Sistema Shyam to roll out mobile services in Delhi and Mumbai by December

21 May 2009, 2154 hrs IST, Writankar Mukherjee, ET Bureau

KOLKATA: Sistema Shyam Teleservices (SSTL) , a JV between Russia’s Sistema and the Shyam Group, is targeting a 10% market share in the Indian mobile turf, in the next five years. Unperturbed by the slowdown, the company is committed to its 22-circle expansion plan by mid-2010, including rollouts in the high-stakes Mumbai and Delhi circles by December.

This was indicated by SSTL’s president & CEO Vsevolod Rozanov at the company’s high profile launch of CMDA mobile services in Kolkata on Thursday. “SSTL is targeting around 35-40 million subscribers in five years. We plan to start services in 2-to-3 new circles every quarter. Next in line are the circles of West Bengal, Bihar/Jharkhand. Number portability will also drive growth for us.”

At present, SSTL operates CDMA mobile services in Rajasthan, Tamil Nadu and Kerala. It offers CDMA mobile services under the MTS brand with around five lakh subscribers.

Incidentally, SSTL believes entry into the super-competitive Mumbai and Delhi circles will help it also grow its non-voice revenue. “We are looking at VAS and data services as future revenue streams and we expect Mumbai and Delhi will provide such opportunities,” said Mr Rozanov.

On the network front, SSTL plans to expand the number of its BTS sites from the present 4,000 to 20,000 by next year. “We have already invested $1.2 billion and are committed to our declared $5.5-billion investment plan over the next 3-5 years. The meltdown has not changed our plans,” Mr Rozanov said.

SSTL will evaluate possibilities for an IPO next year. The Russian government’s proposed investment in the company has also progressed. “The Russian government has announced a budgetary allocation of $670 million to acquire around 20% stake in SSTL. The deal is likely to be completed in the next two months. But Sistema will continue to enjoy a majority shareholding in SSTL,” Sistema senior vice president Sergey Cheremin said

The company currently has 1,500 people on its rolls and plans to take its headcount to 8,000 people as its expands across the nation. Even though SSTL has a GSM licence, it will currently focus only on CDMA as it feels this technology can provide cost competitive service in the Indian market.

Airtel enters international airspace

21 May 2009, 1235 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: Bharti Airtel customers will soon be able to make and receive calls on their mobiles, send text messages and even access data while travelling on select international airlines, with India’s largest mobile phone operator entering into an agreement with an inflight solutions firm.

Bharti has tied up with AeroMobile, the world’s largest inflight solutions company, which currently has agreements with several global carriers such as Emirates, Qantas, Malaysia Airlines and Turkish Airlines. Bharti will be the first Indian telco to offer this facility to its customers. Globally, several operators across Europe, the US and Australia offer inflight services.

Bharti Airtel’s chief marketing officer Raghunath Mandava said 434 international flights that has this facility had taken off/landed in India in April.

AeroMobile, a UK-based company majority-owned by Norway’s Telenor, is in the process of entering into tie-ups with more airlines and this number is set to increase, said Mr Mandava. “While AeroMobile has tie-ups with Emirates & Malaysia Airlines, not every aircraft on their fleet will have this facility. It will depend on whether the aircraft allotted on that route has been wired by AeroMobile. But, passengers will be informed during their bookings if the facility is available on the flight,” he said.

Airtel customers will only have to activate their international roaming to use the service. On the tariff front, the rates will be similar to what Indian customers pay when they avail international roaming in Norway. This is because, AeroMobile is majority-owned by Norway’s Telenor.

An outgoing call will cost Rs 188 per minute while it will be Rs 24 per minute for incoming calls. Passengers will be 0charged Rs 41 for an outgoing SMS while incoming SMSs will be free. Bharti did not give any revenue projections, but said it was targeting niche customers flying abroad.

Passengers on international flights will not be able to use their handsets while flying over India as existing regulations do not permit cellular services on aircraft flying over Indian air space. “This facility will remain with the Captain of the aircraft. He can switch it on when the aircraft is outside the Indian air space, or turn it off, when it enters the country,” Mr Mandava said.

In March, Malaysia Airlines, announced that passengers using in-flight mobile services had exceeded 40% of the total. “Data devices such as BlackBerry are proving to be popular, with data traffic on some flights exceeding 2MB, the equivalent of 40 Black-Berry users sending and receiving email,” the airline added in a statement.

According to AeroMobile’s website, caller ID will also function as normal during inflight calls. “Simply switch your mobile phone on inflight to access GSM services, just as you would while traveling abroad. You will be billed via your existing mobile phone service provider. GPRS and all other IP based services (e.g. internet) is available. More applications will become possible once higher speed satellite communications services become available,” the company website says. AeroMobile has an agreement with the world’s largest aircraft maker Boeing whereby the latter will install this technology in all the new planes it manufactures.

Qualcomm’s mantra: Always-on wireless access at low cost

On www.business-standard/india by Shyamal Majumdar / Mumbai May 21, 2009, 0:03 IST

Kanwalinder Singh, president, India and South Asia, of the world’s largest CDMA (Code division multiple access) chipset maker, Qualcomm, has reasons to feel happy. Despite late entry into Indian market, CDMA 2000 has over 92 million subscribers and enjoys a quarter of the market share. In recent months, CDMA 2000 has averaged subscriber net additions of over 2.7 million per month.

But Singh says the time has come to go beyond voice. “Indian mobile companies have been obsessed with the voice subscription game. It’s time to look at value-added services that can significantly transform society,” Singh says, adding 3G wireless broadband is an opportunity coming their way to make high-speed wireless internet access more widely available and affordable. According to the ITU (International Telecommunication Union), for every one per cent increase, internet connectivity has twice the impact of voice on GDP growth.

Singh says globally 2G (GSM) is rapidly transitioning to 3G and Qualcomm will drive a similar trend in India and bring in “affordable tiered solution” to stimulate mass market adoptions. Reasons: 3G feature phones will bring better voice clarity and multimedia experience to users, opening new services revenue streams for wireless operators; 3G USB modems, dongles and data cards will bring ‘always on’ wireless broadband connectivity to laptops and desktops that are already experiencing accelerated growth; and affordable 3G smart phones will bring in a new dimension to enterprise connectivity.

Affordability is the key word here. Singh says computing devices are getting smaller (last year, 2 million laptops were sold in India compared to 3 million smart phones) and the San Diego-based company is ready with technologies that can change people’s lives, particularly in emerging markets like India. For example, Qualcomm-powered wireless internet devices can remove the need to carry a mobile phone, if the computing device is small enough.

For example, the Kayak platform developed by the company Kayak, is essentially a portable computing device that leverages 3G chipsets and can also be connected to the internet even in small villages where connectivity is difficult to access or is unaffordable. Kayak fills the niche that exists between desktop PCs, which normally require landlines or separate accessories for connectivity, and internet-capable wireless devices.

Qualcomm will not make the Kayak PCs, but will offer the software specifications and reference design to device manufacturers. Devices based on the Kayak design will offer a full-featured Web 2.0-capable browser to perform at desktop resolutions; access via the browser to Web 2.0 productivity applications; support for both television sets and computer monitors to be used as displays and/or for a built-in display; compatibility with a standard keyboard and mouse for input; and music player and/or a 3D gaming console functionality. While a laptop usually measures 15 inches or more, that on Qualcomm’s snapdragon platform would be mostly in the range of nine to 12 inches. There will be pocket devices also.

One of the major advantages will be that these devices will be low-powered. The small computing devices when embedded with a snapdragon chipset platform can make them run even on mobile phone batteries. In a country like India where power supply in villages has been a problem, this can be a game-changer, says Singh.

A proud Singh says the Kayak platform was developed by over 1,000 engineers based in the company’s Research & Development (R &D) centres in Bangalore and Hyderabad. Web-based applications open up new possibilities for people in emerging markets for whom packaged software can be expensive, says Singh, adding that the prices of 3G entry-level handsets will come down sharply.

Of course, Qualcomm isn’t alone in looking at launching such low-cost internet-based devices in India. Intel, the world’s largest chip-maker, is also introducing net-enabled devices based on atom processors, starting from as low as Rs 5,000. But Qualcomm, which was established in July 1985, has an advantage because of its technology-richness. The company, which invests over a fifth of its global revenues in R&D efforts, holds 8,900 US patents and pending patent applications for CDMA and related technologies.

Telcos go creative on VAS

From www.businesss-standard.com/India by Seema Sindhu / New Delhi May 21, 2009, 0:01 IST

The value-added services sector is expected to touch Rs 9,760 cr by end June. Telecom operators in India appear to be gung-ho over the prospects of value-added services (VAS) which help them to differentiate, add substantially to their margins while simultaneously be a precusor to third generation or 3G regime. The recent creative campaigns of majors like Vodafone (ZooZoos), Airtel (R Madhavan and Vidya Balan), Virgin Mobile (music download) and Aircel’s (Internet applications) are a case in point.

VAS offerings provide telcos with a wider platform for communication. Sunzay Passari, VAS & devices head at Loop Mobile, says: “If you look at the current campaigns of telcos, there’s focus on VAS. Strategically, it’s VAS where telcos can differentiate themselves. Our advertising is more VAS-oriented. Around 60-70 per cent of our total ad budget goes into VAS advertising,” says Passari. This year, VAS comprised 12.5 per cent of Loop’s total revenue, and over 8 per cent came from non-SMS services. Passari says the share of VAS is increasing significantly.

The Internet and Mobile Association of India (IAMAI) predicts that the VAS industry will touch Rs 9,760 crore by end of June 2009, growing at 70 per cent. Music, caller ring back tones and wallpapers are the most consumed services. Over half of the music industry’s Intellectual Property Rights (IPRs) comes from the mobile space. Moreover, given the declining average revenue per user (Arpu) and increasing competition among operators as new players join in, there will be more focus on VAS.

For India’s largest private telco, for instance, VAS will play an important role as Bharti Airtel moves towards achieving its target of adding another 100 million in just three years. The company has already crossed the 100-million subscriber mark. VAS accounts for around 10 per cent of Airtel’s revenues (non-SMS would be around 6 per cent). “As we move from plain generic communication to entertainment, VAS plays an important role. It acts as a productivity-enhancement and livelihood-enhancement tool. For instance, we have mandi prices for rural people on their mobiles, we give them weather information and also provide local job search facility on mobiles. As SMS moves from English to vernacular languages, VAS revenue (both from SMS and non-SMS services) will only increase,” says Raghunath Mandava, chief marketing officer, Airtel.

Harit Nagpal, director, new business and marketing at Vodafone Essar, has a slightly different take on this subject. “We can’t go away from our core, network promotion. ZooZoos was to offer some variety. You have to have some variety in your campaign,” he says. VAS comprises around 10 per cent of its total revenue, and more than half of it comes from non-SMS services. For Vodafone, while there is no significant increase in VAS revenue share compared to the near-past, it has increased in value terms.

Prashant Singhal, telecom head at Ernst & Young, opines, “Though voice is the killer application, operators don’t have to induce customers to use voice. That’s why there’s this focus on VAS. Moreover for new operators, VAS gives better revenue margins too.” A new operator will end up paying 60-75 paisa (20 paisa termination charge and 45-55 paisa carriage fee) on a national call while charging the customer only 1.50 paise. On the other hand, chances are that an old operator’s call will terminate on its own subscriber (on account of penetration), which will save him both the charges. VAS gives telcos a margin of 60-80 per cent.

Aircel, which since its inception has used VAS as its strategy, says VAS has helped it project its brand as fresh. Gurdeep Singh, COO of Aircel, adds: “Last decade had seen enough of roll-out and affordability in telephony. Future of telephony is VAS. Thus we have put VAS at the core of our strategy. VAS contributes 10 per cent of total revenue of Indian telcos, whereas in other countries it contributes between 15-30 per cent of total revenue. It’s an underexploited area we are looking to tap.” Singh refuses that margins are better in VAS.Also the VAS shift is a precursor to 3G. On asking if it’s a preparation in account to 3G, Passari responds, “As you add more and more subscribers and take into account the number of players entering the market, moving towards VAS is the only way. When 3G comes, definitely it will give immediate boost to those telcos which are well positioned in VAS. So, it’s a mix of both.” Singh of Aircel holds the same view.

Plan to divest 10% in BSNL may be revived

From www.businesss-standard.com/India by Surajeet Das Gupta / New Delhi May 21, 2009, 0:28 IST

The department of telecommunications (DoT) plans to revive the issue of disinvesting government shares in Bharat Sanchar Nigam Ltd (BSNL) once a new minister takes charge.

The BSNL board had last year approved a plan under which the government would divest 10 per cent of its shares to the public. But opposition from the unions backed by the Left parties — which supported the United Progressive Alliance in the last Parliament — had stalled the process. That opposition has abated, now that the Left is no longer a factor in the current ruling alliance.

“We expect the new government to take up the issue in the next one or two months,” said a senior DoT official.

The government had estimated that a 10 per cent stake sale to the public would help it garner over Rs 10,000 crore, based on a Rs 1,00,000 crore valuation for the company. The original valuation, however, was made when the Bombay Stock Exchange’s Sensitive Index was near 20,000 level. Given that the Sensex is at now 14,000 levels, the government can expect to earn far less from a 10 per cent stake. (The ministry is also hoping to garner around Rs 30,000 crore from the auction of five licences for 3G, or third-generation, telecom services.)

In debates in Parliament, IT and Telecommunications Minister A Raja had made it clear that divestment was a high priority to allow BSNL navratna status, meaning it would acquire a greater degree of autonomy and establish the brand.

The proposal was strongly opposed by the Joint Forum of BSNL Unions and Associations, which threatened to go on strike. The unions also rejected overtures from the management in the form of an employee stock option (Esop) scheme, offering BSNL’s 350,000 employees 500 shares each at Rs 10 a share.

Later, Centre for Indian Trade Unions (CITU) President and CPI(M) Politburo Member M K Pandhe wrote to K Karunanidhi, Tamil Nadu chief minister and head of the UPA ally Dravida Munnettra Kazhagam (DMK), not to allow the divestment to go through. Telecom minister Raja was from the DMK.

The Left had also complained that the finance ministry, especially under P Chidambaram, was pushing the divestment to balance the fiscal deficit.

BSNL has around 60 million subscribers, and clocked revenues of over Rs 38,000 crore in 2007-08. It has, however, been facing tough competition and losing market share to private sector rivals, especially in the mobile space, which accounts for 75 per cent of telecom subscriptions in India. BSNL was recently overtaken as India’s largest telecom player by privately-owned Bharti, which recently crossed the 100-million subscriber mark.BSNL, meanwhile, is close to finalising a contract for over 93 million GSM lines across the country, which will include both 2G and 3G networks in what is the largest order of its kind in the world.

NSN seeks CVC probe on disqualification from BSNL deal

21 May 2009, 0258 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: Nokia Siemens Networks (NSN), which has been disqualified from BSNL’s tender for 93-million lines on ‘technical grounds’, has approached the Central Vigilance Commission seeking a probe into its disqualification. NSN had earlier approached the Competition Commission of India for the same.

The BSNL tender for 93-million lines is divided into four zones. Last week, BSNL had opened tenders for three zones — North, East and South Zones. Ericsson was awarded the contract for 25 million for the North Zone and 18 million for the East Zone, while Huawei bagged 25-million lines for the South Zone. Indian security agencies have permitted BSNL to offer contracts to Chinese companies like Huawei only in the southern states.

NSN had bid for all the four zones, but was disqualified. In its communication to CVC, Nokia Siemens has sought that BSNL provide the reasons for its disqualification. NSN has pointed out that they had furnished all clarifications, details, explanations, along with additional customer reference certificates, as desired by BSNL, and were therefore confident of meeting all technical requirements.

“We are fully confident of meeting the requirements, as desired by BSNL. Even if the BSNL evaluation team feels that there are any shortcomings in our furnished responses, we should be given an additional chance for submission/explanation,” added the communication. NSN has also added that since only a single bidder has been shortlisted for each of the four zones, BSNL would ‘be deprived of the benefits of competitive bidding’.

But BSNL sources say that all the four disqualified companies — NSN, China’s ZTE, Alcatel-Lucent and Nortel — were done so on technical grounds. BSNL suspects that vested interests were trying to delay its tender. The PSU is already facing capacity crunch across the country and any further delay in awarding the contracts will result in the company falling a long way behind private operators, as it would not be unable to expand its services and take on new customers.

NSN has also told CVC that BSNL’s tender for 93-million lines did not have a ‘local manufacturing clause’ in line with its earlier tenders.

The company has pointed out that it had put in investments into setting up a manufacturing facility in Chennai, software development centre in Bangalore and a network operating centre in India, expecting a long-term relationship with BSNL.

Besides, BSNL executives point out that NSN’s allegations were baseless, especially considering that the company had refused to supply 9.63 million GSM lines in BSNL’s earlier tender, despite being given the contract. BSNL also shares the view that NSN’s failure to accept the orders for these 9.63 million lines had majorly impacted its network expansion plans. Additionally, BSNL executives also say that network vendors cannot dictate terms of the tender. They add that NSN cannot rake up the issues, such as the tender not having a domestic manufacturing 15 months after the tender was issued.

DoT panel opposes lock-in on stake sales

21 May 2009, 0336 hrs IST, Kalyan Parbat & Joji Thomas Philip, ET Bureau

KOLKATA/NEW DELHI: A government panel is opposing a safeguard measure aimed at preventing owners of companies which acquired telecom licenses in early 2008 from making windfall profits, laying itself open to criticism on an issue which has already resulted in a lot of controversy. The department of telecom’s (DoT) high-powered committee is citing the long-term interests of the sector to argue against the telecom regulator’s recommendation of a three-year lock-in on stake sales by the owners of companies which were allocated spectrum allegedly at throwaway rates.

The Telecom Regulatory Authority of India’s (TRAI) recommendation was made in March based on a proposal by DoT. A panel of the department is now objecting to the regulator’s suggestion. The telecom department will soon ask the regulator to reconsider its recommendation. The government does not have the power to overrule Trai without first referring the matter back to the regulator. But in case Trai refuses to change its stance, the government can go ahead and do away with the lock-in requirement. DoT’s high-powered committee, which was asked to take a final call on TRAI’s views, said in a report dated May 9 that the lock-in should apply only to future telecom licensees and not any of the existing players.
“In case the lock-in condition is at all to be introduced, under no circumstances should it be enforceable with retrospective effect for existing license holders. Such lock-in, if introduced by the government, should only apply in case of new licensees and be incorporated into the future license conditions,” the panel wrote. Among those who will benefit from the panel’s view are Datacom, Swan, Unitech, Loop and S Tel, which acquired their licenses in early 2008. A top DoT official confirmed that its internal committee was against the lock-in and that the matter would be referred to Trai after the new minister takes charge.

Faced with severe criticism of the then telecom minister A Raja’s decision to award pan-India licenses for Rs 1,651 crore (about $400 million), a price fixed in 2001, DoT had proposed amending licensing norms to impose a 3-5-year lock-in on the sale of promoters’ equity for new entrants. DoT referred this proposal to TRAI. The telecom regulator agreed with the communication ministry’s proposal saying that the main objective was “to block the unearned gains arising from transaction in stakes of promoters, particularly when the value of spectrum is not getting correctly reflected in the entry fee.”

Going a step further, TRAI has also asked DoT to seek the finance and the law ministries’ views if the three-year lock-in can be imposed retrospectively. But TRAI had also clarified that the lock-in would not apply if these telcos were to issue fresh share capital to investors and foreign telcos.

This implies that even in the event of a lock-in, it would not have impacted the deals which have already been entered into by companies such as Swan and Unitech.

Swan offloaded a 45% stake to UAE’s Etisalat for $900 million and Unitech divested up to 67.25% in its telecom venture to Norway’s Telenor for $1.1 billion. These companies maintain that they did not offload stakes but only issued fresh equity to the foreign partners.