuru) — Fri, 30 Aug 2013 10:48:00 +0000

The Communications ministry and the Department of Telecommunications (DoT) have been looking at various means to solve some of the most compelling problems facing the sector for sometime now. Recently, DoT has come up with a swap formula. Under this Defence has been asked to vacate 15 MHz of spectrum that it has in the 2100MHz band in exchange for the same amount of spectrum in another frequency band--most possibly the 1900MHz band. The 2100Mhz band is being used for 3G services.

What the swap does is provide three bands of 5MHz across the country to mobile operators. That will help operators offer 3G services across the country. Currently, no private operator has 3G spectrum across the country. Bharti Airtel, Reliance Communications and Aircel have 3G spectrum in 13 circles, Idea (11), Vodafone and Tata Teleservices (9 each). In the May 2010 auctions, DoT had offered 20MHz of spectrum in the 2100MHz band for bidding. Of that one band of 5MHz was reserved in 20 circles for state-owned Bharat Sanchar Nigam Ltd (BSNL). In Delhi and Mumbai, it was reserved for Mahanagar Telephone Nigam Ltd (MTNL).

That could well clear up the imbroglio in providing 3G services. What this initiative means is that every existing 3G operator would be in a position to offer services across the country. Currently, operators have gone in for intra circle roaming (IRC) agreements to offer services in circles where they do not have spectrum. This has been deemed inappropriate by DoT. More importantly, defence is currently not using the spectrum.

The other advantage as far as the government is concerned is that it can put these blocks up for bidding and expect reasonable interest from incumbent operators. That should help shore up government revenues too.

It looks that finally the government is looking to untangle the telecom mess.

Faria appointed CEO of Airtel Africa; Manoj Kohli returns to India

noreply@blogger.com (TelecomGuru) — Wed, 28 Aug 2013 13:27:00 +0000

It has been in the air for some time now. Manoj Kohli, MD & CEO (International) of Bharti Airtels's African, Bangladesh and Sri Lanka operations will relocate to India starting January 1, 2014. He shall be replaced by Christian de Faria, who for the last seven years has held senior leadership positions in African mobile leader MTN including Executive Vice President, responsible for the operations for West and Central Africa Region and later as Group Commercial Officer for two years until January 2013.

As CEO of Airtel Africa, Christian will be responsible for providing overall leadership for the African operations and will be fully empowered to manage its P&L. He will lead the growth agenda across markets and build key skills and capabilities within the organization. He will also be co-opted on the Board of Bharti Airtel International Netherlands B.V. and on the boards of major operating companies in Africa. Christian has over 30 years of industry experience and has worked with MTN, Telekom Malaysia, Discvision, Deutsche Telecom and Grundig.

Manoj who has been in Africa now for over three years had the mandate to turn around the African operations. While Airtel Africa has seen annual revenues at $ 4.4 billion come close to the targeted $ 5 billion, the same cannot be said about EBITDA. During 2012-'13, EBITDA was $ 1.1 billion against the target of $ 2 billion.

It is still not clear what the new role for Kohli will be once returns to India. The Bharti Airtel media release states that Manoj would lead strategic issues such as in-market consolidation via M&A, key matters relating to towerco, global partnerships,global sourcing from key partners and strategic regulatory aspects. Additionally, Manoj will be responsible for the business development/M&A function for the telecom business and be involved with the group strategic matters. He will continue his position on the boards of Bharti Airtel International Netherlands B.V. and Airtel Networks Ltd, Nigeria.

The contentious issues

noreply@blogger.com (TelecomGuru) — Tue, 27 Aug 2013 08:54:00 +0000

Things are finally beginning to look up in the Indian telecom industry. However, there are many issues that need to be sorted out, and that too quickly for the sector to truly take-off once again.

1. Pricing of spectrum The biggest problem relates on how to price spectrum. The last two auctions failed to take-off simply because the base price approved by the Department of Telecommunications (DoT) was way too high for an industry beset with problems. Despite two rounds of bidding, there were no bidders for GSM spectrum in Delhi, Mumbai, Karnataka and Rajasthan despite the fact that there were many new operators in the fray. After all, the four circles had a combined base price of Rs 6873 crore that accounts for 49 per cent of the total base price.

Possible solution The Telecom Regulatory Authority of India (Trai) has just concluded an Open House on this issue. The obvious way is to go in for cutting the base price of spectrum in these four circles between 25-30%. That would in turn effectively reduce the nationwide base price by almost Rs 2,122 crore. That could make the circles attractive.

Problem area While that would make life easier for the current GSM operators, the dual technology operators and are opposing it.

2. Refarming of 900Mhz band The other big debate is over the refarming of spectrum in the 900MHz band.

Possible solution: The government could come up with a mechanism to release spectrum in the 900MHz band when the licences are due for renewal and open it to all operators for bidding. There is currently a proposal to provide 2.5MHz to existing operators at the discovered price in the auction.

Problem area The incumbent GSM operators are strongly opposed to this model. However, there is a suggestion that the governmnet open up the E-GSM band for GSM operators. That would provide operators around 10Mhz of additional spectrum in the 900MHz band.

3. Spectrum trading The TRAI is considering the possibility of introducing spectrum trading.

Possible solution This could happen since all operators are in favour of it. It is important for consolidation to happen in the sector.

Problem area DoT is not particularly in favour of spectrum trading. That could well be the biggest problem area.

4. The M&A norms All operators are awaiting clarity on this. After all, the fewer the number of operators, the better it is for the industry. It remains to be seen what is finally agreed upon.
Possible solution The DoT had earlier talked about allowing mergers between two operators if their revenues and subscriber base in a circle is under 35 per cent of the total. From 35 per cent to 60 per cent would need the approval of DoT.

Problem area It will all depend on the fine print. But this is one issue that all operators are looking forward to.

Getting back in the groove

noreply@blogger.com (TelecomGuru) — Mon, 26 Aug 2013 17:07:00 +0000

Yes, I have been away for quite sometime now. But, for the first time in years, I am finally feeling positive about the telecom sector. Over the next few months, the sector should be back in the reckoning. There are multiple reasons to be positive about the sector.

After almost 18 months of chaos post the cancellation of 122 licences by the Supreme Court in February 2012, the industry is in a position to grow once again. That is because many hard decisions were taken by operators. First operators, be it big or small; new or incumbents have gone about slashing costs to the bone. That has started showing results.

Second, following the directive of the Department of Telecommunications (DoT), operators have disconnected subscribers who did use their connections for 60 days at a stretch. As a result, the mobile subscriber base has fallen by 33 million in the last 16 months to 870 million. This has resulted in an upswing in average revenues per user for almost all operators.

Third, three operators pulled the plug on their Indian operations. Then three others who got spectrum decided to bid only for a select few circles during the 2011/2012 spectrum auctions. That allowed the remaining operators to first go ahead a reduce many of the free offers. Then some of the bigger operators boldly went ahead and hiked tariffs--something that was inconceivable till a few months ago. That improved the bottomline of operators.

Four, as operators reduced their presence across circles they went ahead and cut down on jobs, many of which are unlikely to be replaced.

Five, as operators started to see voice revenues stagnate, the rush is on to get a slice of the data market, through 3G and broadband wireless access services. While the incumbent operators are still trying to get their data act in place, Sistema Shyam TeleServices today gets 35% of its revenues from data.

While all this looks hunky dory there are yet many issues that need to be sorted out. I'll tackle that in the next post.

Budgeting for the next fiscal

noreply@blogger.com (TelecomGuru) — Sat, 02 Mar 2013 09:54:00 +0000

Now that the Union Budget is history let’s take a look at what the government got from the telecom sector and what it hopes to raise during the next fiscal (2013-14). During 2012-13, the government had targeted to raise Rs 58,217.33 crore. That included Rs 40,000 crore from the telecom auctions. But, it managed to raise only Rs 19,440.67 crore. After all, there were hardly any bidders for the November auction and the March auction is a flop show anyway.

Despite the issues, during this fiscal, finance minister P Chidambaram has targeted to raise Rs 40,847 crore from the telecom sector.

Explaining it on television, Chidambaram pointed out that the budget estimate during 2012-13 was done without analysis. This time round, he has got the numbers broken down to the last digit and got an assurance from the Department of Telecommunications (DoT). The receipts mainly relate to one-time spectrum charges levied as per the recommendations of TRAI, auction of 1800 MHz and 900 MHz spectrum and receipts from 800 MHz spectrum.

It remains to be seen how successful Chidambaram is considering that there were no bidders last time round. The lone bidder for the March 11 auction is Sistema Shyam Teleservices that is bidding for 800MHz spectrum in some 11 circles.

So what happens to the spectrum that has to be auctioned in the 900MHz and 1800MHz? First the empowered group of ministers (eGoM) is expected to take a decision in this regard. The big question is whether they will cut the base price in the four circles—Delhi, Mumbai, Karnataka and Rajasthan. According to a Goldman Sachs report, the government could raise the amount if it sells all targeted 900/1800MHz spectrum at a reserve price 45 per cent lower than the recently failed auction’s reserve price.

That will put it quite in sync with the discount offered to the 800MHz spectrum. While that will be welcomed by operators’, what has emerged quite clearly is that the finance minister does not need the support of the telecom sector to meet his fiscal deficit target. Maybe that could be a reason to celebrate.

Getting set for the next auction

noreply@blogger.com (TelecomGuru) — Sun, 27 Jan 2013 12:53:00 +0000

If everything goes to plan, the auction of spectrum in 800/900/1800MHz band will start on 11 March. This time round the focus will be on the metropolitan cities of Delhi and Mumbai where there was no bidding in the November auctions. The big question is whether the government will be able to make the most of it?

The real action will be in the 900MHz band where Bharti Airtlel, Vodafone and Loop Mobile will have to bid to ensure that they retain spectrum. At the base price alone, 900MHz spectrum in Delhi, Mumbai and Kolkata will yield the government Rs 25,000 crore.

There should be bidding in the 800MHz band since base rates for the auction have been halved by the Cabinet. So a national licence starts at Rs 9,100 crore. But, it seems unlikely that even Sistema Shyam Teleservices will bid for a national licence. In all propbability, it will bid for 6-7 key circles.

While the 900MHz band is part of the re-farming exercise, the 1800MHz spectrum in Delhi, Mumbai, Karanataka and Rajasthan is on offer since there were no bidders in the November 2012 auctions. To ensure that there is bidding this time round, the government has reduced the base prices by 30 per cent. Yet Norway's Telenor has sought a 50 per cent cut in the rates, quite in line with what the government did for the 800MHz band.

Not that the cut has satisfied SSTL. In fact, the Association of Unified Telecom Service Providers of India (Auspi) has sought a 75 per cent cut.

That remains to be seen. But action for spectrum will start soon. Tariffs for subscribers should rise in accordance with how much more operators pay for spectrum. What it essentially means is that the days of cheap mobile telephony are coming to an end. Unless of course the government allows domestic connectivity on internet protocol. That would lead to a bloodbath.

Getting set for the auctions

noreply@blogger.com (TelecomGuru) — Fri, 19 Oct 2012 17:04:00 +0000

Almost nine months after the Supreme Court cancelled 122 telecom licences, the process to get back licences began today. Bharti Airtel, Vodafone, Idea Cellular, Tata Teleservices, Videocon Telecommunications and Telewings (part of Norway's Telenor) have put in their bids to be part of the auction for spectrum in the 1800MHz band.

Interestingly, there were no applications from Mukesh Ambani controlled Reliance Industries, Anil Ambani controlled Reliance Communications and Russian leader Sistema Shyam Teleservices Ltd (that operates under the MTS brand.

However, it is widely believed that post the auctions, Videocon will join hands with RIL, quite on the lines of how Infotel Broadband was acquired by RIL soon after the mid-2010 auction of 3G spectrum.

Meanwhile SSTL has come out with a statement that says: “Sistema Shyam TeleServices Ltd (SSTL) has consistently maintained that it has been unfairly penalised in the February ruling of the Supreme Court and has filed a Curative Petition seeking to restore its licences. SSTL was the only operator to have applied for a Pan India CDMA spectrum in 2008. There is no finding or suggestion by the CAG report that CDMA spectrum was equally or anywhere near in demand as GSM. SSTL believes it has a strong case and is determined to await its hearing.

In this context, and considering the level of recommended spectrum prices which makes the business case unviable, SSTL had no choice other than not to take part in the 2G auctions for 800 Mhz. SSTL would like to once again reiterate that it is hopeful that the highest court of the land will speedily look into the merits of its case and will give it justice.”

It now remains to be seen how many of these operators will go the whole hog and bid for spectrum. The action is just about beginning.

Spectrum pricing blues continue

noreply@blogger.com (TelecomGuru) — Fri, 20 Jul 2012 15:54:00 +0000

The confusion continues!

The Empowered Group of Ministers (eGoM) met again today to decide on the base price for auctioning 2G spectrum. While the meeting is over there is yet no clarity on what has been decided. While communications & IT minister Kapil Sibal refused to give details, sources privy to the deliberations said the eGoM has decided to lower the TRAI suggested base price. The eGoM has also agreed to allow operators to stagger the payment.

Though the numbers are still not available, the base price for the auction of 5MHz of spectrum could range between Rs 14,000 crore to Rs 16,000 crore in the 1800MHz band. In that case the spectrum usage charge (SUC) would range between 3-6%. At Rs 16,000 crore the SUC would be 3% and would rise by one percentage point as the base price increases by Rs 1,000 crore.

However, no decision was taken on the one-time fee that DoT had proposed to levy on existing telecom operators by making changes in their licence conditions.DoT wants incumbents to pay auction-discovered price for the spectrum they hold, a move bitterly opposed by CDMA operators.The Union Cabinet will take a final decision on the prices of telecom spectrum and one-time fees payable by incumbent telecom operators.

It is unlikely that the Cabinet will take a decision on the pricing of spectrum till such time as the eGoM comes up with a formula for prospective licensing. Essentially, the spectrum drama continues.

Waiting for EGoM

noreply@blogger.com (TelecomGuru) — Thu, 05 Jul 2012 04:38:00 +0000

After many twists and turns, the Empowered Group of Ministers (EGoM) has to take a call on the base price for auction of 2G spectrum. But, ministers are wary of getting into the widening swamp of 2G. Pranab Mukherjee decided to go ahead and file a Presidential Nomination rather than come up with a number. Agriculture minister Sharad Pawar who was appointed to head the EGoM pulled out before the first meeting.

So what happens now?

First, the EGoM has to decide on the issue of providing a level playing field to new operators. In a Cabinet Note, the Department of Telecommunications (DoT) has sought imposing a one-time charge on incumbent operators. It argues that new operators have to pay the discovered price. Since incumbents have paid only Rs 1658 crore, they need to match the discovered price for the number of years their licence is valid.That puts a huge burden on later entrants like Tata Teleservices and Reliance Communications. However, that would allow the incumbents to offer all services--2G, 3G or 4G.

DoT has come with various options based on from when the operator is to be charged and how to base it on the amount of spectrum held.

The retrospective charge would kick in from the time the licence was issued. However, that is part of the Presidential reference. The other is a prospective charge from when the EGoM recommends it. If operators decide not to pay, they would be able to offer only 2G services. That would be a clear negative in the longer term.

The second is on the spectrum held by operators. The first option is to charge operators for all spectrum they hold, the second for spectrum over 4.4MHz and the third for spectrum over 6.2MHz in a circle. It is only the incumbents that have spectrum exceeding 6.2MHz and state-owned operators BSNL and MTNL that have spectrum exceeding 6.2MHz.

For now, the telecom industry is waiting for the government to get out and clear the mess.

No base price for spectrum yet

noreply@blogger.com (TelecomGuru) — Thu, 21 Jun 2012 17:20:00 +0000

It was a day of confusion, and yet a lot of clarity.

After all, at 5:30 pm the Empowered Group of Ministers (EGoM) was to meet primarily to decide on the base price for auctioning 2G spectrum in the 1800MHz band. That one number would change the fortunes of quite a few telecom companies and that of thousands of telecom industry employees.

First it was postponed to 8:30 pm. Then it did not happen. Incidentally, there was no official comment on why it was postponed. Though nobody is willing to say it in so many words, it is believed that finance minister Pranab Mukherjee was not comfortable taking a decision on the issue just days before he files his candidature to be India's next President.

That decision will now have to be taken by the next finance minister, which in all likelihood would be Prime Minister Manmohan Singh himself.

Pranab's chances of becoming President depends on the support of Samajwadi Party chief Mulayam Singh Yadav. So, the government would also not want to take a decision on pricing that would rankle Mulayam.

So, the process for fixing the reserve price has been delayed yet again. The losers in this are the new operators: Norway's Telenor and Russia's Sistema JSFC. Or will they be losers? Time will tell. Watch this space.

Rahul Khullar new TRAI chairman; Sarma leaves with a sting in the tail

noreply@blogger.com (TelecomGuru) — Sun, 13 May 2012 17:26:00 +0000

In classic Indian government style, it finally went down to the wire. On Saturday, JS Sarma completed his three-year term as chairman of the Telecom Regulatory Authority of India (TRAI). He also submitted a 60-page response to the clarifications sought by the Department of Telecomunications (DoT) on April 23.

On Monday, 14 May current commerce secretary, Rahul Khullar will take over as TRAI chairman.

However, Sarma did not show any leniency to operators as he went. In his reply to the DoT, there is no reduction in the reserve price that he suggested. Also, in the first auction, only one operator will get spectrum in the 1800MHz band. That is because Sarma has reserved spectrum in the 1800MHz band for refarming. Starting 2014, licences of operators with spectrum in the 900MHz band will expire.

Only in the case of CDMA operators, he has suggested where enough spectrum is not available, the reserve price should be 1.3 times the price of 1800MHz band spectrum. Earlier he had recommended it as double the price of 1800MHz band spectrum.

Lastly, as a parting shot, Sarma has raised the spectrum usage charge to 3% from his original recommendation of a flat 1%.

It remains to be seen what DoT does with the suggestions. It is not imperative for DoT to accept the recommendations.

It is believed that DoT will just opt for the auction of 1800MHz spectrum and junk all the other suggestions. That would be taken up by Khullar. Also, now that former telecom secretary Siddharth Behura is out on bail, there is a feeling that the worst is over for the sector.

Let's hope Khullar can do what no other regulator has managed till date--be strong and draw the road map for forward looking policies.

Raja moves bail application

noreply@blogger.com (TelecomGuru) — Wed, 09 May 2012 16:53:00 +0000

It is action time again.

More than three months after the Supreme Court cancelled 122 licences issued in 2008, the doors seem to be opening for the prime accused in the 2G spectrum qallocation case.

After being in Tihar Jail for over a year in the 2G spectrum case, former telecom secretary Siddharth Behura was granted bail today. Immediately after the court granted bail to Behura, his boss and former telecom minister Andimuthu Raja who has been in jail for the past 15 months moved a bail application. Raja is the prime accused in 2G spectrum allocation case. His plea will be heard on Friday, 11 May.

With Behura getting released, Raja is the only one still in jail. He was charged with conspiracy, cheating, criminal misconduct and abusing an official position in the allocation of 2G spectrum licences which were believed to be rigged.

Raja said he should be granted bail as he is unable to put his case before the Public Accounts Committee (PAC) of Parliament and the Joint Parliamentary Committee (JPC) which is looking into the various aspects of the issue.

The interesting days are just about to start.

Will this chaos lead to some good?

noreply@blogger.com (TelecomGuru) — Mon, 07 May 2012 16:14:00 +0000

It has been a long time since I have been here. However, quite like India, the telecom scene in India also is a case of change, but yet no change.

We are currently in the midst of a proposed New Telecom Policy. That it was supposed to come in 2011 is a different issue. The action started after the Supreme Court cancelled 122 licences issued to eight operators in 2008. It wanted the government to auction all spectrum in future. With the SC getting into the act (everything needs a push from the SC)the Department of Telecommunications, the Communications ministry and the Telecom Regulatory Authority of India (TRAI) are looking to clean up the mess.

Isn't that expecting too much.

Well, this time round, TRAI managed to spook it further. First it recommends a reserve price of Rs 3,622 crore per MHz for 1800 MHz band spectrum. That's a reserve price of Rs 18,100 crore for 5MHz of spectrum. Two, it ensures that only one block of 5MHz is up for auction, despite the fact that the SC had cancelled licences of eight operators. Third, it ensures that there will be spectrum re-farming in the 900 MHz band.However, it suggested that operators need to pay only a quarter of the discovered price in the auction immediately. However, that is unlikely to pass muster with the DoT and the empowered Group of Ministers.

What it has done is make almost all operators are unhappy. The new ones hate it because there is only one band in each circle at a huge price. Of the eight operators whose licences were cancelled, at least three have exited. Two are incumbents. So that leaves three new operators--Uninor, Sistema Shyam and Videocon Telecommunications in the fray. The original incumbents find the new reserve price for both 1800 MHz and 900 MHz band too high. The operators who came in between need to re-farm their 800 MHz band.

But is everything all that dark? Not really. DoT is speaking to the defence ministry to vacate spectrum so that at least three licences can be given in each circle.

So, is this the beginning of a new dawn? Maybe, since the SC has brought in the first wave of consolidation. The next few months should see more action.

Stay tuned. I am back to keep you updated on the go.

BSNL in the red

noreply@blogger.com (TelecomGuru) — Sun, 01 Aug 2010 07:10:00 +0000

State-owned Bharat Sanchar Nigam Ltd (BSNL)is in serious trouble. It has recorded the first ever loss since it was formed in October 2000. Since Kuldeep Goyal retired on 31 July, BSNL does not have a CMD now.But,that is nothing new for BSNL which has not been able to find a replacement to SD Saxena who retired as director finance in December 2008. That's a net 19 months without a CFO.

The government has just started the process to identify a CMD. Hopefully that process should not take as long. However, BSNL has company in MTNL, which too has an acting CMD.

As Goyal demitted office, he announced that BSNL has run up a loss of Rs 1,823 crore during 2009-'10 against a profit of Rs 575 crore in 2008-'09.During this fiscal, BSNL reported a 10.4 per cent decline in revenues at Rs 32,045.41 crore for 2009-10 as against Rs 35,812 crore in 2008-09.

The loss has been attributed to the fall in revenues from landline services and a higher wage bill due to the implementation of the Sixth Pay Commission for government employees. More importantly, it has not been able to compete in the ever-changing Indian telecom market.

As if that was not enough, it sought a refund of the payment made for 3G and BWA spectrum. That request was rejected by finance minister Pranab Mukherjee.

So will the government finally look to selling off a 26% stake in BSNL?

That could well be the best thing that could happen to BSNL. For that to happen, the government needs to convince the multitude of unions on the positives of selling the stake.

BSNL's slowing growth

noreply@blogger.com (TelecomGuru) — Wed, 07 Jul 2010 17:58:00 +0000

Suddenly communications minister A Raja is batting for state-owned telecom operators Bharat Sanchar Nigam Ltd.(BSNL)and Mahanagar Telephone Nigam Ltd (MTNL). Raja is seeking free 3G spectrum for both BSNL and MTNL. This after it was agreed that BSNL and MTNL which received the spectrum in 2008 would match the price arrived in the 3G auctions.

Why does this surprise the telecom industry?

Well, today BSNL is a shadow of what it was in May 2007 when A Raja was appointed as communications minister. At that time, BSNL had 31.6 million subscribers out of a total 177.8 million subscribers accounting for a subscriber market share of 17.76%. Then BSNL had marginally more subscribers than both Reliance Infocomm and Hutchison Essar (now Vodafone Essar). Today BSNL has 71.7 million subscribers and accounts for a market share of just 11.6%. It is number four after Bharti Airtel, Reliance Communications and Vodafone Essar. Ironically, the three private players seem to have retained their market share.

The slow growth in subscriber base was largely due to a shortage of capacity in the network. This happened primarily due to the policies followed by the communications ministry led by Raja. Soon after Raja became minister in May 2007, among the first things that he did was start re-negotiating the 45 million lines GSM tender of BSNL that was placed when Dayanidhi Maran was minister.

While Raja did manage to get a lowering in prices, the tender size was halved to 22.5 million. Then in April 2008, another tender of 93 million GSM lines was floated. This was the biggest order ever in the history of telecommunications. However, in 2010, a committee headed by Sam Pitroda, advisor to the Prime Minister has asked BSNL to scrap the tender.

So, it seems quite surprising that a man who literally rang the death knell for BSNL is now pleading with finance minister Pranab Mukherjee to give it a lease of life.Is there more than meets the eye? Or is there some truth in the rumours of an impending Cabinet reshuffle?

Mukesh Ambani back in telecom; WiMAX is dead in India

noreply@blogger.com (TelecomGuru) — Sat, 12 Jun 2010 08:14:00 +0000

It all happened in a few hours. Just before the FIFA World Cup started off in South Africa, there was sizzling hot action in the Indian telecom industry. On Day 16 of the bidding for broadband wireless access (BWA) spectrum, the auction ended in just one round.

That's when the surprises started to tumble out. Surprise 1: Infotel Broadband Services Private Limited, owned by Anant Nahata (son of Mahendra Nahata who has been running telecom equipment maker HFCL)won spectrum across India for Rs 12, 848 crore. The other winners included Aircel (8 circles), Tikona Digital Networks (5), Bharti Airtel and Qualcomm Inc (4 each)and Augere (1).

But, even before the ink had dried, came the second big surprise of the day. The $ 44.6 billion Reliance Industries Limited (RIL)owned by Mukesh Ambani in a media release announced that it had acquired a controlling 95% stake in Infotel for Rs 4,800 crore (US $ 1.03 billion)and that Infotel would be a subsidiary of RIL.The message was clear. It would focus on 4G and use TD LTE as the means of achieving that.

The not so surprising action came from younger brother Anil Ambani who welcomed the entry of Mukesh into telecom. Before most people could fathom what all this meant came the next big surprise. Mukesh is reported to have begun talks with Anil Ambani controlled Reliance Communications (RCom) for possible sharing of infrastructure.

So what does all this mean to the sector?

One, WiMAX as a technology is dead in India. The future will be TD LTE. Two, the level of competition will now extend to broadband. One can expect to see enterprise broadband rates come down over the next year. Three, it is very unlikely that RIL will restrict itself to 4G. It is likely to be present across the telecom eco-system, be it 2G/3G, enterprise services.One way out is to pick up a stake in RCom, which is looking for an infusion of cash. The other option is to pick up an existing player with a reasonable subscriber base.

One thing is for sure. Over the next 12 months, India will have just 6-7 large telecom operators. The game is simply over for the new players who managed to get licences and even start services in some circles over the last 12 months. What remains to be seen is how does the leader in telecom, Bharti Airtel react to this development. That could be an interesting play.

Making 3G work

noreply@blogger.com (TelecomGuru) — Sat, 05 Jun 2010 05:02:00 +0000

After what seemed like eternity, the 3G auctions are finally done and over with. Most importantly, the government has already received Rs 67,719 crore ($14.6 billion)from nine telecom service providers including state-owned Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL). The broadband wireless access (BWA) auctions have already generated bids of Rs 28,567 crore for three bands. So the government is assured of at least Rs 96,285 crore from telecom spectrum auctions.

Interestingly, none of the private operators has 3G spectrum across India. So there will be a spate of intra circle roaming deals. To do that, every private operator is looking to woo BSNL and MTNL which already have 3G spectrum across India. That could end up being a boon for both operators whose books are awash in red ink.

So what is likely to happen now? Once the spectrum is released in September, operators will work towards migrating their high ARPU subscribers to the 3G bands. That in turn will ease the pressure on the 2G spectrum. That will allow the operators to add on more subscribers on the 2G network. Most of this action will be in the top 20 cities.

The availability of 5 MHz of 3G spectrum will definitely ease the spectrum crunch of the incumbent operators for the time being. It is quite likely that the bulk of the post-paid subscriber base will opt for 3G services. Operators will soon try to monetize their investment in spectrum and rolling out 3G networks. One way out would be to provide spectrum to mobile virtual network operators (MVNOs) to launch services.

Thanks to the high bids for 3G spectrum, it is unlikely that any of the operators will go in for cut-throat pricing. The focus will be on services relating to Bollywood, cricket, astrology and religion. However, the biggest driver for 3G will be internet access. After all, millions of Indians will be in a position to surf the net, check e-mail etc for the first time. And they will do so on a mobile phone and not on a personal computer.

However, 5 MHz of 3G spectrum could be just too little in the not-too distant future. As subscribers opt for data services in a big way, the next round of spectrum crunch will be in data. Hope that the government is in a position to provide another 5 MHz to operators by then. Or else it would be one more service that does not provide value for money thanks to the bungling of the powers that control the telecom sector in India.

2009 for India telecom

noreply@blogger.com (TelecomGuru) — Sat, 03 Jan 2009 07:29:00 +0000

Telecommunications in India has not been hit by the global slowdown, yet. In the three month (September-November) period, the country added 30.84 million new mobile subscribers. That's over 10 million new additions every month. It seems unlikely that growth rates will drop substantially in the immediate future.

The big advantage is that while the big Indian telecom operators are mildly leveraged, there is a huge demand for connectivity across the country. Also, all the big operators including state-owned Bharat Sanchar Nigam Ltd (BSNL) are looking at sharing infrastructure. That will reduce their capex for now and opex in coming years.

So how will 2009 be?

A lot will depend on how the 3G auction fares, well, when it happens. In case the global operators are not present, it will be an opportunity for domestic operators to strengthen their position.

But competition is going to become more intense in 2G. Reliance Communications has already launched its GSM service. As of now it is unclear that there will be another price war quite like 2003 when Reliance launched its CDMA service. In such times, a price war could be just futile.

But there seem to be question marks over when other bidders will launch services? Datacom Solutions is in the process of resolving its ownership issues. Real estate major Unitech (which owns Unitech Telecom in collaboration with Norway's Telenor) is still trying to clear out its real estate dues. Swan Telecom is enmeshed in the dispute over BSNL providing it intra-circle roaming services. While most operators talked about launching services in mid-2009, as things stand, end-2009 would be a better bet.

However, this could just be the time for BSNL to get back into the reckoning. It's long delayed order of 23 million lines is being deployed now. That means it will have enough capacity to meet the needs of consumers in 2009. Plus, its 93 million line tender is being evaluated. it has launched IPTV services and is also expected to launch 3G services later this month.

So can we expect to see BSNL rising up the ranks in 2009?

It is also high time the government started lowering the levies and duties imposed on the sector. Unless that is done quickly, consumers should brace themselves for an increase in tariffs. But, that could end up slowing the Indian telecom growth story. It is not something that the government would want.

3G auction: Delayed further

noreply@blogger.com (TelecomGuru) — Sat, 03 Jan 2009 06:36:00 +0000

This is supposed to be the year of 3G in India. Well MTNL has started on a limited basis and BSNL should be there soon. But, the 3G auction seems to be stuck in a maze. As things stand there are serious doubts whether the auction will take place before the coming elections.
First, there were no real global telecom operators at the pre-bid conference last month. Then the Department of Telecommunications (DoT) decided to postpone the auctions by 15 days. Now, the finance ministry wants the base price for the 3G auctions to be doubled from the earlier Rs 2,020 crore to Rs 4,040 crore ($ 824 million). It also wants the base price for broadband wireless access (BWA) to be doubled from Rs 1,010 crore to Rs 2,020 crore.
What these moves mean is that it is unlikely that the process for 3G auctions will start before the elections. This also runs counter to the claims of communications and information technology minister A Raja's claims that the auction will happen in January 2009.
Of course it is well known that a couple of telecom operators are not too keen for the acutions to happen now. So,well wait and watch till the action starts.

A 3G nation...finally

noreply@blogger.com (TelecomGuru) — Sat, 13 Dec 2008 07:34:00 +0000

So after years of debate, India is on the world 3G map. So what if it means that only high-end subscribers of state-owned Mahanagar Telephone Nigam Ltd (MTNL) in limited areas of Delhi have access to the service for now. Well, the Jadoo has begun.
Bharat Sanchar Nigam Ltd (BSNL) which was also provided spectrum with MTNL will officially launch services in Chennai hopefully on 14 January 2009. That also happens to be Pongal, the Tamil harvest festival. Initially subscribers are being offered video telephony and later mobile television. However, the big hope is that gaming will become a big driver for 3G in the coming months.

Auction of 3G spectrum
While MTNL and BSNL launch 3G services, private telecom operators are waiting to get into the act. That wait should end on 16 January when the for 3G spectrum starts. In 15 of the 22 telecom circles in India, private operators can bid for four blocks of spectrum of 2X5MHz. There is no spectrum available as of now in Rajasthan and the North-East. In Delhi and Gujarat private operators can bid for just two blocks of spectrum each, while there is just one block available in West Bengal. Once the 3G auctions are over, the bidding for BWA (broadband wireless access) auctions will begin.

The two-stage auction will be done over the internet. The Clock stagewill establish the bidders in each of the circles. It will consist of many rounds. This will happen simultaneously for all the 22 circles. It will stop once demand for lots in the service area is less than or equal to the available supply. This will be followed by an Assignment Stage. This will be a single round in which the winning bidders can bid for specific frequencies. However, the winning bidders need not participate in this round unless they are looking for a specific band to operate in.

All that is fine. But in the current state of the world market, how high the bids go remain to be seen. Over the next couple of years, the focus of the operators would be on subscribers in the Top 2o cities. That could mean that the battle for the Delhi spectrum could be long-drawn. After all, only two slots are available. But, expect moderate bidding in other circles. After all, in a low ARPU country, it is debatable how many subscribers will opt for 3G services.

A lot of that will become clear over the next five weeks. But, I see this as the opening for large global operators to get their foothold into India.

How many 3G service providers does India need?

noreply@blogger.com (TelecomGuru) — Sun, 27 Jul 2008 07:10:00 +0000

If one has to believe the communications ministry then we could have 12 providers of 3G services. Each of them will have 5 MHz of spectrum. Nowhere in the world are there so many 3G operators. While Australia has six, the UK has five. If this happens then all the big 2G operators will be in a position to get spectrum . Add to that international service providers who are looking to get a slice of the India action.

But in most other countries, operators get a minimum of 15 MHz at one go. It does not augur too well for 3G services. What is likely to happen is that once the global players get 3G spectrum, they will look to acquire operators who have 2G spectrum already. That way, they become full-scale operators. It is also a great way for some of the new licencees to exit. But for that to happen, the government must go ahead and amend the M&A guidelines that insist on a three-year moratorium. If that gets reduced, we could see a re-alignment of the Indian telecom space.

For now, it is still in the realm of speculation. But do not be too surprised if things change rapidly. After all the Left is out of contention. This is just the right time to push through a load of reforms in the sector.