India Mobile

BSNL in the red

2010-08-01T00:10:00.000-07:00

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

2010-07-07T10:58:00.000-07:00

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

2010-06-12T01:14:00.000-07:00

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

2010-06-04T22:02:00.000-07:00

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

2009-01-02T23:29:00.000-08:00

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

2009-01-02T22:36:00.000-08:00

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

2008-12-12T23:34:00.000-08:00

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?

2008-07-27T00:10:00.000-07:00

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.

Mobile growth to taper off after 2010

2008-07-25T09:01:00.000-07:00

Well, the June subscriber numbers are in--all of 8.94 million new mobile users. So in the first half of 2008, India has added 53.24 million new mobile subscribers. That leads to 286.86 million mobile subscribers. At this rate there should be 300 million mobile subscribers at the end of August.

Can we sustain this kind of growth? As things stand, we can do this through 2009 and into 2010. That is when things should start to slowdown. By then there will be 500 million plus mobile subscribers. It would mean a mobile penetration level of 45-50%. That's almost double of the current 24.94%. I do not think that India will overtake China in mobile subscribers.

China has three people per family as opposed to India's five. At two phone per family (for both parents) that works to a penetration level of 66.67%. India will settle at a penetration of 50%. Unless there is a sea change in the people's income it is unlikely to go much beyond that number.

But telecom industry officials argue that it is possible to touch a 75% penetration. For that to happen, we need income levels to rise sharply in the low income and poor India. That remains to be seen. But a 600 million subscriber base is quite achievable. Anything after that will be a bonus.

ASUS is already in India

2008-07-20T01:33:00.000-07:00

The iPhone is now round the corner in India. Both Bharti and Vodafone will be marketing the phone. That's a clear difference from the United States where only AT&T subscribers can have an iphone. But, hey at Rs 8,000 for a phone, it comes much below the Nokia N series. So expect all and sundry to be carrying an iphone soon. So much for exclusivity.

But, while the iphone comes with a lot of big bang and advertising, Taiwan's ASUS has made a quiet entry with some print advertising to support it. The ASUS PDA phones have been around for a few months. According to Edward Wang, head, mobile communications ASUS Technology: "The Indian PDA market is huge and growing very fast." This year, India will purchase an estimated 350,000 PDA phones. that is expected to hit 600,000 in 2009.

While the current set of PDAs in India are targeted for the male user, ASUS will soon launch PDAs in pink and white for the women users. ASUS is estimated to invest close to Rs 20 crore in India over the next couple of years.

ASUS has seven models and five service centres in India. Wang points out that the real competition for ASUS comes from HTC and iMate. According to him, iphone is a threat but not a huge threat.

But, the real business for ASUS is motherboards. Soon once should hear more of ASUS in India.

The MTN saga

2008-07-20T01:11:00.000-07:00

It's been a while since i have been around. In the meanwhile, there has been a lot of action over South African telecom operator MTN. First it was Bharti, who then decided against it. The we had Anil Ambani-led Reliance Communications trying to woo MTN. After almost two months, when it seemed to be happening, elder brother Mukesh Ambani threw in a googly.

But what i simply cannot fathom is why is MTN such a hot property? It is ironical that both Bharti and Reliance would have ended up being subsidiaries of MTN. Agreed it is present in 21 countries. But that also includes places like Sudan and Afghanistan.

But be prepared for more news on Indian operators looking to expand their footprint globally.

Namashkar Moto

2008-04-02T09:21:00.000-07:00

It calls itself 'The Indian Multinational'. Now Videocon, India's largest consumer durables company has evinced interest in acquiring the mobile handsets division of Motorola, the world's third largest handset maker after Finland's Nokia and South Korea's Samsung.

That Motorola's handset division was in trouble is old hat. Motorola's gross revenues have fallen from $ 42.8 billion in 2006 to $ 36.6 billion in 2007. That's largely due to slowing handset sales. The handset division clocked sales of $ 19 billion in 2007 against $ 28.4 billion in 2006. Handset sales slumped 27% from 217.4 million in 2006 to 159.1 million in 2007. It is claimed that Merrill Lynch has valued the handset division at $ 3.8 billion.

So does it make sense for Venugopal Dhoot to take the plunge?

For starters, Videocon is rolling out a pan-India mobile service network. The handsets could feed into that, but, there is no reason why a subscriber should opt for a Moto handset in a country where Nokia was and is still King. Nokia controls over 60% of the Indian mobile handset market, that is estimated to have picked up close to 100 million handsets in 2007.

Second, margins in the handset business are wafer thin. So that could be a difficult long-term bet for Dhoot. Lastly, this is a business where R&D budgets are huge. That is what hit the bunch of Chinese handset makers. Lastly, Motorola has not come with a great product after the Razr. That was too long back in history. It remains to be seen what Videocon can manage to overcome this problem. This is critical to ensure survival in a business where people change handsets in less than a year.

This could make or break Videocon.

100 million handsets in a year

2008-03-31T09:24:00.000-07:00

Nokia announced that it has made 125 million mobile handsets in India over the last two years. That by all means is a huge number. But what the Finnish major failed to mention was that during 2007 it made 100 million handsets at its plant at Sriperumbudur, near Chennai. That's because in 2007 Nokia had announced it made 25 million handsets in India during 2006.

That's already showing in the results. Earnings from the Indian operations have grown from Euro 2.71 billion (Rs 15,803 crore) to Euro 3.9 billion (Rs 24,968.7 crore). That's a cool 43.91% rise in revenues in Euro terms in just a year. I guess that's easy when you control more than half of the worlds fastest growing mobile market. After all, India has been adding over 8 million new mobile subscribers a month.

To do that it needs a lot more people. During 2007 the headcount at Nokia India has gone up from 3,800 to 8,000. By this time next year Nokia plans to have 13,000 employees in India. That's literally trebling the workforce in two years! All this needs additional investment, which will rise from the $ 210 million already committed to $ 285 million over the next year.

With 100 million handsets out of India, it is head and shoulders above the rest of the handset makers--Elcoteq, Samsung, LG, Motorola and Flextronics. Of these, the only one can that can match Nokia is Flextronics that has a huge facility with two plants down the road from the Nokia plant.

No wonder, Nokia is by far the biggest multinational in India. It remains to be seen how it will leverage Ovi (means "door" in Finnish) in India. That's when it will have to fight the entrenched service providers. It will be an interesting play. Stay tuned.

Finally, no more ADC

2008-03-27T10:17:00.000-07:00

It’s finally happening. Starting 1 April, the Access Deficit Charges (ADC) on domestic calls has been phased out. For international calls it has been halved to 50 paise from the present Re 1. ADC is a charge that private operators have been paying state-owned BSNL to help roll-out telecom services in rural areas since May 2003. Till date BSNL should have received close to Rs 20,000 crore from ADC.

Already, the bigger private operators like Bharti Airtel and Vodafone Essar have agreed to pass on the benefits to the consumer.

But, does it help the subscribers. Not really. That’s because it makes a Re 1 call cheaper by—well—0.75%. That’s not something substantial that will show up in the bill. The real gainers are the operators. It is estimated that operators will save close to Rs 2,700 crore. That’s something to celebrate about.

The real loser in this will definitely be BSNL. However, the government has promised to allocate Rs 2,000 crore from the Universal Service Obligation Fund (USOF).

Will that mean the rural roll-out will get slowed down? Unlikely. As all operators have realised, the growth is happening only in the smaller towns. The metros and the big towns are close to saturation. So, ADC or not, the march to rural India by private telcos will continue unabated. After all that is where the gravy will come from.

Catering to senior citizens

2008-03-16T06:29:00.000-07:00

Now maverick Richard Branson is here with Virgin Mobile. So the quite stodgy Tata Indicom is trying to cater to the needs of the youth. That's an interesting prospect. Going by Branson's track record, what it will offer to the youth remains to be seen!

So is this the beginning of the segmentation of the Indian mobile market? The BlackBerry already meets the needs of the busy executive. Virgin Mobile will go for the youth. But with affluence levels rising, there is a market for senior citizens too. A large chunk of the 60+ Indians today are quite well-to-do. Also with spare time on hand, they could be all set to download music and ringtones.

With children working in different parts of India and even abroad, these users will make long-distance calls too. So, are any operators looking to meet the needs of the senior citizens? That's a market ready for the picking.

However, a caveat. Obviously, the youth will use their phones for more years than their senior citizen counterparts. But then that is no reason to not focus on this market. Are operators listening?

Soul of the Indian Night

2008-03-11T09:20:00.000-07:00

Over the last dozen-odd years, hundreds of mobile handsets have been launched in the country. But this time round, when Nokia launched the N82, it has come up with the unique Soul of the Night. It's a wireless adventure that is happening in Delhi, Mumbai and Bangalore. Over the past few months, Nokia has done similar events across the Asia Pacific region.
Over the past few weeks, several celebrities are blogging on the site with their N82 handsets. These celebrities are posting pictures of locations, restaurants, pubs and events in their cities. The celebrity list includes Manish Arora, Mandira Wirk, Murali Karthik in Delhi; Dino Morea, Niaha Jamwal and Shiamak Davar in Mumbai; Charu Sharma and Prasad Bidapa in Bangalore.
Well, the action is not restricted to these cities. There are postings from Bihar, Uttaranchal and Jharkhand too.
But then the N82 is not just a phone. I have been playing around with an N82 over the past fortnight. It has anything that anybody would want. Today all phones have cameras, video recorders etc. But the N82 also has music, a really superb camera, GPS, city maps, location finder and a huge, huge memory. The best feature is Nokia Maps that allows users to download maps of 150 countries. Also, it provides voice-activated navigation that allows the user to simply drive his car while the phone tells you how to get to your location. Plus downloading the maps is free. So no more stopping and asking directions in a strange city!!
So what more could you ask for on one device. Oh i forgot. You can surf the worldwide web and post on your blog with it. Simply cool.

Tata's Virgin gamble--Will it work this time?

2008-03-06T07:56:00.000-08:00

Virgin Mobile is now in India, courtesy Tata Teleservices. That is an interesting combination--the maverick boss of a highly successful telecom service with the staid boss of India's slowest operating telecom company.
But, what is not clear is whether it is an MVNO or a franchisee operation. That is because the government has not given the green signal for starting MVNO services in India. So what exactly is this new animal?
That's what the Tatas should answer. After all, it has morphed its telecom operations so many times that one simply does not know aht they are up to. Yes, it seems to be the most confused mobile operator in the country.
A little bit of history here on the Tatas telecom business. It started life as Tata Cellular, a GSM service provider in Andhra Pradesh. Then it decided to join hands with Birla AT&T that provided GSM services in Maharashtra and Gujarat. That later morphed into IDEA Cellular.
Somewhere during this passage, the Tatas felt going CDMA was a better bargain. After all, the then Mukesh Ambani controlled Reliance Infocom was going the CDMA way. Then it sold its stake in IDEA to the Aditya Birla group. Now that the Anil Ambani controlled Reliance Communications is going the GSM way, the Tatas are as usual following them.
But going the MVNO way is a new path altogether. So when the Cellular Operators Association of India (COAI) raised objections, it has come up with a new complaint--the telecom policy did not allow outsourcing of networks.
But hello--what was the group doing for well over three years. After all, Bharti outsourced its network ages ago and has become a case study for mobile operators globally.
The confused thinking is clearly reflected in the subscriber base. It has just 22.5 million subscribers in 20 circles as opposed to IDEA which has 21.95 million subscribers while being present in only 11 circles. The only two circles where Tata is not present are North-East and J&K.
Maybe Richard Branson can pull this group's telecom business by the boot straps. That's what the group needs, if its telecom business has to last out.

Getting back

2008-02-19T08:19:00.000-08:00

I have been away for quite sometime. But, the action in India's telecom sector continues unabated. I shall be a lot more regular from now on.
Anyway a quick recap:
* The Department of Telecommunications (DoT) received 121 applications for starting mobile services from nine new players.
* It has allocated spectrum to Reliance Communications to start GSM services
* Bharti and Reliance Communications have spun out their tower companies as separate entities
* Among the new players in the mobile race are real estate major Unitech, electronics leader Videocon, Shyam Telelink in collaboration with Russia's Sistema
* However, there is no clarity on when these licence holders will be allocated spectrum
* There is no news on the auction of 3G spectrum
* Thanks to over 8 million new subscribers being added every month for the past three months, tele-density is within striking distance of 25%

Will I get a licence?

2007-10-02T00:58:00.000-07:00

Now the 1 October deadline is over. The Department of Telecommunications (DoT) has received over 400 appplications for universal accesss service licences (UASL). Now that's not 400 companies. Each of the new bidders has filed 22 applications each to cover the entire country. (The bidders have to file a separate application for each of India's 22 circles--that is equivalent to a state).
Among the big names who have filed in their bids are AT&T in collaboration with Mahindra Telecommunications and Russia's Sistema with Shyam Telelink. Many of India's telecom companies that lost out in the race earlier like Himachal Futuristic Communications Ltd (HFCL)are also in the race. The surprise entry is from a host of Indian realty players including Delhi-based DLF, Unitech and Parsvnath. All of these are flush with cash and are looking to make a splash in telecom.
Not surprisingly, all of the new players are looking at just marketing their venture. This is what Bharti Airtel did, but years after it started services. Videocon for example is looking to use its 15,000 strong retailer network to sell the service.
Will all this work?
It all depends on what norms the DoT come up with. After all setting and running a telecom network does not mean just plonking Rs 1,600 crore on the table. But, there are enough telecom professional in India who can help these companies roll-out their networks.
So do we see calls at 20 paise a minute? Or will this lead to another round of consolidation a couple of years down the road?
I believe that there is no place for more than eight players. we already have six in each circle. So who all will last in the long run? Well, simply wait and watch as the latest saga unfolds.
Well, I think I should have also put in a bid last evening. But, then there is enough scope when one of these guys wants to sell it--at a premium.

3G for rural masses

2007-09-20T05:28:00.001-07:00

If you thought that 3G was something meant for city slickers to download music and videos only, think again. Sweden-based Ericsson has launched the Gramjyoti Rural Broadband project in 18 villages and 15 towns near Chennai. Under the project, Ericsson is using the existing 2G network of operators like Bharti Airtel, BSNL and Aircel to provide a slew of services to rural folk.

The pilot project uses HSPA (high speed packet access) to provide e-education, tele-medicine, e-governance, entertainment and video conferencing facilities in the region. More than being a corporate social responsibility (CSR) project, this demonstrates to the people and the government how to provide people centric facilities.

Though this project is on for just three months, government support could ensure that rural folk across the country can benefit from the latest technology. Plus the cost implications are not too high. Apollo Hospitals claims that if each family of four pays just Rs 2 a day (Rs 60 a month), it can provide medical facilities in the villages. Ericsson's partners in the venture apart from Apollo include Hand in Hand - an NGO, Edurite, One97, CNN and Cartoon Network.While it has tied up with CNN,

The other plus is getting government documentation (birth, death certificates), land records etc sitting in the village. Currently, this is a showcase project. Once this is replicated across the country only will the benefits begin to flow.

Heading for court?

2007-09-06T04:42:00.000-07:00

The recommendations by the Telecom Regulatory Authority of India (Trai) on the review of licence terms has put the cat among the pigeons. At first glance the biggest gainer is Anil Ambani-led Reliance Communications.

That's because Trai has at one go sought to tighten the norms for allocating additional spectrum to existing operators. Under the old norms, an operator in a C circle would get 15 MHz of spectrum with 1.2 million subscribers. The new norms mean that the same operator would get only 8 Mhz. To get 15 Mhz, the operator needs to have 8 milllion subscribers.

What it does is simply ensure that all those operators who had sought additional spectrum will not get any till they reach a much higher subscriber base. However, it cleans the way for new operators. After all, Trai has removed the cap on operators in a circle. So, logically there can be any number of operators, provided there is spectrum.

So operators like Aircel, Spice and Reliance will be in a better position to get spectrum. The big question is will all these operators set up the networks? Seems unlikely. What is likely to emerge is a set of operators who will hawk off the licences and the spectrum to existing operators.

Of the players in the running, this is a great opportunity for Reliance to roll-out a nationwide GSM network. The fun has just begun.

As things stand, lawyers will rake it in till such time as this debate is settled.

Exploding batteries

2007-09-04T03:11:00.000-07:00

Global mobile giant Nokia is in a bit of a quandary in India. While Nokia CEO Olli Pekka Kallasvuo announced in New Delhi that India is the second largest market for Nokia after China, Nokia has been hit by the battery. Ever since Nokia came up with an advisory on the BL-4C battery, television channels have been focussing on exploding batteries.

In the process, TV channels claim that 10-12 handsets have exploded over the last couple of weeks. Surprisingly, in no other country do we have exploding batteries. While Nokia India's Shivkumar has taken pains to point out that the exploding batteries are fake, the pressure is immense. After all, it is the largest multinational in India. It is estimated that 85 million out of India's 192 million mobile users are using Nokia.

Though the advisory was for a certain 46 million phones that were sold all over the world, people queued outside outlets in India to replace their batteries. Shivkumar points out that 25% of the people who had the problematic battery have got a replacement. The balance will get it in the next fortnight.

While everyone has debunked the conspiracy theory, one thing is sure: demand for phones of rival vendors seem to have gone up.

So where does that leave Nokia? It is not really hit simply because this is for the first time ever that any corporation is replacing any part in its products in such large volumes in India. The next few months will show the impact of the battery advisory.

Rising revenues

2007-08-02T03:18:00.000-07:00

A quick look at the first quarter results of telecom companies' shows that revenues are clearly soaring. During Apr-Jun 2007, Bharti Airtel has seen its gross revenues hit Rs 5,905 crore ($ 1.47 billion), an increase of 53% over the same period last year. If one took into account only the mobile revenues, then it has touched Rs 4,697.6 crore ($1.17 billion. That's 65% over last year.

But Bharti is not the only one with great results. IDEA Cellular which has come out with its results for the first time since listing has recorded a turnover of Rs 1,477.6 crore ($ 369.4 million). Reliance Communications has notched Rs 4,304 crore ($ 1.07 billion)up 32%. Of that mobile earnings are Rs 3373 crore ($ 843 million. EBITDA margins are in the 40% plus range now.

But if one looks at the earnings per subscriber, that's not too different. Going by the June subscriber base, Bharti's 42.7 million mobile subscribers paid-up Rs 1,100 each during the quarter. That works out to Rs 366.67 ($9.16) per month. IDEA's 16.12 million subscribers paid on an average Rs 305 ($ 7.63) each month. Reliance subscribers paid Rs 351.33 ($8.78) per month.

In all , the per subscriber earnings are hardly different for the operators. Bharti is ahead primarily because of the huge lead it has in subscriber numbers.

New minister soon?

2007-07-30T02:39:00.000-07:00

It's been close to three months since Andimuthu Raja took over as communications and information technology minister. He has managed to raise hell over BSNL's 65 million-line tender. Now the 23 million line tender is almost through.

But, the big question that is doing the rounds of both Sanchar Bhawan and Electronics Niketan is whether he will complete three months?

That's because if one goes by the whispers that are doing the rounds of the ministry, Raja could make way soon. After all, everyone knows that Chennai decides who the communications minister and not the Prime Minister.

While no one is willing to put a date for the changeover, what is reliably known is that soon India will have its first woman communications minister. After all, with a woman President and a woman chairperson of the National Advisory Council, why not have a woman communications minister.

One only hopes that her communication skills are better than Raja.

Sexy towers

2007-07-25T03:25:00.000-07:00

The newest fascination in the telecom sweepstakes are towers. So what if they look ungainly, spoil the looks of a city and yet you do not get great coverage. Every operator seems to have spun off its mobile tower business into a separate entity. First Reliance Communications sold 5% stake in its tower company for Rs 1,400 crore. That puts the enterprise value of the tower company at Rs 28,000 crore ($ 7 billion).

As if that was not enough, the $ 1.4 billion American Tower Corporation (ATC)that owns or operates 22,000 telecom towers in the US, Mexico and Brazil is setting up its Asia-Pac headquarters in Delhi. It is looking at initially managing towers of Indian mobile operators. The idea is to get more operators onto each tower. At a later stage ATC it could set up its own towers or even look at acquiring a tower company.

Currently, India has 100,000 telecom towers of which 35,000 are owned by Bharti Airtel. The whole idea behind this scheme is co-locating the electronics equipment of at least two operators on a single tower. Obviously, there are major cost benefits to the operator.

But already mobile operators have outsourced their networks and their IT infrastructure. If they also manage to outsource their towers, then what is left of a telecom company? Al you need is service agreements with each of the vendors to ensure quality. And in case there are issues with coverage then the blame can be passed on to eother of the vendors.

So are mobile operators just there for branding and marketing a service? That's something i guess none of the guys who sold out of the telecom business seem to have ever considered.