While Vodafone got its green signal, market leader Bharti Airtel welcomed it with its best results ever. Annual revenues have increased 59% to Rs 18,520 crore ($ 4.5 billion*), while net profit has soared 89% to Rs 4,257 crore. ($ 1.04 billion). Bharti's profit is a shade higher than the revenues of India's fifth largest mobile player IDEA Cellular, which recorded revenues of Rs 4412.93 crore ($ 1.07 billion).
Bharti Airtel chairman and group managing director, Sunil Bharti Mittal has announced capex of $ 3.3-3.5 billion (Rs 14,000 crore plus)in 2007-'08. That's in addition to the Rs 31,950 crore that the company has already invested in the network.
Of the additional $ 3.5 billion, 70% will be invested in the mobile network. That includes setting up of 30,000 new base stations (it already has 40,000 in operation), adding more optic fibre (it already has 40,484 route kilometres). It will cover 70% of the country's population as opposed to 59% now. Of the 30,000 new base stations, around 60% (18,000) will be installed in rural areas. By then, its rural coverage will increase from the current 207,327 villages to over 300,000.
Bharti is clearly following the lower ARPU, higher volumes game. After all, it is unlikely that ARPUs will rise.
Now that Bharti has a pretty strong position in India, Mittal is looking at making a global presence. It already runs the Seychelles network. Bharti Global has been awarded licenses to operate 2G and 3G services in Jersey and Guernsey in Europe. The latest has been the acquisition of a licence to start 2G and 3G services in Sri Lanka.
But is Bharti worried about the impending challenge with the entry of Vodafone? Sunil Mittal brushed it off by simply saying: "Is that question for us or them?"
3G SPECTRUM
With communications minister Dayanidhi Maran talking about international bidders for 3G spectrum, Mittal clearly said that they are waiting for the policy. he also added that the existing operators are best positioned to offer 3G as an overlay on their existing 2-2.5G networks.
* Based on an exchange rate of Rs 41 per US dollar.
Saturday, April 28, 2007
Friday, April 27, 2007
Is Essar back in the race?
So, its finally over. The Foreign Investment Promotion Board (FIPB) has given the green signal to UK-based Vodafone to acquire a 52% stake in Hutch Essar. It agreed that 15% stake controlled by Analjit Singh of Max group (7.58%) Asim Ghosh (4.68%) and IDFC (2.81%)is controlled by Indians. Hence it does not violate the government cap of 74% FDI in telecom.
Of the Essar group's 33% stake in the company, 22% is controlled by companies registered in Mauritius. With Vodafone's 52% stake that adds up to 74%. Now with the FIPB clearly stating that none of the three entities that control the 15% stake can sell their stake to a foreigner without taking the approval of the government. But that cannot happen unless the FDI norms are changed.
That means in case any of them want to exit, it can be bought by the other two. Or they need to find another Indian investor.
With the Essar group already controlling 33%, this is a clear chance for them to consolidate their holding to 48% by buying out all of the three. That definitely is a possibility that Arun Sarin and Vodafone would not want. After all, big comma is well known to have a 100% control on almost all the operations. Knowing the ambitions that the Ruias have and the their current cash flush position, I would not be surprised to see them make an offer to the trio. When? That remains to be seen.
But I am sure, most telecom scribes in Delhi are quite happy that Voda has finally got the FIPB green signal. After all, one cannot keep having three stories a day on the same company from three different correspondents for three months in a row.
Of the Essar group's 33% stake in the company, 22% is controlled by companies registered in Mauritius. With Vodafone's 52% stake that adds up to 74%. Now with the FIPB clearly stating that none of the three entities that control the 15% stake can sell their stake to a foreigner without taking the approval of the government. But that cannot happen unless the FDI norms are changed.
That means in case any of them want to exit, it can be bought by the other two. Or they need to find another Indian investor.
With the Essar group already controlling 33%, this is a clear chance for them to consolidate their holding to 48% by buying out all of the three. That definitely is a possibility that Arun Sarin and Vodafone would not want. After all, big comma is well known to have a 100% control on almost all the operations. Knowing the ambitions that the Ruias have and the their current cash flush position, I would not be surprised to see them make an offer to the trio. When? That remains to be seen.
But I am sure, most telecom scribes in Delhi are quite happy that Voda has finally got the FIPB green signal. After all, one cannot keep having three stories a day on the same company from three different correspondents for three months in a row.
3G soap opera
The Department of Telecommunications (DoT) feels that there should just four 3G service providers in the 2.1 Ghz band in any circle. However, with 40 Mhz of spectrum being available, it is clearly possible to allocate 5 Mhz each for all the seven big mobile service providers (BSNL/MTNL, Bharti, Hutch Essar, Reliance, IDEA, Tata Teleservices and Aircel). By charging Rs 1,500 crore per operator, the government can make a neat Rs 12,000 crore at one go.
There is also talk that DoT wants to provide 10 Mhz to four operators. Of this one of them will be BSNL/MTNL.
Telecom industry officials point out that under the Universal Access Service Licence (UASL)the existing operators can provide video and data services, which is anyway 3G.
More importantly, former telecom regulator, Pradip Baijal had admitted that 3g is a continuum of 2G services.
This according to telecom experts could be construed as a back-door entry for MVNOs. All the companies that either quit India or missed out on the India experience are looking to make a splash here now.
But if the government does go about inviting international players to bid for the 3G licence, then we could see a replay of the unending court battles against the launch of wireless in local loop (WLL) services. Only this time it could be bloodier as all the Indian operators will be together.
There is also talk that DoT wants to provide 10 Mhz to four operators. Of this one of them will be BSNL/MTNL.
Telecom industry officials point out that under the Universal Access Service Licence (UASL)the existing operators can provide video and data services, which is anyway 3G.
More importantly, former telecom regulator, Pradip Baijal had admitted that 3g is a continuum of 2G services.
This according to telecom experts could be construed as a back-door entry for MVNOs. All the companies that either quit India or missed out on the India experience are looking to make a splash here now.
But if the government does go about inviting international players to bid for the 3G licence, then we could see a replay of the unending court battles against the launch of wireless in local loop (WLL) services. Only this time it could be bloodier as all the Indian operators will be together.
Thursday, April 26, 2007
Maran's 3G googly
Communications minister Dayanidhi Maran has fired the latest salvo in the battle for 3g spectrum. By allowing international players to bid for 3G spectrum, Maran has turned the tables on the existing mobile operators. That means the big mobile operators can plonk in the cash and get spectrum while Indian operators could be left salivating for spectrum.
However, like all things Indian, it will not be as simple as it seems. That's because the Cellular Operators Association of India (COAI) and the Association of Unified Telecom Service Providers of India (AUSPI) have joined hands to fight the phoren hand. After all, the existing operators have already invested a lot of money on the ground to make mobile telephony what it is today.
Second, with the big players coming, Indian operators will need to pay a much higher fee to get the spectrum. Going by the initial TRAI recommendations, a pan-India 3G licence would come for a base price of Rs 1130 crore. But, this googly could spoil their balance sheets for a long time to come.
Also, none of the global players is expected to go deep into the country. They will restrict themselves to the big cities.
That leaves a lot of questions unanswered.
# What happens if Indian operators do not manage to get 3G spectrum?
# Is that the end of the road for these players?
# Will there be enough takers for 3G services in India?
# Can an existing operator join hands with an international operator to start 3G services as a separate service?
# Is this the formal entry of MVNO services in India?
I hope to clarify most of these over the next couple of days.
However, like all things Indian, it will not be as simple as it seems. That's because the Cellular Operators Association of India (COAI) and the Association of Unified Telecom Service Providers of India (AUSPI) have joined hands to fight the phoren hand. After all, the existing operators have already invested a lot of money on the ground to make mobile telephony what it is today.
Second, with the big players coming, Indian operators will need to pay a much higher fee to get the spectrum. Going by the initial TRAI recommendations, a pan-India 3G licence would come for a base price of Rs 1130 crore. But, this googly could spoil their balance sheets for a long time to come.
Also, none of the global players is expected to go deep into the country. They will restrict themselves to the big cities.
That leaves a lot of questions unanswered.
# What happens if Indian operators do not manage to get 3G spectrum?
# Is that the end of the road for these players?
# Will there be enough takers for 3G services in India?
# Can an existing operator join hands with an international operator to start 3G services as a separate service?
# Is this the formal entry of MVNO services in India?
I hope to clarify most of these over the next couple of days.
Monday, April 23, 2007
Mixed band trials: Another tussle
The CDMA based mobile operators are all set to start 3G trials in the 1900 Mhz band. The aim of this trial is to see if CDMA services in this band will interfere with mobile services offered by the GSM players. This move could lead to the next round of the 3G spectrum wars.
That's because the GSM-based operators have all along claimed that CDMA services in the 1900 Mhz band will interfere with 3G services in the 21.Ghz band. Within hours of the news being public, T.V. Ramachandran, director general of the Delhi-based Cellular Operators Association of India (COAI) has shot off a seven-page letter to telecom secretary D.S. Mathur.
So, the battle for 3G spectrum seems to have begun in earnest all over again. Ramachandran claims that the DoT has allowed a trial for the mixed band without involving the GSM industry.
Considering that the GSM camp has always opposed the mixed band plan, this move could result in the entire issue going to court. But, then that is not something new in the Indian telecom industry. With China planning to roll-out 3G services under the TD-SCDMA standard later this year, it is high time the government and the telecom companies come to a tacit understanding on 3G services. Or else, it will be one more case where India waits while the world goes way ahead.
That's because the GSM-based operators have all along claimed that CDMA services in the 1900 Mhz band will interfere with 3G services in the 21.Ghz band. Within hours of the news being public, T.V. Ramachandran, director general of the Delhi-based Cellular Operators Association of India (COAI) has shot off a seven-page letter to telecom secretary D.S. Mathur.
So, the battle for 3G spectrum seems to have begun in earnest all over again. Ramachandran claims that the DoT has allowed a trial for the mixed band without involving the GSM industry.
Considering that the GSM camp has always opposed the mixed band plan, this move could result in the entire issue going to court. But, then that is not something new in the Indian telecom industry. With China planning to roll-out 3G services under the TD-SCDMA standard later this year, it is high time the government and the telecom companies come to a tacit understanding on 3G services. Or else, it will be one more case where India waits while the world goes way ahead.
Monday, April 16, 2007
Moto pulls out: Fast track ahead for BSNL
Last month, state-owned Bharat Sanchar Nigam Ltd (BSNL) added close to 2 million new mobile subscribers. The monthly mobile subscriber additions at BSNL should rise substantially over the next few months. That's because US-based Motorola has withdrawn the case it filed six months ago challenging its disqualification from BSNL's $ 5 billion tender for 63 million mobile lines.
Now, the two lowest bidders--Sweden-based Ericsson and Finland's Nokia will roll-out the 45 million lines. An 18 million line contract has already been awarded to France's Alcatel that has a technology sharing agreement with state-owned ITI. Ericsson will roll-out 60% of the 45 million lines, while the balance goes to Nokia.
Motorola officials claim that they withdrew the case simply because it was hurting the consumer. Plus it wanted to retain a good relationship with BSNL. Obviously, its not as simple as that. Motorola officials were not surprisingly unwilling to comment whether there was any other reason behind the sudden change in stance.
BSNL, currently the third largest mobile operator will soon be in a position to threaten the top two mobile operators--Bharti Airtel and Reliance Communications. As of end-March, Bharti leads with 37.14 million subscribers followed by Reliance with 33.82 million. BSNL has 27.42 million. That ranking could change substantially by the year-end. That will be the immediate fallout of Motorola withdrawing the case.
BSNL is India's largest telecom company with a presence in 21 of the 23 circles. It is not present in Delhi and Mumbai, where the other state-owned Mahanagar Telephone Nigam Ltd (MTNL) is present.
Now, the two lowest bidders--Sweden-based Ericsson and Finland's Nokia will roll-out the 45 million lines. An 18 million line contract has already been awarded to France's Alcatel that has a technology sharing agreement with state-owned ITI. Ericsson will roll-out 60% of the 45 million lines, while the balance goes to Nokia.
Motorola officials claim that they withdrew the case simply because it was hurting the consumer. Plus it wanted to retain a good relationship with BSNL. Obviously, its not as simple as that. Motorola officials were not surprisingly unwilling to comment whether there was any other reason behind the sudden change in stance.
BSNL, currently the third largest mobile operator will soon be in a position to threaten the top two mobile operators--Bharti Airtel and Reliance Communications. As of end-March, Bharti leads with 37.14 million subscribers followed by Reliance with 33.82 million. BSNL has 27.42 million. That ranking could change substantially by the year-end. That will be the immediate fallout of Motorola withdrawing the case.
BSNL is India's largest telecom company with a presence in 21 of the 23 circles. It is not present in Delhi and Mumbai, where the other state-owned Mahanagar Telephone Nigam Ltd (MTNL) is present.
Thursday, April 12, 2007
Growth continues
With 6.13 million new additions in March 2007, country's GSM subscriber base has hit 121.43 million. That's a 5.32% increase over the last month figure of 115.29 million subscribers. During the month, the lead was set by state-owned Bharat Sanchar Nigam Ltd (BSNL)which added 1.98 million subscribers. Following it was Bharti Airtel with 1.70 million new subscribers and Hutch Essar with 1.09 million.
During the month, the pressure was maintained by leading CDMA operator Reliance Communications that added 1.2 million subscribers. That's a neat 7.33 million new subscribers in a month without accounting for the additions by Tata Teleservices. However, one must remember that the biggest additions in every fiscal are in March, coinciding with the end of the fiscal year for operators.
Not surprisingly, the sharpest growth was in the C circles that grew by 8.73%. B circles grew grew by 6.66% followed by A circles at 4.82%. the metros grew by just 2.99%. Among the states, Assam grew 12.44% followed by North-East (11.16%) and Rajasthan (11.13%).
During the month, the pressure was maintained by leading CDMA operator Reliance Communications that added 1.2 million subscribers. That's a neat 7.33 million new subscribers in a month without accounting for the additions by Tata Teleservices. However, one must remember that the biggest additions in every fiscal are in March, coinciding with the end of the fiscal year for operators.
Not surprisingly, the sharpest growth was in the C circles that grew by 8.73%. B circles grew grew by 6.66% followed by A circles at 4.82%. the metros grew by just 2.99%. Among the states, Assam grew 12.44% followed by North-East (11.16%) and Rajasthan (11.13%).
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