MTNL plans to double mobile users by 2008

State-run MTNL, which operates in Delhi and Mumbai, today said it plans to more than double its mobile subscriber base to five million by March 2008 and is expanding capacity for the same.

At present, MTNL has 2.4 million mobile subscribers in both the metros and has created capacity for two million mobile connections in Mumbai and Delhi by 2007-08, MTNL CMD, R S P Sinha, said here after presenting dividend cheque of Rs 106 crore to Union Telecom Minister, Dayanidhi Maran.

MTNL's sister concern BSNL plans to add 3 million mobile-subscribers monthly over the next three years to reach a mobile-subscriber base of 108 million. BSNL currently has a mobile-subscriber base of 24 million and operates in rest of the country except Delhi and Mumbai.

The MTNL CMD said the PSU has shown remarkable growth broadband subscriber base and the resulted revenue from that service, which has increased to Rs 135 crore in the first nine months of the current fiscal from Rs 35 crore from the same period earlier.

With so much demand for broadband, We expect Rs 50 crore revenue from broadband in the fourth quarter, Sinha said adding MTNL would target to reach 20 million broadband subscribers by 2008 March from the current 4.30 lakh.

It currently has a waiting lit of 15,000 subscribers for broadband in Delhi and Mumbai together.

NYSE listed MTNL's growth targets are not unrealistic as the country gears up to reach a total telephone target of 650 million phones by 2012 and out of that 584 million is expected to be wireless.

Low tariffs of as low as two cents have caused a monthly addition of six million mobile subscriber addition each month the world's fastest growing wireless market.

Bharti, RCoM, in race for Saudi licence

Bharti, Reliance Communications and MTNL have joined six other global telecom companies in the race for Saudi Arabia's third mobile licence. ET had first reported that Bharti, Reliance Communications and MTNL were considering the option of applying for the Saudi licenses.

Sources said that the three Indian telcos had submitted their bids over the weekend, which was the last date for the placing of the bids. They also added that all three companies had formed consortiums with local partners for the bid. While Reliance has teamed up with local partner Abdullah Adbulaziz Al-Rajhi, Bharti has teamed up with the Samawat and MTNL with Al Shoula, the sources added.

Saudi Arabia is the largest telecom market in the Gulf and is also considered as a very lucrative market as its tele-density is very low. Analysts peg the value of the Saudi licence at about $4 billion.

The Indian telcos, however, will have to compete with many international majors who are also in the race for the licenses including Orascom of Egypt, MTC of Kuwait, Oger Telecom, MTN of South Africa and Turkcell of Turkey for the Saudi licence.

Last month, following the request from several companies, Saudi Arabia's telecom regulator Communication and Information Technology Commission (CITC) extended the deadline for submitting applications for the new mobile licence to February 24, and for the fixed-line licence to March 10 . The new licences, when awarded, will break the monopoly of Saudi Telecom Co (STC) in the landline segment in addition to adding a third mobile phone operator after STC and Mobily.

All three Indian companies have a history of bidding for licences abroad, although their record on this front is mixed. MTNL, which had recently lost the bid Kenyan's second national licence also offers services in Nepal and Mauritius.

Earlier this month, Reliance got a second shot at bagging the Kenyan mobile licence it lost to Dubai-based Vtel Holdings after the latter's contract was cancelled by the Kenyan government. Last year, Reliance lost its bid for mobile licences in Egypt, Bhutan and Sri Lanka.

Bharti had recently bagged the licence to become Sri Lanka's fifth GSM-based operator. The company, which lost out in Kenya and Bhutan, also offers comprehensive telecom services in Seychelles under the Airtel brand since 1998 and has also been awarded licenses to operate 2G and 3G services in Jersey and Guernsey in Europe.

WiMax ready for rollout

After much talk, tests and trials, WiMax seems to be finally ready for commercial use in India. WiMax, high-speed internet access over a wireless connection, is a low-cost way to provide internet connectivity in places where laying cables is difficult.

Chennai-based Aircel is planning to take its WiMax network national while the Tata-owned VSNL will roll out retail WiMax offerings later this year. Bharat Sanchar Nigam (BSNL) is also ready to start WiMax services, having undertaken pilots at 14 locations.

VSNL as well as BSNL have partnered with Aperto Networks, developer of the world's most advanced WiMax base stations and subscriber units, to deploy multi-service broadband wireless systems.

“Wireless is much more reliable than wireline networks. Many organisations may use a combination of wireline and wireless for offering broadband. By the second half of this year, we hope to start offering WiMax to retail customers," Srinivas Addepalli, corporate strategy head of VSNL, told ET.

“Users are largely enterprises right now,” he said. Last May, VSNL acquired ISP provider Primus Telecommunications which has spectrum for WiMax.

While Motorola as well as Nortel are offering WiMax equipment, Alcatel-Lucent has completed the country's first live WiMax field trial using Aircel's licensed spectrum, confirming that the technology is ready for commercial deployment.

The trials demonstrated applications in moving conditions such as video streaming, high-speed file downloads, voice over IP and web browsing.

“WiMax has the potential to provide India with widespread broadband access, especially in rural areas, thereby ensuring economic growth, better education, health care, and improved entertainment services,” Ravi Sharma, president, Alcatel-Lucent, South Asia said.

However, industry experts feel there is need for reduction in prices of customer premise equipment to fuel large-scale deployment of WiMax. Currently, a CPE costs between $250-300, making WiMax a costly proposition unless economies of scale are achieved. Also, there is lack of clarity over spectrum issues related to WiMax. “A policy statement only can push WiMax offtake,” said an expert.

“BSNL is planning to take WiMax to 8,000 villages where it is the easiest and most efficient way to offer broadband. We have already tied up with Aperto for equipment,” a BSNL official said.

Arbitration panel on BPL Mobile spat set up

The arbitration panel to settle the dispute over BPL Mumbai circle was constituted even before the Hutch-Vodafone deal was announced on February 11.

A 132-page circular issued by Hong Kong-based Hutchison Telecom International Ltd (HTIL) on Wednesday said, “The panel was constituted as of February 5, 2007.”

This means the arbitration panel was formed just a week before UK’s Vodafone won the bid to buy the controlling stake in Hutch Essar.

The Bombay High Court had, in August 2006, referred the dispute over BPL Mobile Mumbai circle, which is fully owned by Essar, to an arbitration panel.

The dispute arose after Essar decided to keep BPL Mumbai operations separately even as it combined its other firm, BPL Communications, with the merged Hutch-Essar.

The court, that time, also restrained Essar group from selling shares or creating any third party interest in BPL Mobile Communications till the dispute was settled by an arbitration tribunal, constituting representatives from both Hutchison and Essar, along with a neutral member.

But, the tribunal was not formed for several months, while Essar maintained that it would run BPL Mumbai on its own.

Wednesday’s document adds that Hutch Essar was taking all steps to settle the BPL issue in accordance with the terms of the BPL Mumbai share purchase agreement.

According to the document, Vodafone has agreed in its agreement with Hutch “to make an offer to acquire from the Essar group its entire interest in the Hutch Essar group at a price which values its interest on the same basis as the sale share.”

The Vodafone-Hutch deal is expected to be completed by April 2. HTIL will not compete with Vodafone in India for three years after the completion of the deal, the circular says.

So far, the Hutch-Vodafone deal does not include BPL Mumbai.

But, Vodafone CEO Arun Sarin had indicated during his recent India visit that the BPL Mumbai issue would be discussed with Essar, which has expressed its intention of remaining partners in the venture with Vodafone.

Essar has also stated that it wants “partnership of equals” and “joint management” in the new venture. Essar holds 33% in Hutch Essar.

BPL Mumbai vendors cannot sell or otherwise deal in the shares of BPL Mumbai till four weeks after the constitution of an arbitration panel, the HTIL circular states. In other words, BPL Mumbai cannot be sold to a third party till March 5.

The Essar group had terminated the deal for the sale of BPL Mumbai to Hutch Essar on August 1, 2006, citing lack of government approvals.

Subsequently, Hutch Essar approached the court, seeking a stay on the termination of the sale purchase agreement as well as stay on the sale of BPL Mumbai shares to third parties, pending arbitration.

Hutch Essar had entered into a share purchase agreement with BPL Communications Ltd, Capital Global Ltd and Essar Teleholdings Ltd (together called BPL Mumbai vendors) to acquire a 99.99% of the issued share capital of BPL Mobile Communications (BPL Mumbai) on December 23, 2005.

British Telecom granted ILD, NLD licenses

British Telecom (BT) today announced it has been granted international long distance (ILD) and national long distance (NLD) licenses by the Department of Telecommunications.

These licenses willl enable its newly-formed joint venture company, BT Telecom India, to offer services for the first time directly to multisite corporate customers in the domestic market.

Minister of communication and IT, Dayanidhi Maran said that to further promote investment into India and enhance the business opportunities for Indian companies operating overseas, India must have the best and latest infrastructure. These licenses will allow BT to bring its 21 CN services to India`s IT and ITeS sector and increase their competitiveness through connectivity, availability, quality and responsiveness on a global scale.

BT plans to provide corporate customers who have sites in India with virtual private network-based (VPN) services using technologies such as internet protocol-based multi-protocol label switching (MPLS) and ATM.

The company had announced growth plans for its Indian operations in September 2006, predicting that its revenues from India will be 250 million dollars by 2009 and that it is looking to increase its employee strength in the country by hiring an additional 6,000 people within the next two years.

This month, it signed an agreement for the acquisition of i2i Enterprise, a Mumbai-based enterprise services company specialising in internet protocol (IP) communications services for major Indian and global multinational companies.

BT also plans to add additional resources to support its already substantial capabilities in outsourcing and systems integration services.

Essar wants to be equal partner with Vodafone in HEL

Essar, the Indian partner of Vodafone in its new acquisition, Hutchison Essar Ltd (HEL), is looking for parity in partnership ahead of discussions with the UK giant, which is taking a majority 67 per cent stake in the company.

Reports quoting Essar sources said it wanted 'partnership of equals' and 'joint management' in the country's fourth largest mobile venture, HEL. Essar Teleholdings CEO Vikash Saraf also refuted reports that Essar could exit the business, provided Vodafone paid a premium for its 33 per cent stake in HEL.

"We are the founder partner and shareholder. We will continue as a strategic partner in HEL and not as an investment partner," the report quoted him as saying.

"So, where is the question of seeking a premium?" he asked adding, "The fundamental tenet of the partnership with Vodafone will be a partnership of equals where both sides have a meaningful role. This will be the basis for any agreement with Vodafone."

Vodafone CEO Arun Sarin, who was in India last week after clinching the $11.1 billion deal to acquire 67 per cent stake in HEL, had held discussions with the Essar promoters, the Ruias. Further discussions between Ruias and Vodafone are expected to start later this week for which group vice chairman Ravi Ruia is slated to fly to London.

Although Sarin had exuded confidence that an agreement with Essar would be signed soon, Saraf said: "We have communicated our views. Discussions are at a preliminary stage. They (Vodafone) have also expressed almost similar views, saying that Essar can add lot of value."

"This is an early stage. But we want the shareholder agreement to address all aspects including when the partners are working together to add value and in the eventuality, if any, of either of the partner quitting," the report quoted him as saying.

Meanwhile, Egyptian telecom entrepreneur Naguib Sawiris, whose Orascom Telecom is a minority shareholder in Hutchison Telecom International Limited (HTIL), said the Mumbai-based conglomerate has been a 'troublesome' partner and that Vodafone should try to buy the Essar group out of Hutchison Essar.

Hutchison Whampoa and Orascom own 49.7 per cent and 19.3 per cent respectively of HTIL, which last week agreed to sell a 67 per cent stake in Hutchison Essar to Vodafone. Essar, which owns the remaining 33 per cent in HEL, clashed when Orascom bought its stake in HTIL in 2005, because Essar said it had a right of first refusal over any transaction affecting the ownership of Hutchison Essar. They are also at loggerheads over Essar's decision last year to drop its planned sale of mobile operator BPL Mumbai Communications to Hutchison Essar.

Vodafone chief Arun Sarin had said last week the UK group's preference was for Essar to be its partner, although it would also offer to buy its stake.

Country`s telephony subscriber base reaches 196.71 mn

The number of telephone subscribers in India surged to 196.71 million at the end of January 2007, taking the country's teledensity to 17.45 per cent.

The total number of telephony subscribers stood at 189.93 million at the end of December 2006.

The number of wireless subscribers in the country has crossed the 156 million mark with the addition of 6.81 million users in the month of January, at a growth rate of 3.5 per cent.

The total number of wireless users -- GSM, CDMA, and WLL-F -- stood at 156.31 million at the end of January 2007 as compared to 149.50 million in December 2006, according to figures provided by telecom regulator TRAI and DoT.

The wireline subscribers registered a negative growth rate of 0.03 million with the total wireline subscriber base reaching 40.40 million at the end of January 2007.

The overall teledensity reached 17.45 in January 2007 as compared to 17.16 at the end of December 2006.

The net addition of wireless and fixed line subscribers in the first ten months of FY 2006-07 has been 56.39 million as compared to 28.39 million during the corresponding period of FY 2005-06.

Total broadband connections in the country reached 2.15 million at the end of January 2007.

During January 0.05 million broadband connections were added as compared to 0.10 million during December 2006, registering a negative growth rate.

Vodafone may fuel further reduction

Mobile tariffs in India fell to attractive low levels with major operators today slashing roaming rates by up to 56 per cent, even as UK giant Vodafone promised to offer cheap rates once it enters the market through Hutch-Essar.

Though the reduction in roaming rates was in response to sector regulator TRAI's order, the coincidence was too striking to be dismissed.

While market leader Bharti Airtel slashed roaming tariffs yesterday, other major players Reliance Communications, MTNL and Idea Cellular roaming rates by 22-56 per cent for both local and STD calls depending upon their tariff structures. Besides they also scrapped the montly rental on roaming service.

Hutch, in which Vodafone has picked majority stake, too lived up to Sarin's words that customers can look forward to cheaper rates by announcing a reduction of up to 56 per cent in national roaming tariffs with no monthly rentals.

Market leader Bharti Airtel cut tariffs yesterday.

Subscribers will also not pay any security deposit for national roaming.

Hutch users will now pay only Rs.1.75 for incoming calls which will now save costs between 5456 per cent, depending on the roaming distance. Outgoing local calls will be Rs.1.40 per minute, while STD calls will cost Rs. 2.40 per minute. There will be no change in cost for ISD rates and SMS or GPRS usage.

State-run MTNL also effected the reduction as per which all local calls on roaming will be charged at Rs 1.40 per minute from Rs 1.50 per minute plus 14 per cent Surcharge.

Vodafone: Competition or collaboration?

With the British telecom major Vodafone having bought a majority stake in Hutch Essar, the rules of the game in India’s booming telecom sector are set to change. While the existing telecom players - especially the big boys like Bharti Airtel and Reliance Communication will find the going tough, the expectation of people from the British telecom giant will be far higher than it has been and the company must try to meet the expectations of its customers.

Both Bharti Airtel and Reliance Communication have gone on record about their determination to counter the possible challenge from Vodafone. The Chairman and Managing Director of Bharti Airtel, Sunil Mittal on Monday said the company would up the ante knowing that Vodafone would come hard to grab more market share. Chairman of Rel Comm Anil Ambani has also lined up an extensive capex plan going forward.

While the entry of Vodafone in India, the fastest growing among the emerging markets in the world, will certainly alter the dynamics in the telecom sector, this will also unfold a good range of opportunities for collaboration between players aimed at cost-cutting and better services. Almost in tandem with winning the Hutch bid, Arun Sarin, CEO of Vodafone, announced his company’s plan to collaborate with Bharti.

Sharing the tower infrastructure with other players also makes a lot of business sense for all. While it unlocks a lot of value for the owner of these towers, it will make a lot of commercial sense for the players who will be sharing it without having to own it. This is especially important for a sector which, going forward, will see its returns only thinning out--a phenomenon currently being seen in the West.

Bharti has signed an infrastructure sharing agreement with Vodafone, which would allow both operators to share nearly 70,000 mobile towers across the country. Bharti would also be Vodafone's preferred long distance telephony service provider. Mittal has said that the agreement would lead to huge savings for both the companies. Bharti would make Vodafone its preferred roaming partner, as per the agreement. All this could well fit in to the broader strategy of cooperation to cut down on costs.

In a way, Vodafone is banking heavily on effectively leveraging infrastructure-sharing arrangements, value-added and innovative schemes, which are its forte worldwide and capitalise on 3G services over the next few years.

All in all, India's telecom scene is all set to see an interplay of cooperation and competition in the days to come.





 

Tatas give a miss to VSNL call

It's five years to the day since the Tatas took over Videsh Sanchar Nigam (VSNL) from the government. It also marks the expiry date of a call option the group has to buy out the government's residual 26.12% stake in VSNL.

Sources at Bombay House, the Tata group headquarters, say they will not exercise the option and just let it be.

This position is at variance from the group's earlier stance when it had approached the government asking them to sell of the remaining stake. Sources said this U-turn is because "there are too many outstanding issues". One of the primary concerns on the Tatas mind is that of the valuation itself. Until now, there has been no agreed formula to arrive at a fair price for the residual share. This, they believe, can hamper final negotiations.

For instance, after Balco was taken over from the government by Sterlite founder Anil Agarwal, he exercised his call option to buy the remaining shares.

But because there was no pre-determined formula, political parties got involved in the valuation. The outcome was vociferous squabbling and the government continues to be a stakeholder in Balco.

Then there is the issue of demerging 700 acres of surplus land from VSNL on which no clarity exists. Add to this the fact that the Tatas have their hands full with tying up funds for its $13 billion acquisition of Corus. Which means, they are in no particular hurry, to divert funds into buy goverment's stake. In any case, the group holds a comfortable 50% in VSNL. As against this, in Tata Power they have only 32% and just 28% in Indian Hotels.

Another irritant is the golden share. As per the agreement between the government and the Tatas, even with one share, the Centre can veto any resolution. Recently, the government blocked a VSNL proposal to subscribe to the Tata brand by paying a royalty. A Tata group spokesperson declined comment.

Going by VSNL's last closing price of Rs 440 on the Bombay Stock Exchange, the government's stake is currently valued nearly Rs 3,300 crore. The Tatas acquired 25% stake from the government in VSNL at Rs 1,439 crore against Reliance's offer of Rs 1.347 crore. They acquired another 20% through an open offer at a cost of Rs 1,131 crore. 

Vodafone confirms deal with Hutch-Essar for $11.1 bn

 Vodafone has announced acquisition of majority 67 per cent stake in Indian mobile firm Hutch- Essar for $11.1 billion, marking the single largest foreign investment into India - one of the fastest expanding telecom markets.

Announcing the deal that puts the enterprise value of Hutch-Essar at $18.8 billion last night, Vodafone CEO Arun Sarin said: "We are delighted to be deepening our involvement in the Indian mobile market... We have concluded this transaction within our stated financial investment criteria."

Simultaneously, Vodafone offloaded its 5.6 per cent direct stake in India's mobile leader Bharti Airtel to the Bharti Group for $1.6 billion.

Vodafone said it had agreed to buy Hong Kong-based Hutchison Telecom International Ltd's 67 per cent stake in Hutch-Essar for $11.1 billion plus $2 billion in debt, valuing the company at $18.8 billion.

"This is a good price which reflects the premium position of Hutchison Essar as India's leading operator," Essar, which holds 33 per cent stake in the venture, said in a statement.

Vodafone's bid trumped offers by Reliance Communications (RCOM), Essar and the Hinduja Group.

RCOM Chairman Anil Ambani, in a statement, welcomed Vodafone into India, saying: "Vodafone's participation is a further endorsement of the exciting future growth potential, and the progressive policies... In the Indian telecom sector."

Earlier, Bharti Group Chairman Sunil Mittal said that "the Indian telecom sector is one of the most sought after in the world and the (Vodafone) bid is a strong endorsement of the government policy to promote the Indian telecom sector."

Name stake: Tatas to tag along VSNL

Videsh Sanchar Nigam Limited, India’s largest international long-distance telephony provider, is all set to undergo a brand makeover. Acquired by the Tata Group in 2002, VSNL will incorporate the Tata brand name by the first of half of this calendar year.

This means that it may have to first acquire the residual 26.12% government stake in VSNL before any changes can be made in the name. The Tatas have to take a final call on the buy out by the evening of February 12, the cut off date set by the government on the issue.

“The VSNL board is considering a proposal to attach the Tata name to VSNL. We are, however, not yet clear as to which form it would be in,” a top Tata source, told ET. “If it happens, VSNL will have to make royalty payments to the Tata Group to acquire branding. But that would be a very insignificant sum compared to the benefits and goodwill that will be generated by associating with brand Tata,” he added.

So, you may well see a completely new brand name or an assorted ‘Tata-VSNL’. Else it could just have a tag line of “a Tata Group Enterprise’. The Tata group companies which don’t enjoy the power of the Tata brand currently are SerWizSol (a third party voice and non-voice BPO company), Ginger Hotels (under Rs 1,000 per night hotel chain), Indian Hotels (Taj Group), Nelito (a provider of banking software solutions) and CMC (second largest domestic software provider) and Tayo Rolls (a steel rolls company).

Retail chains like Infiniti Retail, which runs Croma, a chain of multi-brand consumer electronics and durables; Trent, which runs Westside fashion stores, and Titan, the world’s sixth-largest manufacturer of watches, also go without the Tata branding. On the other hand, companies like Voltas and Rallis have ‘A Tata Group Enterprise’ inscribed under their logo.

Apart from work on the brand front, VSNL is readying itself for a new under sea cable project to connect Europe and India. Besides, it is also looking at acquisitions in the managed-services business. VSNL will expand significantly, which includes buying capacity in an east African under-sea cable system EASSy.

It is also in talks with many mobile operators (including Egypt’s Orascom) to jointly develop a $350 million India-Europe under-sea cable system. The cable may have landing stations at France and Italy. The company also plans some acquisitions in the managed services space (including security) over the next three years.

VSNL currently claims to be the largest ILD player in the world with a turnover of 20 billion minutes per year. “VSNL plans to retain the number one position and expand its market share in the broadband space. Currently, it owns only 10% market share in broadband. In other segments it aims to be number one or a strong number two,” these sources said.

The 4,000-people strong VSNL is expecting revenues of over Rs 9,000 crore this year. Typically, about 60% of the turnover comes from voice services. The rest come from data and broadband segments. Currently, the Tatas own a 45% stake in VSNL. About 40.61% is held by Panatone Finvest (a Tata-floated SPV). Tata Power holds 0.90% while Tata Sons hold 3.64%.The Tatas acquired about 25% in VSNL in February 2002 for Rs 1,439 crore.

Hindujas to Partner Qatar Telecom, Altimo for Hutch

The Hindujas confirmed that they have partnered with Qatar Telecom and Russia-based Altimo to form a consortium to acquire Hutchison-Essar. The three companies have jointly put in a bid on Friday night, according to highly placed sources in Hinduja Group.

Company sources also said that the bids made by Hindujas were binding, contrary to some reports that the company had made a non-binding bid a day later since it had not completed due diligence.

While the exact nature of the venture is not clear, Hindujas had said that it would not settle for anything less than 51 per cent.

If that is true then Qatar Telecom and Altimo can jointly hold not more than 16 per cent unless the Ruias-promoted Essar decides to sell out its 33 per cent stake. While the bidders are evaluating the company based on the enterprise value, only 67 per cent equity is on the block.

Hutchison Telecom International Ltd directly holds 51 per cent stake in Hutchison-Essar and indirectly has another 16 per cent stake through Analjit Singh of Max Group and Asim Ghosh, Managing Director, Hutchison-Essar.

In case Vodafone wins the bid, Analjit Singh may opt to retain his 7.58 per cent stake and partner the British telecom major.

Vodafone, Reliance Communications and Essar have also put in their bids by the midnight deadline. It is understood to be hovering around the $16-billion mark. While these three companies have gone solo, Vodafone will have to partner with an Indian company to fulfil the FDI norms.

Meanwhile, Essar sources said that they had tied up enough funds to up the ante even as the Ruias reserved the right of first refusal, which makes it mandatory for Hutch to seek the Indian promoter's approval before selling its stake.

This is of course refuted by Hutchison, which said that Essar could exercise the right of first refusal only in case Reliance Communications emerged the winner.

HTIL board is expected to take a view on all the bids on Sunday, according to one of the bidders.

Mobile subscriber base touches 148.72-million mark in January

Mobile subscriber base (GSM + CDMA) touched 148.72 million-mark in January, up 4.67% compared to 142.08 million in December, according to the figures released by the Cellular Operators Association of India (COAI) and the Association of Unified Service Providers of India (Auspi) on Friday.

In the GSM space, market leader Bharti Airtel continues to maintain the leadership position with a 30.54% market share with 33.73 million subscribers. Bharat Sanchar Nigam Ltd (BSNL) held the second position with 24.42 million subscriber base, closely followed by Hutchison Essar with a user base of 24.41 million. In the CDMA space Reliance Communications Ltd (RCL) held 71.79% market share having a subscriber base of 27.51 million. The second largest operator in this category Tata Teleservices Ltd maintained a market share of 27.94% with a subscriber base of 10.71 million during the month.

“The present growth momentum in the Indian GSM industry is expected to continue in the months to come,” said T V Ramachandran, director general, COAI. The subscriber base of GSM phones in metros grew by 2.8% over the previous month. Mumbai recorded the highest growth of 3.8% in this category during this period.

'Hutch-Essar best fit for Vodafone, RCom'

Rating agency Fitch said that British giant Vodafone and domestic telecom major Reliance Communications (RCL)--the two front-runners in race for India's fourth largest mobile player Hutch-Essar, stand to gain the most from a deal.

While mentioning that today has been set as the last date of submission of bids by various suitors, Fitch said a long-drawn bidding war might lead to a much higher acquisition cost for the winner.

This could also adversely impact the financial profile of the acquirer if substantial dent is incurred to fund the deal, the rating agency said adding the strategic value of Hutch would be most significant for Vodafone and RCL.

It said the competition for Hutch is aggressive and the counter parties are reportedly willing to pay around 20 billion dollar for Hutchison Telecommunications International Limited's (HTIL) 67 per cent stake in Indian mobile venture.

The major contenders include Vodafone, RCL, Essar Group, Egypt's Orascom Telecom and Hinduja Group.

"Hutch will not only be a good fit for Vodafone's portfolio but the robust growth in India could also help offset slowing growth in the group's traditional West-European markets," the agency said.

UK-based Vodafone has an impressive footprint spanning 27 countries but has a limited exposure to Asia, which has some of the fastest growing telecom markets.

Fitch said the merger of RCL and Hutch would radically alter the competitive scenario. 

Hutchison asks for India unit bids by Fri - report

Hutchison Telecommunications International Ltd. has "formally" asked bidders for Indian mobile firm Hutchison Essar to submit their offers by Friday, the Business Standard said on Thursday.

Britain's Vodafone Group Plc, India's Reliance Communications Ltd., the Essar group and the Hinduja group are expected to submit their bids "only on the last day", the newspaper said, citing sources close to the development.

Hutchison has not fixed a base price for the bidders, the paper said.

A spokesman for Hutchison Telecom declined comment.

Hutchison Telecom, controlled by Hong Kong's Hutchison Whampoa, holds 67 percent in the fourth-biggest mobile operator in India. India's Essar group holds the remainder.

On Wednesday, the Hindustan Times newspaper said Hutchison Telecom may sell its stake through an open auction with a minimum reserve price of about $14 billion.

Separately, the Wall Street Journal reported on Thursday that India's Hinduja group was teaming up with Qatar Telecom in its bid for Hutchison Essar. It cited people familiar with the situation.

A Hinduja official declined comment.

India, the world's fastest-growing major mobile market, adds about 6 million users a month with call rates as low as 1 or 2 U.S. cents a minute. 

Dhoots in telecom, to partner Verizon

The $88-billion US telecom giant Verizon has tied up with consumer electronics heavyweight Videocon to offer international long-distance (ILD) services in India.

Verizon, which is keen to tap the lucrative market for long-distance calls from India, has formed a JV — Verizon Communications India —with Leo Communications, part of the $3-billion Videocon group.

The initial investment in the venture is estimated to be over $30 million. “The JV is in the process of applying for a licence to provide ILD services,” people familiar with the development told ET. Verizon will hold 74% in the JV, while the rest will be held by Leo Communications. FDI regulations restrict foreign ownership in telecom entities to 74%.

Videocon chief Venugopal Dhoot declined to comment. “It is too early to disclose details,” he said.

India is a lucrative market for telecom companies and teledensity is just around 16%. The wireless business is growing very fast and the number of people calling overseas from India is rising fast every year. The annual ILD outgoing minutes from India were 2,500 million in 2005-06 and are expected to rise to 3,500 million by March this year.

However, sources close to the deal said Videocon sees synergy in the fast-growing space of telecom and connectivity with its existing businesses. “The partnership makes great business sense for us, especially given the convergence in the digital and electronics segment including IT hardware etc,” an official said.

Videocon is a leading player in the consumer electronics and household appliances segment. It also produces CRT glass, colour picture tubes and other key components. Company watchers said Videocon is likely to be more of a financial partner in the JV and would eventually sell out in the long run.

This is yet another diversification for the Videocon group, which began as colour television maker from Aurangabad. Over the years, the group has built a business in oil and is now looking to enter the telecom sector.

Verizon Business India will offer companies operating in India direct access to Verizon Business’ advanced IP communications portfolio.

Trai lowers network charges by 29%

Telecom regulator Trai on Friday announced a reduction of up to 29% on port charges that private operators pay to connect to their networks to those of state-owned BSNL and MTNL.

The move is expected to pave the way for marginal reduction in tariff cuts, especially roaming rates. It is also set to reduce the operational costs of private operators.

Trai said it expects service providers to pass the benefit of port charges reductions to consumers. Incidentally, this follows a recent move by the regulator to cut roaming charges by up to 56%.

Private operators said that the reduction in port charges will translate to a saving of Rs 350-400 crore annually for the industry.

“Each operator will save between Rs 25-40 crore, the benefits for consumers will therefore be very marginal,” said an executive with a service provider.

Trai dials telcos for report on call routing

The Telecom Regulatory Authority of India (Trai) has asked mobile operators to submit a report on the compliance of a government order allowing telephone calls within four circles to be treated as intra-circle for tariff purposes.

The move comes in the wake of sector tribunal TDSAT rejecting a plea last month by private mobile firms. The operators had challenged the regulator’s direction to discontinue differential tariffs within Maharashtra, West Bengal, Tamil Nadu and Uttar Pradesh — the four circles where the department of telecommunications had in May 2005 permitted inter-service area connectivity among service providers.

The arrangement for call routing and dialling in these states was different from other states. Calls within the four states were treated as intra-service calls, leading to a decline in tariffs charged by mobile operators. However, some private mobile firms specified higher tariffs for calls terminating in the mobile networks of BSNL and MTNL within these states.

The regulator found the differential tariffs to be discriminatory and felt these were preventing consumers from getting full advantage of the government decision to allow inter-service area connectivity within the four states. Trai issued a direction in February 2006 to mobile firms in these four states to discontinue differential tariffs.

The regulator said it has asked all mobile companies in these states to report compliance with its direction and intimate the date from which the service providers have been complying with the direction. Subsequently, Trai intervened against the discriminatory tariff of Hutch (Aircel Digilink) in Uttar Pradesh (East) service area. 

R-Comm to spend $2.5b for expansion

Reliance Communications, India’s second-largest wireless company, will spend about $2.5 billion over the next one year to expand its coverage across the country, chairman Anil Ambani said on Thursday.

The company aims to expand coverage to another 15,000-20,000 new towns. Every single cluster, with a population of over 50,000, will be served once this expansion is completed, Mr Ambani added. The expansion will be funded through a mix of internal accruals and debt. Reliance has a net worth of over Rs 20,000 crore and a low debt-equity ratio. Plus, it generates an annual cash flow of over $1.5 billion.

The latest move comes at a time when Reliance is preparing to place a final bid for Hutchison-Essar. Hutchison Whampoa is selling its 67% stake in the company and has already allowed prospective bidders to do a due diligence. Reliance is on the verge of completing its due diligence. A final bid will be called soon after the shareholders’ meet of Hutchison Telecom International. Mr Ambani said that the picture will become clearer over the next few weeks.

Reliance has an overall subscriber base of over 30 million. Mr Ambani told a conference call that the rollout will be completed within the next 12 months. RCL’s subsidiary, FLAG Telecom, is also investing $1.5 billion in a new project.

The company is expanding capacity in all its major segments. Recently, it completed the expansion in its GSM business where capacity was raised to 10 million lines. The GSM business, which services seven circles in east and north-east and Himachal Pradesh, now has a subscriber base of 4 million.

RCL on Wednesday posted a 198% increase in third quarter net profit to Rs 924 crore, while operating profit expanded 76% to Rs 1,527 crore. The EBITDA margin rose to 41% from 29%, while revenue rose 26% to Rs 3,755 crore. 

Sony Ericsson to make mobile phones in India

Sony Ericsson, a joint venture between Japanese electronics and entertainment company Sony Corp. (6758.TO) and Swedish telecommunications major Telefon AB LM Ericsson (ERIC), expects to make up to 10 million handsets every year by 2009 in India, a statement from Sony Ericsson said.

About a third of its handsets are made by Sony Ericsson primarily in China, with the remainder made by contractors in Brazil, Japan, Malaysia, China and now in India.

It said the handsets will be manufactured in the southern Indian city of Chennai. The statement didn't detail the investment level in the venture.

The initial focus will be to make basic color phones and midlevel music-enabled phones for the Indian market. The phones will also sport customized features such as local content, said the statement.

"The decision to manufacture in India is part of this (long-term growth plan) strategic decision," it said, saying India is one of the fastest growing mobile markets and a priority for the company.

Indian mobile users pay among the lowest call rates in the world, as low as one U.S. cent a minute, and operators are rapidly expanding their networks to smaller cities and towns lured by high growth rates.