BDA-FICCI Report Summary

Number portability to start from September

30 Apr 2009, 0156 hrs IST, TNN

BANGALORE: Come September, mobile users in metros and larger cities will be able to shift from their existing operators to another operator, retaining their mobile number. The DOT has given the license to MNP Interconnection Telecom Solutions, a Telcordia joint venture company, to roll out the system in two phases in the southern and eastern regions. This facility will initially be rolled out in Tamil Nadu, Andhra Pradesh and Kolkata, and in Karnataka in six months.
To shift from an existing operator, customers will need to submit a request to their operator. “The process has to be completed in a maximum of two days and the mobile phone will be under a de-activated stage for just two hours, during the process,” said Ashok Sapra, MD, MNP Interconnection Telecom Solutions.

Bharti all set to scale 100m user mark

1 May 2009, 0102 hrs IST, Shalini Singh, TNN

NEW DELHI: Bharti Airtel is set to become the first Indian operator with 100 million subscribers nationwide, in all probability within a few weeks.
At the end of March, Bharti’s overall subscriber base was 96.6 million. After including the subscribers added in April, its total subscriber base is expected to hit 99 million. Bharti added 32.5 million subscribers in 2008-09 with an average of 2.7 million subscribers per month. Bharti added a record 8.37 million new subscribers in January-March quarter, according to a statement issued by company on Wednesday. These numbers suggest that Bharti’s mobile subscriber base alone is already to 97 million (93.92 million of its 96.6 million subscribers in March were mobile subscribers). Somewhere in the middle of May its overall subscriber base is likely to cross 100 million and by May-end/early June its mobile subscriber base is expected to cross the 100 million mark. When contacted, Airtel’s CEO & Jt MD Manoj Kohli admitted that the 100-million subscriber mark would be breached latest by early June. This means that nearly one of every 13 Indians will be using an Airtel subscription by that time. This will also improve Bharti’s global ranking. Others ahead of Bharti include China Mobile, Vodafone (UK), Telefonica (Spain), Telenor (Scandinavia), China Unicom, T Mobile (Germany) and Orange (France). Yet, unlike Bharti whose 100-million subscriber base has come from a single country India most of its rivals in the top ten have consolidated figures across many countries. Where single country subscriber numbers are concerned, Bharti will rank in the top five with every possibility of becoming the second or third largest in the world by 2012 after China Mobile/China Unicom. By comparison, the world’s largest mobile company, state-owned China Mobile already serves close to 480 million subscribers, 80 million more than India’s total mobile population.

Bharti inks $500m deal with Alcatel

1 May 2009, 0054 hrs IST, TNN

NEW DELHI: Telecom major Bharti Airtel has signed a five-year managed services deal valued at $500 million with Alcatel Lucent for its fixed-line and broadband operations.
A separate joint venture company in which Alcatel Lucent will hold 74% equity and Airtel the remaining 26%, will manage the services. “We have not yet decided on value of the equity capital”, Bharti Airtels CEO & Jt MD Manoj Kohli told ToI. The new joint venture will be manned by 4,000 employees, which are to come from both the partner firms. However, the number of employees that will be transferred out from each company has not been disclosed. Alcatel Lucent will be responsible for installation and rollout of services at the customer premises, will provide 24×7 customer service and also be involved with the transformation or migration of the network to an Internet Protocol platform for flexibility and scale. Bharti has already outsourced its network management to Nokia Siemens and Ericsson in two different deals for its wireless business while its IT infrastructure is managed by IBM.

RCom Q4 net falls 3.3% on expansion cost

1 May 2009, 0052 hrs IST, TNN

MUMBAI: Reliance Communications (RCom) has seen a drop in quarterly profit due to expansion costs. The country’s second biggest mobile phone operator on Thursday reported 3.3% decline in consolidated net profit at Rs 1,454 crore in the fourth quarter ended March 31, 2009.
RCom posted a net profit, after adjustment of share of minority interest and associates, of Rs 1,503 crore in the same quarter of 2007-08. Total income rose more than 15% to Rs 6,124 crore in the March quarter 2009, from Rs 5,311 crore in the previous corresponding period. The company, which offers both GSM and CDMA services and had 73 million subscribers as of March 31, 2009, reported a 9% jump in consolidated net profit for the financial year ended March 31 at Rs 5,908 crore, from Rs 5,401 crore in the year-ago period. Revenues were higher by more than 20% to Rs 22,941 crore during 2008-09, from Rs 19,068 crore in 2007-08. Commenting on the results, RCom chairman Anil Ambani said: “Reliance Communications has completed the world’s largest network rollout in 2008-09 ahead of schedule and at a very competitive cost, which is approximately 35% lower than original guidance. We are confident of improved performance in the coming years.” RCom launched its GSM services in just 11 months after receiving in January 2008. The company has added over 11.3 million wireless subscribers during the quarter, an increase of 110% compared to the previous quarter, and also increased its town coverage from 11,000 to 20,000 in just three months. At a conference call with analysts on Thursday evening, vice chairman Satish Seth said, RCom’s $2-billion spending plan for this fiscal year does not take into account expenditure on 3G services. The company, which has crossed the “peak” of its capital expenditure, spent $3.8 billion on expanding networks and services in the year ended March 31, Seth said. During the year, Reliance Globalcom, an RCom subsidiary, also signed an agreement to buy global managed network services provider Vanco Group, which has a strong presence in developed markets, with annual revenue of $365 million (Rs 1,550 crore), through secure long-term contracts with large enterprise customers.
Vanco is reported to have over 220 multinational customers and its services are available in over 40,000 locations across 163 countries. The company has said that “Flag’s reach and capacity along with Vanco’s long-term relationships and expertise would be a perfect combination to offer high margin value-added services to enterprise customers”. An analyst tracking the company said RCom’s nationwide GSM service had helped it gain three million customers more than Bharti’s 8.3 million additions last quarter. The Vodafone Group increased its subscribers by 7.8 million. India, the world’s largest wireless market after China, added almost 45 million users, more than the population of Spain, in the three months ended March 31, the analyst added.

PMO rejects telecom fee cut

5 May, 2009, 1427 hrs IST,TNN

NEW DELHI: The Prime Minister’s Office (PMO) has shot down the decision of the communications ministry to slash the licence fee for telecom operators with large networks by up to a third, saying the ministry did not obtain the Cabinet’s clearance before announcing the cut.
Last year, the department of telecom (DoT) had announced that the proportion of revenues telecom operators pay as licence fee to the government would be cut by up to 33% from April 1, 2009 if operators’ services are available in 95% of the residential areas in a state or a telecom circle. The move was intended to give a Rs 2,000 crore annual benefit to the industry. Following the PMO’s directive, the DoT will recall its notification announcing the reduction in licence fee. In a missive to the communications ministry, the PMO said the telecom department did not follow procedure and obtain Cabinet clearance before announcing the reduction in licence fee. If the proposal were to be put up before the Cabinet, it would not have been cleared due to opposition from departments of expenditure and economic affairs of the finance ministry, it said. The cut, which was to be effective from April 1, could not be implemented due to opposition from the finance ministry which said it had not been consulted on this issue. The department of telecom, in its defence, had said the licence fee cut was based on the recommendations of telecom regulator Trai. At present, telcos pay 10% of their revenues as licence fee in category ‘A’ circles (Tamil Nadu and Maharashtra, among others) 8% in ‘B’ zones (Kerala, Punjab and Haryana, among others) and 6% for ‘C’ circles (Himachal Pradesh, Bihar and Orissa, among others). As per last year’s announcement, these would have come down to 8%, 6% and 4% for operators with networks covering over 95% of the residential areas in a circle. The licence fee cut would not have impacted the exchequer as DoT had planned to reduce telcos’ contribution to the Universal Service Obligation Fund (USOF) for rural telephony, which is paid out of the licence fee. Currently, all operators pay a flat 5% of their total revenues towards USOF. This means half the licence fee of an ‘A’ circle player goes to USOF, while almost 85% of a C circle operator’s licence fee goes to fund rural telephony. This was to be reduced to a flat 3% for those players whose services are available in over 95% of the residential areas. As of 2007-08, the size of USOF was Rs 20,500 crore and it is now estimated to have crossed Rs 25,000 crore. And, as of September 2008, just 27% of the amount has been utilized, according to telecom regulator Trai. The PMO, while admitting that about Rs 14,000 crore remained unutilised in the USOF as on February 28 this year, also said this amount can be used for ambitious schemes for subsidising telecom infrastructure in rural and remote areas. “Most of these schemes relate to support for shared towers, optical fibre cable infrastructure in the North East and broadband expansion in rural areas including subsidising customer premises equipment. These initiatives are capital intensive, crucial for broadband penetration and will require huge funds,” the PMO said in its communication to the communications ministry.

Up for grabs: Bharti’s $2b deal

5 May, 2009, 1422 hrs IST,TNN

NEW DELHI: India’s largest mobile company Bharti Airtel’s over $2-billion network outsourcing contract will be up for grabs soon.
With its current multi-billion-dollar network outsourcing deals with equipment majors Ericsson and Nokia Siemens Networks (NSN) up for renewal next year, the telco will start inviting bids from global equipment vendors in the next couple of months. According to people familiar with developments at Bharti Airtel, Ericsson and NSN will not be guaranteed an automatic extension, and will have to compete with other potential bidders. Industry executives point out that incumbent Ericsson and NSN remain favourites to win the deals, but Bharti’s decision to invite bids also presents an opportunity for other equipment vendors, such as Huawei, ZTE and Alcatel-Lucent, to bid for one of the largest networks management contracts globally. Significantly, Chinese equipment vendors will be participating for the first time. Bharti has some experience of working with other equipment vendors. The telco had earlier awarded the contract to build, maintain and manage its networks in Sri Lanka to Chinese equipment major Huawei. Franco-American telecom gearmaker Alcatel-Lucent has also emerged as a strong player in India, having bagged a series of contracts recently. Last year, it bagged a managed services deal with Reliance Communications, covering the latter’s GSM and CDMA networks. Last week, Alcatel-Lucent formed a $500-million JV with Bharti to manage its landline and broadband networks. Bharti Airtel has been one of the pioneers in outsourcing its infrastructure and IT systems. In fact, its multi-billion-dollar deals with Ericsson and NSN as well as its IT outsourcing deal with IBM were perhaps the first such deals signed anywhere in the world. Sweden’s Ericsson manages Bharti’s networks in 15 of the total 22 telecom circles while the rest are handled by NSN.

DoT reviewing M&A guidelines

May 2009, 0026 hrs IST, Shalini Singh, TNN

NEW DELHI: The telecom sector is set for consolidation in mobile telephony with DoT sources revealing that a special committee set up to re-evaluate spectrum pricing is also reviewing the M&A guidelines.
If the renewed guidelines come through in the next few months it will indicate an important shift in policy direction. Presently, the M&A guidelines discourage mergers between two operators holding mobile spectrum. Confirming this, a senior DoT official told ToI, “The DoT is reviewing the M&A guidelines of April 2008.” The DoT in its report has noted that “issuance of many licences and spectrum has fragmented the spectrum space beyond optimal limits. In this scenario, a policy approach would be to have an enabling policy, so that consolidation of the market and hence spectrum takes place through merger of licences and transfer of allotted spectrum from one licensee to another.” The department is considering a transfer fee to ensure that the “licensee does not make a windfall gain simply by trading his scarce commodity.” According to the report, the government has to cede its assumed role as an arbitrator of appropriate use of spectrum to the market, retaining some very broad discretionary powers in the event of gross violation of licence conditions. Secondly, the government will have to accept moderate windfall gains to operators by allowing trading with an associated transfer price. Current M&A guidelines discourage mergers by requiring surrender of spectrum with a merged entity if the subscriber numbers do not support the total spectrum. This condition will be done away with as India slowly moves away from subscriber-linked criteria for spectrum allocation. As a result of the M&A guidelines new companies, like Loop and Datacom were unable to merge their businesses with existing operators or combine with new entrants. The change will now allow such companies to sell their licences and spectrum to not only new entrants as in the case of Unitech/Telenor and Swan/Etisalat but also some existing operators who are facing scarcity of spectrum. Before the 120 new licences were given the average GSM spectrum per operator was at 7.4MHz. This has come down to 5.7MHz in the current scenario. As the M&A guidelines fall apart, it is quite clear that India will once again settle at six to seven operators with about five pan-India operators and a few regional players.

Telcos give equity details to TRAI

6 May 2009, 0024 hrs IST, Amrita Nair-Ghaswalla, TNN

MUMBAI: Since the last round of allotment of telecom licences in India in 2008, five of the six who were given the Unified Access Service (UAS) license, have changed their equity structure, some drastically. Datacom Solutions, a JV between the Dhoots of Videocon group and HFCL, has not gone for any change in shareholding structure. On the other hand, Chennai-based S-Tel that saw an over seven-time jump in its equity base, papers and information available with TOI showed.To ensure that the new telcos do not make a killing by selling stakes even before they launch their services, the Telecom Regulatory Authority of India (Trai) had asked the six companies to clarify their equity structure. According to official papers, S-Tel showed a 667% growth in equity capital from the time of applying for the license to its current status, while another reported a 439% growth. Yet another recorded a 135% growth. “The catalyst was the rapid change in the equity structure of Swan Telecom and Unitech Wireless, widely reported in the media,” official sources told TOI. “Without starting operations, many players had actually made a handsome profit,” sources added. Likewise, at the time of applying, Loop Telecom had an equity share capital of Rs 131 crore which was subscribed by two Indian promoters–BPL Mobile and BPL Communication in a 51.24-48.76 ratio. Subsequently, the company told Trai that it had issued additional equity shares, thereby increasing its equity share capital to Rs 308 crore. The firm informed that around Rs 74 crore was contributed by a third foreign entity, Capital Global. S-Tel, which holds licences to operate in several northern and eastern states, had an equity capital of Rs 18 crore at the time of applying for a license. This was subscribed to by Skycity Foundation, an Indian entity and Telecom Investment Mauritius, in the ratio of 51:49. As on December 2, 2008, the company informed that its share capital had increased from Rs 18 crore to Rs 138 crore (indicating a growth of 667%). A third party, Sahara India Investment Corp entered the scene. Sistema-Shyam applied for UAS licence on September 25, 2007. The Indian promoter had an equity holding of 70%, while the foreign promoter Sistema Joint Stock Financial Corporation (SJSFC) held 10%. Total equity capital was Rs 456 crore. On January 18, 2008 and then on June 6, 2008, SJSFC increased its equity to 51% and 72% respectively. Subsequently, additional equity shares were issued by the company thereby increasing its share capital to Rs 2,456 crore. Presently, SJSFC holds nearly 74% of the equity, the company told Trai. Swan Telecom had two investors while applying for the UAS licence–Tigor Trustee and Reliance Telecom, in the ratio of 90.1% and 9.9% respectively. Subsequently, vide a letter to DoT on December 7, 2007, Reliance Telecom divested its equity capital as well as the preferential shares in the company. After divestment, the shares of the company were held by Tigor Trustee (90.1%) and Delphi Investment (9.9%), a foreign entity. Since Unitech Wireless initiated an equity change only on April 9. 2009, it has informed Trai that an analysis would be sent over shortly. Datacom Solutions has intimated that there is no change in the equity structure of the company.

Reliance GSM goes post-paid in Mum

23 Apr, 2009, 1319 hrs IST

MUMBAI: Mobile GSM Service has commenced the commercial roll-out of its post-paid services in Mumbai.
The roll-out of its post paid services is the second phase of Reliance Mobile’s GSM foray. The launch of post-paid services follows the pre-paid launch early this year. Reliance Mobile has launched its GSM post paid services with a plan of Rs 375. The company has bundled numerous benefits as part of its effort to target post-paid high ARPU customers. In line with its value proposition, Reliance Mobile is offering 750 free local minutes as part of this plan during the post-paid roll-out. The company is also offering tariff benefits to its new post-paid subscribers by offering a flat Local call rate of Rs 0.50/minute to any network as well as fixed line phone. The company is also offering a flat STD call rate of Rs 1 to any network across India. “The Reliance Mobile GSM post paid service entails offering a unique value proposition fine-tuned as per the needs of nearly 14 Million GSM customers in Mumbai circle. This Customer Experience Programme is in line with Reliance Communications’ Philosophy of making world-class telephony services accessible and affordable to the masses,” said Akshay Kumar, Regional Head, West, Reliance Communications. Reliance Mobile GSM Service is also rolling out special SMS packs in the Mumbai market. Currently, the company is rolling out two SMS packs. For light SMS users, the company is offering free 100 local and national SMS bundle at a monthly charge of Rs 25. For mega SMS users, Reliance Mobile is offering free 1,000 local and national SMS bundle for a monthly charge of Rs 60 only. This unique SMS packs are part of the company’s focus to drive SMS traffic in Mumbai circle. “The GSM customers in Mumbai can now avail of state-of-the-art, next generation, EDGE ready Reliance Mobile GSM Network – the only network that offers Digital Voice clarity and intrinsic value benefits for our subscribers,” Mr Akshay Kumar added. For low-usage subscribers, Reliance Mobile is offering Rs 199 plan as part of its GSM post-paid launch in Mumbai. The company has bundled a local usage discount of Rs 150 with this plan. Recently, Reliance Mobile became the first company in the world to add over 11 million new subscribers in a span of three months. Reliance Mobile added these subscribers post the launch of its GSM services in India. With an addition of 3 million new subscribers during March 2009, Reliance has added the highest number of new subscribers in the Industry for the 3rd consecutive month.

Airtel net profit up 8%

29 Apr, 2009, 1420 hrs IST,IANS

NEW DELHI: Telecom major Bharti Airtel’s net profit for the quarter ended March 31 rose nearly 8 per cent to Rs 20.48 billion, as compared to Rs18.99 billion in the same period the previous year.
Total income too increased about 30 per cent to Rs 102.96 billion from Rs 79.29 billion in the period under review, the company said on Wednesday. The group’s net profit increased about 23 per cent to Rs 78.59 billion for the year ended March 31, 2009, as compared to Rs 63.9 billion the previous fiscal, while total income surged over 37 per cent to Rs 375.04 billion from Rs 272.9 billion. The telecom major announced a dividend of 20 per cent for the first time. “Bharti Airtel has had an excellent year with a revenue growth of 37 per cent. Our focus on rural penetration and customer affordability has been instrumental in delivering this strong growth,” said company chairman and managing director Sunil Bharti Mittal. Bharti Airtel has earmarked $2 billion for capital expenditure, which, however, excludes the 3G and tower businesses. It has set aside $1 billion for the tower business that includes wholly-owned Bharti Infratel and Indus Towers, in which it has 42 percent stake. The company said it had 96.6 million subscribers as of March 31, an increase in the total subscriber base of 50 per cent or about 32.4 million subscribers from that on the same date last year. The Bharti Airtel scrip, which touched a high of Rs 751.30 soon after opening at the Bombay Stock Exchange (BSE), settled at a level just above its last closing figure of Rs 725.70 around noon. The company also announced a stock split, dividing existing equity shares of Rs 10 face value into two equity shares of Rs 5.