DoT proposes tax breaks for 3G winners

26 Aug 2009, 0044 hrs IST, Kalyan Parbat & Joji Thomas Philip, ET Bureau at http://economictimes.indiatimes.com/DoT-proposes-tax-breaks-for-3G-winners/articleshow/4934677.cms.

KOLKATA: The Department of Telecommunications (DoT) will ask the empowered group of ministers (EGoM) on 3G-spectrum auction, headed by Finance minister Pranab Mukherjee, to consider a proposal under which successful bidders of pan-India 3G spectrum can enjoy tax benefits applicable under section 80-1A of the Income Tax Act.

The DoT’s rationale is that the 3G mobile broadband should be treated as a distinct infrastructure service and not continuity of telecom operations, especially in case of 2G service providers pitching for a pan-India 3G licence. The DoT will place the proposal during the second meeting of the EGoM scheduled for Thursday.

The proposal for tax benefits applicable under section 80-1A of the Income Tax Act is part of an internal note prepared by DoT that will be circulated to EGoM members, a senior DoT official told ET.

Currently, only telecom companies that kicked off operations between April 1, 1995 and March 31, 2000 enjoy income tax breaks under section 80-1A. If the EGoM were to accept the DoT proposal, it would imply that 3G operations of telecom companies will enjoy income tax breaks on 100% of their profits for initial five years. In the next five years, these telcos will enjoy a 30% tax break on their profits.

The DoT note to the EGoM also adds that Indian Space Research Organisation (ISRO) is of the view that it cannot spare any further airwaves for WiMax services. As reported by ET earlier this month, ISRO chief G Madhavan Nair had said that the Department of Space (DoS) has already parted with 40 MHz of airwaves for WiMax services in the 2.5 GHz band.

He said any interference from the WiMax services offered in this band in the future could “severely affect the very sensitive satellite services in the adjacent band”. Mr Nair had also added the DoS is now left with only 150 MHz of airwaves in the 2.5 GHz band, the bare minimum requirement for satellite services.

The DoT note to the EGoM was prepared by its joint secretary (T) and consists of demands from the industry, especially those of CDMA-based operators, and includes the views of the DoS on WiMax spectrum.

The EGoM is slated to settle all outstanding issues associated with the auction of 3G airwaves, vital for high-end services such as high-speed internet and video conferencing on mobiles.

It will take a final call on the reserve price for 3G and WiMAX spectrums and decide on the number of players to be allowed to offer these high-end services in each circle.

It is also learnt that the EGoM may also debate whether the government at all has the right to urge successful bidders of 3G spectrum to shell out an extra Rs 1,600 crore-plus for a separate pan-India UAS licence, especially when DoT knows only too well that there is no extra 4.4 MHz 2G spectrum available to bundle with new licences.

“At a time when the DoT’s wireless planning cell is well aware that it won’t be able to meet future 2G spectrum obligation for new UASL licencees, why should they be asked to shell out an extra Rs 1,600 crore plus full complement of the licence fees. While nothing has been finalised yet, a successful bidder of 3G spectrum, alternately, may also be asked to shell out a lower sum for a pure vanilla UASL without the bundled spectrum,” said a government official familiar with the matter.

Indications are that a section of E-GoM members are loathe to the idea of fixing the number of slots for 3G services to a maximum five (including BSNL) per service area. “Considering that, there are as many 11 to 9 slots available in some circles like Orissa and Madhya Pradesh, the E-GoM is likely to debate the rationale of uniformly restricting the number of slots (per circle) for delivery of 3G services. There is a feeling in the finance ministry that such restriction can tantamount to a loss of potential revenue for the government,” said a DoT official close to the developments.

Mittal, MTN chief meet Pranab, Khurshid to discuss merger

On 25 Aug 2009, 0720 hrs IST, ET Bureau at http://economictimes.indiatimes.com/Mittal-MTN-chief-meet-Pranab-Khurshid-to-discuss-merger/articleshow/4931103.cms

NEW DELHI: Bharti group chairman Sunil Mittal and South African company MTN’s chief executive Phuthuma Nhleko met finance minister Pranab Mukherjee and minister of state for corporate affairs Salman Khurshid on Monday, triggering speculation about the motive for the meeting days after the merger partners extended exclusive talks for their proposed $23-billion deal.

The meeting with the finance minister comes just three days after both the telcos extended their exclusive merger talks by another month to September-end.

Mr Khurshid said the meeting was just a courtesy call by the honchos to appraise the ministry on the merger talks. Terming the proposed deal as a very big opportunity for the country, he said: “They are in touch with the regulators and the finance ministry. Our (ministry of corporate affairs) role comes at a later stage.”

The nature of the discussions with Mr Mukherjee was not disclosed and both Mr Mittal and Mr Nhleko could not be contacted on this issue. Mr Mukherjee was not available for comments. Officials at the ministry, too, declined to disclose the agenda for the meeting.

The largest telcos in India and Africa have been involved in exclusive talks for close to three months to create the world’s third-largest communications firm. The deal’s contours present a complex structure in which both firms would pay cash and equity for stakes in each other. If the deal goes through, Bharti Airtel will get 49% in MTN and the South African telco and its shareholders will get 36% economic interest in Bharti.

Industry analysts say the most probable reason for the highest ranking executives from both the companies meeting the finance minister could be related to the country’s foreign investment cap of 74% in telecom firms. It is also possible that Mr Mittal and Mr Nhleko could have updated the finance minister on the talks between the companies.
The new FDI norms consider a company Indian if Indian promoters hold a majority stake in it and the investments made by such companies in any joint venture or downstream venture will be treated as Indian.

Bharti Airtel, which had close to 70% foreign equity as per the old guidelines, has only about 43% FDI under the new norms. This is because a significant part of the Singapore-based telco SingTel’s 31% holding in the company as well as Vodafone’s entire holdings are routed through majority-owned Indian companies. Even after the deal, the emerging entity will, therefore, have FDI within the prescribed limit.

Despite this, approval from Indian regulators and the government may still turn out to be a tricky issue. RBI has asked the department of economic affairs under the finance ministry to review the new FDI guidelines. Any changes in the FDI norms could force both the companies to restructure the deal. Besides, the foreign investment promotion board, the apex body that clears foreign investments, has not cleared any proposals so far under the new norms due to opposition from the finance ministry.

Analysts, therefore, speculate that the honchos may have sought clarity from Mr Mukherjee regarding the government’s position on the new FDI norms. They feel that the meeting with Mr Khurshid could be related to Bharti’s plans to issue GDRs to MTN shareholders.

The Indian telco’s equity expansion will only be in the form of GDRs that will be listed on the Johannesburg Stock Exchange. This means, MTN’s proposed 36% holding in Bharti Airtel — 25% with the company and the rest with its shareholders — would be in the form of GDRs listed on JSE.

All regulations related to GDRs are governed by the ministry of corporate affairs. Post the deal, both the telcos will have to get a formal approval from markets regulator Sebi, exempting the South African firm from making an open offer for an additional 20% in the Indian company.

Sify targets voice telecom pie via VoIP

On 25 Aug 2009, 1909 hrs IST, Niranjana Ramesh, ET Bureau at http://economictimes.indiatimes.com/Sify-targets-voice-telecom-pie-via-VoIP/articleshow/4933615.cms

CHENNAI: Sify Technologies, a pioneer among private internet service providers (ISP) in India with 5.7 lakh subscribers and a 5.8% market share, is now targeting yet another area of telecommunications for a first mover advantage – Voice over Internet Protocol (VoIP), for the mass consumer market, as and when government regulation permits it within the country.

“It is a foregone conclusion that we would have a tremendous edge in the VoIP space, technically, when such telephony is allowed in India,” said Sify chief architect (CTO) Arvind Mathur. “Sify’s ISP network is spread across India covering all states with 900 points of presence.” A point of presence (POP) in internet protocol is analogous to a base station or a telecom tower in mobile telephony. But, the capacity of a POP is expandable based on the nodes attached to it.

Sify also holds significant spectrum in the 2.4 GHz, 3.3 GHz and 5.8 GHz frequency bands. 2.4 GHz has, recently, been chosen for the purpose of Wimax services in India, and is yet to be auctioned off. “We will comply by whatever regulation that the government stipulates for the usage of such spectrum,” Mr.Mathur said. “But, we hold enough spectrum to be able to effectively provide last mile connectivity as well as POP to POP connectivity through the wireless mode. We have also invested in buying or leasing cable from carriers for long distance connectivity.”

The company has, in the past few years, ramped up its data centre capacity to augment its core competency of internet protocol based communication. It has invested Rs.100 crore in building data centers in different locations with a total capacity of 2 lakh square feet, to process and store all the transactions – voice or text – that goes via Sify’s IP network.

Presently, the company’s revenues are more leveraged from the managed network and ICT services that it provides to its corporate and enterprise customers. The share of corporate services in the company’s revenues has gone up from 55% to 70% over the past three years, while that of retail service has gone down from 39% to 21% in the same period of time.

“But, when triple play (voice, video, data) is allowed using internet protocol, as it is using mobile telephony today, we will have our network and data centers all ready to expand operations in the consumer market,” Mr.Mathur said. The company has been providing VoIP services for international calls as well as the BPO industry. It presently has 150 BPO customers, doing 100 million minutes of voice calls annually. It also provides virtualisation, cloud computing and software as a service (SaaS) applications and solutions to its clients.

News Digest: MyFM, RCOM, Shaadi, IRCTC, TringMe, Nokia, SBI, IRDA, FrontLine, Tejas, Swan, TechM

From http://www.medianama.com/2009/08/223-news-digest-db-groups-myfm-rcom-shaadicom-irctc-tringme-nokia-sbi-irda-frontline-tejas/ on August 25, 2009

By Preethi J

MyFM To Raise 15.2M

Synergy Media Entertainment Ltd, DB Group’s FM radio division, will raise Rs. 1.52 crore through preferential allotment of fully paid up equity shares. It has received approval from the Foreign Investment Promotion Board (FIPB). Synergy runs 94.3 MyFM in 17 cities.

Related: Dainik Bhaskar IPO Filing: Digital Kiosks; IndiaInfo.com; I Media Corp

RCOM Launches Antakshari

Reliance Mobile launched a new VAS – Antakshari -  on its R-World platform which will allow the subscriber to play antakshari with anyone. Charges are Rs.30 per month with 30 minutes free usage. This service is being launched on both GSM and CDMA networks. (TelecomIndia Online)

IRCTC’s Online Sales Boom

Around 34% of the 880,000 tickets sold daily by the Indian Railways are booked online, ticket sale data between April and July 2009 by the IRCTC reveals. This is not all – online booking of the tickets is also popular amongst low income groups. An thumping 63% of online tickets were booked by them. (Business Standard)

Our Take: IRCTC continues to be the poster boy of Indian e-commerce. We only wish it were more efficient – instead of spending hours standing in a queue, we now spend hours on the website – logging back in due to jittery timeouts and searching for train names and numbers.

Related: IRCTC Does $102 Million In Online Transactions In August; Payment Trends; HDFC, ICICI, Cash Cards Significant

TringMe

This Bangalore based 2007 startup has a platform that helps developers create voice-enabled widgets for the Internet. Tringme hosts some 22 million call minutes per month and expects this to soar to 40 million in the next 3-4 months. One of its clients is Indiamart. (Moneycontrol)

Our Take: Such a platform could spark off more apps and options in the VoIP domain – so far ruled by Skype and Fring. Ofcourse there is still the regulatory hurdle to cross before VoIP usage picks up.

Strike At Nokia’s Manufacturing Plant in TN

Nokia employees at its handset manufacturing factory in Sriperumbudur have demanded a wage increase of €21 for all employees. (Evertiq)

M-Banking Adoption
State Bank of India has added 20,000 mobile-banking customers in 2 months, taking the total to 33,000. M-banking is rising in popularity for small value transactions. (PTI)

All Mobile Banking posts

Shaadi.com Stats

The site has 300m page views a month. 6,000 new profiles are added every day. (Guardian)

Insurance Inst Opts For Online Exams

Complaints of malpractices has led the Insurance Institute of India to make entrance exams for insurance agents online. The institute will be aided in setting up the online examinations by NSEiT, a subsidiary of the National Stock Exchange and Insurance Regulatory and Development Authority. (ET)

HomeShop18 To Raise Funding

The retail TV channel and online site is in discussion with prospective financial and strategic partners to raise money in the next year. It has outlined three priorities – be visible in every television household; to invest in customer experience; and, to reward loyal customers. Network18 owns 65% of HomeShop18. (VCCircle)

PE Firm Frontline Strategy Picks Up Stake In Tejas

The amount and stake are not known, and the stake was picked up by Frontline through a secondary transaction. Tejas has been backed by Battery Ventures, Cascade Capital Management, Mayfield Fund, Intel Capital, Goldman Sachs and Sandstone Private Investments. (VCCircle)

Change In Regulations Deferred: DoT

International telcos in India have been dealt a poor hand by the Indian government. The Department of Telecom (DoT) has postponed plans to remove the double taxation they currently have to comply with for offering long distance calls. They pay license fees twice to the government – for bandwidth which they purchase off domestic operators and again when they resell it to enterprises and their customers. (ET)

Etilsalat Awards IT Contract To Tech Mahindra

Following the move by other telcos to outsource their IT operations, Etisalat DB, which runs new telco Swan Telecom (renamed to Etisalat DB Telecom India), may award the majority of its Rs 150 million outsourcing project to Tech Mahindra. (ET)

Other telco-IT company relationships are: Unitech Wireless – Wipro ; Idea Cellular – IBM ; Bharti Airtel – IBM; Aircel – Wipro

July 2009: 14.38M Mobile Connections Added In India; Landlines Sink; Broadband At 6.8M

From http://www.medianama.com/2009/08/223-july-2009-1438m-mobile-connections-added-in-india-landlines-sink-broadband-at-68m/ on August 24, 2009

By Preethi J

News of the reviving economy is reflected in the telecom sector in the month of July, which saw an addition of 14.38 million wireless connections compared to the 12.03 million in June, 2009. The total number of telephone connections in the country was 479.07 million at the end of July 2009.

• Teledensity rose from 39.86% in June to 41.08%.
• Wireless teledensity is up from 36.64% to 37.87%
• Total wireless connections rose 3.6% to 441.66 million
• Broadband connections swelled from 6.62 million in June 2009 to 6.8 million.

BSNL Loses 0.16M Landline Users; Bharti Adds 33,940

This segment continues to see churn with BSNL’s customers choosing the wireless route and disconnecting their landlines – the two oldest landline providers BSNL and MTNL lost a total of 0.17 million subscribers in July after losing 0.19 million in June 2009. MTNL lost 8181 to reach 3.54 million connections. BSNL lost 166,519 landline connections and now has 28.62 million; it accounts for 76.5% of the country’s landline userbase and will continue to be hit by negative growth even as private service providers such as Bharti Airtel and RCOM add users by bundling the landlines with other necessary services such as broadband and IPTV.

• Total landline connections in India – 37.41 million
• Wireline teledensity has reduced marginally to 3.21%

Downloads: TRAI Data (PDF)

Other operators offering landlines and their user base:

• Bharti Airtel – 2.86 million
• Reliance Communications – 1.13 million
• Tata Teleservices (Indicom) – 967,554
• HFCL Infotel – 163,399
• Sistema Shyam (MTS) – 111,069

Deutsche Telekom Eyes Indian ISP Space; Devas Multimedia Looks To Raise Funds

From http://www.medianama.com/2009/08/223-deutsche-telekom-eyes-indian-isp-space-devas-multimedia-looks-to-raise-funds/ on August 24, 2009

By Preethi J

German telecom conglomerate Deutsche Telekom, which owns T-Mobile in USA, is planning to join the Internet Service Provider arena in India. According to a MarketWatch report, the telco is planning to set up a high-capacity radio network for quick Internet connections in metropolitan areas of India come next year.

I wonder if we need yet another ISP in India, with already a number of incumbent players – Reliance, Tata Indicom, MTNL, BSNL, Hathaway, Tikona, Sify and Bharti Airtel, and France Telecom, Vodafone and DEN Networks also planning ISPs. With the last mile still closed, wireless is being seen as the way to go; which is where Devas Multimedia comes in.

Devas MultiMedia:Looking To Raise Funds

Deutsche Telekom received permission from India’s Foreign Investment Promotion Board (FIPB) last year to invest Rs. 317.85 crore into Devas Multimedia, a little known Bangalore-based wireless services company, which was working on a long term Mobile TV (DMB) project with Indian Space Research Organisation (ISRO). DT has acquired 17% stake in Devas.

Interestingly enough, Devas is looking to raise funds. The company, which already has Telecom Ventures and Columbia Capital as investors, apart from Deutsche Telekom, has a proposal pending with the FIPB for permission to “induct fresh foreign equity participation with the induction of a new foreign collaborator.”

Devas is a curious case: little is known about it, and it still appears to be in stealth mode:  there’s no website and there is little information on it except of it’s work with ISRO and its backers.

India desperately needs a catalyst to boost Internet penetration: Internet growth in July 2009 in India has actually fallen to 2.7% from 3.4% in June and 6.3% in May 2009. Besides the well known issues of delinking last mile access and ISP licensing which are throttling growth, other issues Deutsche Telekom will need to grapple with are low PC adoption and lack of Indic language content.

Companies Eying ISP Space In India

Earlier this year, France Telecom also entered India through Equant Network Services, its joint venture with Emery Technologies with the intention of launching Internet services;  Vodafone too announced its entry. The latest to announce plans of becoming an Internet service provider is DEN Networks, a cable TV company which is planning to go public to raise funds.

The Wireline Alternative: Broadband Over Power

Research and experiments on Broadband over Power Lines have been on for years – news about it pops up every few months. Indian Express has the latest: about Bengal Engineering and Science University professors and CESC have implemented Broadband over Power in two housing estates in Kolkata. The copper wires that supply electricity to double as broadband connections and installing a customer premise equipment that decodes the signals and brings them to your computer. But if it’s that simple, why is it taking so long to materialise? The government recently deferred an application by Powermax Communications, a provider of power transmission  and distribution management systems and broadband over power services, to increase foreign equity participation.

Bharti, MTN Executives Meet with Indian Finance Minister

http://online.wsj.com/article/SB125110691436753327.html?mod=rss_india_news on August 24, 2009

By MUKESH JAGOTA and R. JAI KRISHNA

NEW DELHI — Bharti Airtel Ltd. Chairman Sunil Mittal and MTN Group Ltd. Chief Executive Phuthuma Nhleko met Monday with India’s federal Finance Minister Pranab Mukherjee as the two companies strive to come closer to a deal to combine.

The meeting comes as Bharti, India’s biggest wireless operator by subscribers, and South Africa’s MTN last week extended their merger talks for the second time to Sept. 30.

The agenda of the meeting with the finance minister wasn’t disclosed, and Messrs. Mittal and Nhleko declined to comment when approached by Dow Jones Newswires after the meeting.

Finance ministry officials also declined to comment on the minister’s talks with Bharti and MTN executives.

Bharti and MTN have been in talks for more than two months on a complex cash and share swap, which they say would be a $23 billion merger.

On Friday, Mr. Mittal told Dow Jones Newswires the second extension to talks with MTN signals that a deal may be worked out this time around. But people familiar with the matter said there are still differences on pricing and the makeup of the combined entity’s board.

Some analysts speculate that the companies’ meeting with the finance minister could be related to foreign ownership laws for telecom firms in India. A foreign company isn’t allowed to own more than 74% in local telecommunications operators.

The basic terms announced in May would see Bharti accumulate a 49% stake in MTN, buying a stake directly for cash and newly issued global depositary receipts, plus receiving MTN shares as part of a swap. MTN would buy a 25% stake in Bharti for $2.9 billion in cash plus new shares, while stock received by its shareholders would take its stake in Bharti to about 36%.

Bharti is 30%-owned by Singapore Telecommunications Ltd.

TTML’s network rated ‘Congestion-Free’ yet again!

Mumbai, July 08, 2009: Tata Indicom press release

Reinforcing its claim as the best service provider, Tata Teleservices (Maharashtra) Limited (TTML), has once again emerged as the only congestion-free network, amongst all telecom operators, in the most recent survey commissioned by the Telecom Regulatory Authority of India (TRAI).

 In the report for Q4 –FY09, TTML’s network has recorded zero congestion across all its Points of Interconnect (POI). This is the fourth consecutive TRAI report that has rated TTML as the best network provider in its geographies.

Commenting on this achievement, Mr. Haridev Khosla, President–Network, Tata Teleservices (Maharashtra) Limited, said, “This is a happy moment for us. We have not only achieved the status of being the only congestion-free network but also have managed to consistently ensure the best network for our subscribers as per 4 consecutive TRAI reports. This report vindicates our belief and our investments in our network.”

The network congestion report of all CMSPs for the period January, February, March 2009 is available on the TRAI website.

The Hindu Business Line : I&B Ministry moots five-year tax break for digital TV services

via The Hindu Business Line : I&B Ministry moots five-year tax break for digital TV services on June 19, 2009

Our Bureau

New Delhi, June 18 The Ministry of Information and Broadcasting has suggested a five-year tax holiday for those offering digital television services.

The Minister, Ms Ambika Soni, met the Minister of Finance, Mr Pranab Mukherjee, with the I&B’s budget proposals.

The Ministry is suggesting the tax holiday for digital cable, direct to home, satellite-based cable Headend in the Sky (HITS) and similar service providers distributing digital content. They could be taxed for 30 per cent of their profits for the following five assessment years in a block of 15 years, suggest the Ministry.

The Ministry has also asked for the fringe benefit tax (FBT), currently at 20 per cent, to be reduced to five per cent for both print and electronic media, and an exemption from FBT for the film industry.

Service tax of around, 12 per cent, applicable on advertising revenue of television broadcasters should also be exempt,

Ms Soni told Mr Mukherjee, bringing them at par with the print media which enjoys this exemption.

For newspapers, the I&B Ministry would like the government to waive the levy of service tax on road and rail haulage for imported newsprint.

Ms Soni has also asked service tax, entertainment tax and value added tax to be replaced by unified single Goods and Servi

Indian mobile users to hit 771 mn by 2013: Gartner – The Financial Express

via Indian mobile users to hit 771 mn by 2013: Gartner – The Financial Express on June 18, 2009

Bangalore: Indian mobile users will jump more than 90 per cent to 771 million by 2013 as companies expand networks to rural areas in the world’s fastest growing wireless market, research firm Gartner said.

India had 403.66 million wireless users at the end of April, Telecom Regulatory Authority of India figures showed earlier this month, second only to China that has more than 600 million wireless subscribers.

Cheap call tariffs and handsets are driving demand in India, where operators such as Bharti Airtel and Reliance Communications are now building telecom towers and networks to cover smaller towns and villages to hook new users.

Gartner, the world’s biggest technology research firm, sees mobile subscriber base growing at a compound annual growth rate of 14.3 per cent in the four years to 2013, up from an estimated 452 million by the end of 2009.

Revenues of Indian mobile phone companies will exceed $30 billion in 2013, rising at a compound annual growth rate of 12.5 per cent over the same period, it said.

“The Indian mobile industry has now moved out of its hyper growth mode, but it will continue to grow at double-digit rates … as operators focus on rural parts of the country, said Madhusudan Gupta, senior research analyst at Gartner.

Gartner, however, predicted a “significant drop” in average revenue per user (ARPU) — a key gauge of performance — as the bulk of new subscribers from the hinterland usually talk less on phones and some use mobiles just to answer calls.

Bharti, which is in talks with South Africa’s telecoms firm MTN Group to create the world’s No.3 wireless group, saw a drop of 15 per cent in its March quarter ARPU as it won more new users in rural areas. The research firm said voice tariffs would fall substantially in 2009 as new operators join the market.

The telecoms unit of Indian developer Unitech Ltd will launch mobile services with Norway’s Telenor in the December quarter this year, a top company official said on Tuesday.

Bharti’s rivals such as Reliance Communications, Vodafone Essar and Idea Cellular are also rapidly expanding their services across the country.

Related stories at

• http://www.ciol.com/technology/mobility/news-reports/indian-mobile-users-to-hit-771-mln-by-2013-gartner/18609121197/0/
• http://efytimes.com/efytimes/fullnewsxml.asp?edid=35243
• http://economictimes.indiatimes.com/Indian-mobile-users-to-hit-771-mln-by-2013-Gartner-/articleshow/4671022.cms

Bharti rules out foreign investment in DTH biz

18 Jun 2009, 0124 hrs IST, Rashmi Pratap, ET Bureau

MUMBAI: Bharti Airtel, India’s largest telecom operator, said that its direct-to-home (DTH) venture, Bharti Telemedia does not require the approval of the Foreign Investment Board (FIPB), as the investment has come from Bharti Airtel’s internal accruals.

Responding to questions raised by FIPB regarding foreign investments in Bharti Telemedia, the company said there is no cash flow or investment from any foreign entity into Telemedia either directly or through Airtel.

In a letter to FIPB, Telemedia said FDI investment into Airtel has been in accordance with the norms and cap in the telecom sector and duly approved by FIPB. “Further, there is no FDI investor who has invested in Airtel specifically for downstream investment in the DTH sector. Accordingly, Bharti Telemedia did not apply for FIPB approval as it was not seeking fresh FDI or overseas investment,” it added.

This communication has come in response to a query from FIPB, which said approval for Bharti’s DTH services was “subject to compounding” (confirmation) by the Reserve Bank of India. Bharti said that “compounding” was not applicable in this case as only Indian money has been invested in Telemedia and no foreign money was routed to the company.

The government had earlier said the shareholding structure provided by Bharti Telemedia did not have FIPB approval and this was not in accordance with existing FDI policy. Last year, the Information & Broadcasting Ministry had also raised questions about Bharti Telemedia not having FIPB approval for foreign investments coming into it on a pro-rata basis through investing firms, including Airtel.

According to the FDI guidelines for DTH, total foreign equity holding in a company should not exceed 49% and the FDI component within the foreign equity should not exceed 20%. Airtel has 40% stake in Bharti Telemedia, while the remaining is held by an “Indian company of the Bharti group”, a Bharti spokesperson said.

Bharti also pointed out to FIPB that under the revised FDI policy, as per Press Notes 2 and 4, announced in February this year, Airtel qualifies as a company “owned and controlled” by resident Indians and there is no indirect FDI into Telemedia through Airtel.

Under the revised Press Notes, a company is considered Indian if Indian promoters have a stake of at least 51%. Moreover, the investments made by such companies in any joint venture or downstream venture will be treated as Indian. Since a major part of SingTel’s 31% stake and Vodafone’s over 4% share in Airtel is routed through majority-owned Indian companies, Airtel is owned and controlled by Indians.

Airtel launched its DTH services in October last year. It competes with Tata Sky, Reliance Communications’ Big TV, Zee’s Dish TV and Sun Direct in this segment. The company hasn’t yet started disclosing revenues from DTH services separately. “We will start disclosing the operational and financial performance of DTH operations next year, once they become material,” Airtel CEO and joint MD Manoj Kohli said recently.

The Hindu Business Line : 3G auctions within 72 days of resolving pricing issue: DoT

via The Hindu Business Line : 3G auctions within 72 days of resolving pricing issue: DoT on June 18, 2009

Thomas K. Thomas

New Delhi, June 17

The Department of Telecom proposes to conduct auctions for third generation services spectrum within 72 days of resolving its differences with the Finance Ministry over pricing.

This was mentioned by the DoT in a recent presentation to high ranking government officials. However, the DoT will have to iron out the differences with the Finance Ministry first before it can set a date for the auctions.

Telecom Ministry officials said that expect the auctions to take place by September assuming that the policy issues are resolved.

Two issues

The DoT and the Finance Ministry differ primarily on two issues. One relates to the base price, with the Finance Ministry wanting it pegged at Rs 4,040 crore. The DoT wants it to be between Rs 2,020 crore and Rs 3,500 crore to keep the spectrum affordable.

The other difference is the number of slots to be auctioned. While the DoT wants eight operators to be given 3G spectrum, the Finance Ministry favours five.

The DoT officials said that the issues will be resolved since the Prime Minister has included the auction of 3G and broadband spectrum in his agenda for the first 100 days.

Sources said that another round of meeting between the Union Telecom Minister, Mr A. Raja, and the Finance Minister, Mr Pranab Mukherjee, will take place to arrive at a resolution.

The DoT officials said the issues will be sorted out before the Budget is presented.

The Hindu Business Line : Import of mobile handsets without IMEI number banned

via The Hindu Business Line : Import of mobile handsets without IMEI number banned.

Huge impact on grey market phones.

Our Bureau

New Delhi, June 17 In a move that could signal the end of grey market mobile phones, the Government on Wednesday banned import of all handsets without the International Mobile Equipment Identity (IMEI) number.

IMEI is a unique 15-digit code that identifies a mobile. It prevents the use of stolen handsets for making calls and allows security agencies to track down a specific user. However, a majority of handsets sold in the grey market do not come with the IMEI, which has is of concern for security agencies.

The Government move to ban handsets without the code will hit a number of Chinese and Taiwanese manufacturers that were flooding cheap handsets in the grey market. The move will have no impact on the 25 million cellular users who already have bought a handset without IMEI. The ban is applicable only on new handsets being imported into the country.

The Director-General of Foreign Trade issued the notification on Wednesday imposing the ban with immediate effect.

Welcoming the decision, Mr Pankaj Mohindroo, President, Indian Cellular Association, said, “This is a step in the right direction to throttle handset grey market. However, much more needs to be done to tackle this menace. We are working with the Government in this regard.”

To protect consumers who have already bought handsets without the IMEI number, the Cellular Operators Association of India has tied up with Mobile Standard Alliance of India to set up 1,600 retail outlets across the country to provide the IMEI number on handsets without one. It is estimated that there are 25 million subscribers across the country using handsets without the IMEI number. Concerned over the national security, the Department of Telecom had earlier asked operators to disconnect services to handsets that do not have the IMEI number by April 15. However, the COAI, representing the GSM industry, has developed a software that will provide the unique number to instruments that do not have it.

The solution is being implemented with the approval of the DoT and the security agencies. Subscribers who do not avail themselves of this facility will be disconnected by the operators after June 30.

Related stories at

• http://efytimes.com/efytimes/fullnewsxml.asp?edid=35220
• http://www.ciol.com/technology/mobility/news-reports/india-bans-mobile-handsets-without-imei/18609121163/0/
• http://timesofindia.indiatimes.com/India/Govt-bans-import-of-Chinese-mobiles/articleshow/4668458.cms

DoT seeks Rs 3000 cr support for BSNL- Telecom-News By Industry-News-The Economic Times

17 Jun 2009, 0302 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: The communications ministry has sought an allotment of Rs 3,000 crore from the finance ministry for supporting BSNL’s wireline networks that were set up before April 2002. The DoT wants the amount to be sanctioned in the budget.

This is to compensate the state-owned telco for losses during the last fiscal after telecom regulator Trai had done away with access deficit charge regime from April 1, 2008. Prior to that, all telcos were paying 0.75% of total revenues towards ADC, which was used to support BSNL’s unviable fixedline operations in rural India. In 2007-08, BSNL got Rs 2,000 crore as ADC.

But, when hanging up on ADC, the regulator in a bid to address the concerns of BSNL , which had warned that it would be forced to discontinue all its rural fixed-line operations if the levy were to go, recommended that the government give it a subsidy of Rs 2,000 crore per annum for the next three years from the Universal Obligation Fund (USOF).

All telcos pay 5% of total revenues towards the USOF, which is dedicated to improving communication facilities in rural India. Unutilised amount in the USOF is at over Rs 20,000 crore. In March 2009, BSNL and DoT had signed an MoU to provide the state-owned operator a subsidy of Rs 6,000 core over the next three years from this fund to sustain its rural operations.

In fact, BSNL had even dragged the regulator to the telecom tribunal, but the latter refused to issue a stay on the matter. Trai had however, justified its move to do away with the ADC regime on the grounds that the total support provided to BSNL over the last couple of years under various initiatives which includes reimbursement of licence fee and spectrum charges, moratorium on payment of interest, support from Universal Service Obligation Fund(USOF), ADC funding and exemption on entry fee was about $8 billion (Rs 31,500 crore), while adding that the PSU cannot be supported in perpetuity.

In a bid to give further relief to BSNL, last year, DoT also exempted telcos from paying licence fee on fixedline telephony from licence fee enabling the state-owned operator to save Rs 1,200 crore annually.

via DoT seeks Rs 3000 cr support for BSNL- Telecom-News By Industry-News-The Economic Times.

Revenue, not user base, to set telecom pecking order

17 Jun 2009, 0305 hrs IST, Rashmi Pratap, ET Bureau

MUMBAI: Subscriber numbers in India’s wireless story are losing their relevance today as far as determining the industry position of a service provider is concerned. t will be revenues and not subscriber numbers that could decide the pecking order in the world’s fastest-growing telecom market.

This is reflected in the latest revenue figures released by the industry regulator, Trai. Going by this, the top three operators in India are Bharti Airtel, Vodafone Essar and Bharat Sanchar Nigam (BSNL).

Airtel’s adjusted gross revenue (AGR) from wireless and wireline operations was Rs 7,998 crore for the March quarter. Vodafone Essar, which offers only mobile services, had revenues of Rs 4,456 crore during January-March 2009 on a subscriber base of 68.7 million. Reliance Communications (RCOM), which has the second largest customer base, reported an AGR of only Rs 2,998 crore on 72.6 million users during the quarter, making it the fourth largest in terms of revenues.

The revenues for the state-owned BSNL stood at Rs 3,943 crore making it the third largest. BSNL offers mobile services on GSM apart from fixed line services. Besides showing the revenue capabilities of an operator, AGR is significant, as it is the basis on which service providers pay licence fee and spectrum charges. Operators pay a revenue share licence fee to the government ranging from 6% to 10% of their AGR. Increasingly, operators are targeting revenue growth instead of a larger user base.

According to Bharti Airtel’s vision statement, the company’s aim is 20% increase in revenue margin per subscriber in the next few years.

Analysts contend that with more and more low-end users signing up for services, it is becoming difficult for operators to maintain margins and improve ARPUs (average revenue per user per month). In such a scenario, those who continue to grow revenues along with subscriber base will be the clear winners.

“As the new subscriber base is primarily drawn from tier III towns and rural markets, the incremental subscriber addition is not leading to a commensurate revenue upside for telcos. The catchphrase to evaluate a telco’s performance will be quality of subscribers rather than the number of new subscribers,” Acsendia Consulting principal analyst, Alok Shende told ET.

A smaller player like Idea Cellular, which operates in 13 circles, had AGR of Rs 2,389 crore on a subscriber base of 39 million. This is just about Rs 600 crore less than RCOM on a base which is almost half of that company.

KPMG director (telecom) Romal Shetty said, “Initially, everyone was going after subscriber numbers. Now, they are looking at quality of subscribers. This explains the emphasis on value added services (VAS), which bring in higher revenues.” He pointed out that low-end pre-paid users are now bringing in monthly revenues of as low as Rs 70 per month.

Tata Teleservices reported revenues of Rs 1,889 crore during the quarter placing it at sixth followed by state-owned Mahanagar Telephone Nigam (MTNL). Aircel, a relatively new entrant, is at the eight position, which had AGR of Rs 721 crore during the quarter.

Telcos’ wait for airwaves gets longer

17 Jun 2009, 0702 hrs IST, Joji Thomas Philip & Sandeep Gurumurthi, ET Now

The wait for additional airwaves, key for mobile operators to expand their customer base, has just got longer, with the telecom ministry deciding to make any decision on this only after the upcoming auction of third-generation spectrum, according to a top official in the department of telecom (DoT).

Communications minister A Raja and Finance Minister Pranab Mukherjee met twice on Tuesday, but were unable to reach a consensus on key issues related to 3G auctions such as the base price for these radio frequencies as well as the number of players to be allowed to offer these high-end services.

“No consensus as of now on the base price. We discussed various suggestions — whether we should go for uniform base price or opt for differential pricing, according to circle, depending upon commercial viability of that area,” Mr Raja told reporters after his second meeting with Mr Mukherjee.

As a fallout, the telecom ministry has decided that it will take a call on all issues related with second-generation spectrum, the airwaves on which all mobile services are offered at present, including the methodology for future allocations, the pricing for this scarce resource and the usage charges for utilising these airwaves only after the upcoming auctions of third generation spectrum, the official said on condition of anonymity.

The ministries are divided over the base price for the 3G auctions with DoT proposing a reserve price of Rs 2,020 crore for pan-India 3G spectrum and the finance ministry wanting it to be doubled. DoT has said it is open to hiking the reserve price to Rs 3,540 crore as a compromise.

The two ministers said for the first time that they were willing to look at a differential pricing formula to arrive at a base price for 3G auctions, vital for high-end services such as video conferencing and high-speed internet on the mobiles.

Industry analysts, however, say using a new formula to arrive at differential pricing for each circle will be a time-consuming process that will further delay the 3G auctions.

The development implies that existing telcos will not get 2G spectrum till the issue is settled. Now, they will have to invest heavily on infrastructure to ensure that the quality of services do not deteriorate.

At present, all telecom services are offered on 2G spectrum and these airwaves have been given to telcos based on their subscriber numbers. Put simply, additional radio frequencies are dished out as telcos as they add more subscribers. Currently, India follows a controversial practice of allocating spectrum based on companies’ subscriber base, and is the only country in the world that follows this method.

There are two key factors that have led to the communications ministry deciding to stop all 2G allocations until the completion of 3G auctions.

First, the spectrum panel in its report submitted last month had said the country should adopt the internationally-accepted auction system for issuing additional 2G airwaves to telcos. This committee, consisting of academicians, industry representatives, government officers and industry representatives, had suggested that the 2G pricing be market-linked and be related to the auction price of 3G spectrum.

Second, the committee had also suggested that all telcos who hold radio frequencies beyond the 6.2 MHz mark be charged a one-time fee for all the extra radio frequencies they hold, while adding that this one-time fee be calculated based on the 3G auction price.

The communications ministry can act on these recommendations only after the 3G auctions take place.

The larger implication is that all telcos will have to shell out huge amounts, both for the excess 2G radio frequencies they hold as well as for all additional allocations in the future.

Additionally, DoT’s move to freeze all 2G allocations is also set to impact all telcos. For instance, India’s largest telco, Bharti Airtel, is awaiting additional spectrum allotment of 1 MHz each in five circles.

Reliance Communications, which has start-up spectrum in all 22 circles in the country, is now eligible for the next tranche in six circles as it has reached the prescribed subscriber numbers in these areas. Other telcos such as Vodafone Essar and Idea Cellular too are awaiting additional spectrum in several circles.

With no airwaves allotments over the next couple of months, these operators will have to spend significant amounts in setting up new cellsites. Analysts say for most operators, it is, therefore, a tradeoff between increased capex and allowing the quality of services to deteriorate on account of the spectrum crunch.

This is because it is technically possible to have increased number of subscribers using the same amount of radio frequencies, provided operators spend significant amounts in building more base stations and subscribing to the latest technological innovations.

It is not just the large players that are impacted by the latest policy logjam. The government’s move to put all allocations on hold will also pinch small players and new entrants like Datacom, Unitech Wireless

and Swan Telecom, who are awaiting start-up spectrum in many regions.

Japanese operators eye Indian WiMax space

Interview with – Mr Tatsuo Sato

Thomas K. Thomas on The Hindu Business Line, June 17, 2009

New Delhi, June 16 With the Government all set to finalise its policy for auctioning broadband access spectrum, a number of Japanese companies, including KDDI-backed UQ Communications, are looking to invest in the Indian WiMax space.

Responding to an e-mailed query, Mr Tatsuo Sato, Senior Manager, UQ Communications, told Business Line, “India is fast growing country, and many Japanese enterprises are interested in investing in the Indian WiMAX market. We strongly hope the Indian Government will assign wider bandwidth for WiMAX in order to give Indian operators more flexibility and capability for service expansion. Also, we recommend India to use 2.5GHz because it makes PC manufacturers install WiMAX easily because 2.5GHz WiMAX can utilise Wi-Fi antenna which has already been built into most laptops.”

Tokyo-based UQ Communications is backed by a consortium comprising big names including Intel, KDDI, Kyocera, railway operator JR East, Tokyo Mitsubishi Bank and Daiwa Securities. The company has launched WiMax-based broadband services on a pilot basis with 8,000 subscribers in Japan and is hoping to go commercial starting next month.

Mr Sato said that Indian policy-makers should look at allocating at least 30 Mhz of broadband spectrum to each operator. “30MHz or more bandwidth should be assigned. The wider the spectrum, the better for coverage expansion and for future technology expansion toward new standard 802.16m that realises 100Mbps+ download speed,” he said. The Department of Telecom has proposed to allocate 20 Mhz per operator.

Explaining why UQ chose WiMax technology over other third generation technologies, he said, “UQ selected WiMAX because it has fast-mover advantage over other technologies. Both WiMAX and LTE use orthogonal frequency multiple access and multiple input multiple output, however, WiMAX is way ahead of LTE, and many WiMAX products have been introduced to the market. KDDI, which has 32.26 per cent of UQ’s share, provides EVDO (a 3G technology) but its service is based on cellular phones, and its required data speed is not so high. WiMAX, like Wi-Fi, is born through an Internet-based culture.

“With an open standard, many device manufacturers make a variety of devices, and numerous operators (includes mobile virtual network operators) create various value added services. As a result, WiMAX users can select from a variety of devices and services,” he said.

The Hindu Business Line : Seminar on rural telecom

via The Hindu Business Line : Seminar on rural telecom, Chennai, June 17

The first big revolution in rural telephony happened when STD booths were set up across the country, including in remote villages. Mobile telephones have taken rural India by storm. This mobile revolution is changing the way marketers can connect with their rural audience, according to the Rural Marketing Association of India. It says that a bulk of the anticipated growth in the telecom subscriber base will come from rural India because of the infrastructure support from the Government and aggressive marketing strategies of service providers and handset manufacturers. It is in this context that the association is organising a seminar on `Rural telecom’ in Delhi on July 3.

According to the association, the seminar will help learn from approaches adopted by different stakeholders and debate on how best to design and implement telecom solutions. Dr J.S. Sharma, Chairman, Telecom Regulatory Authority of India, is expected to deliver the keynote address at the seminar, which will see the participation of representatives of service providers and handset manufacturers. – Our Bureau

No consensus on 3G reserve price: Raja- Hindustan Times

From The Hindustan Times on June 16, 2009

No consensus has been reached between the Department of Telecommunications (DoT) and the finance ministry on the reserve price for third generation (3G) radio waves auction, Communications Minister A Raja said in New Delhi on Tuesday.

Raja, who met Finance Minister Pranab Mukherjee on Tuesday in New Delhi to discuss issues related to 3G spectrum auction, told reporters that the reserve price matter would be discussed with Prime Minister Manmohan Singh.

The final decision will be taken by the Group of Ministers (GoM) and the Cabinet Committee of Economic Affairs, he added.

The DoT plans to auction radio frequencies for the country’s 20 of 22 telecom service areas.

The process has been delayed a number of times after the finance ministry suggested that the starting auction price of Rs.2,020 crore be doubled.

via No consensus on 3G reserve price: Raja- Hindustan Times.

Raja expects minimum Rs 25,000 cr from 3G, BWA spectrum bids- Telecom-News By Industry-News-The Economic Times

Raja expects minimum Rs 25,000 cr from 3G, BWA spectrum bids

From http://www.economictimes.com on 16 Jun 2009, 1617 hrs IST, PTI

NEW DELHI: Telecom Minister A Raja on Tuesday said that he expects revenue of at least Rs 25,000 crore from the auction of radio waves for third generation (3G) mobile, broadband and wireless services.

Raja, who met Finance Minister Pranab Mukherjee, said his department had assured the government of an early service rollout.

“In connection with the 3G and WiMAX auctions, we assured (the Finance Minister) of an early rollout, an early auction and more revenue for the government,” Raja told reporters after meeting Mukherjee earlier today.

Raja’s estimate is lower than what (Rs 30,000 crore) the government had forecast last year when the 3G auction process was announced.

Raja meets Mukherjee again in the evening seeking clarity on the number of licences to be auctioned and the reserve price to be set. DoT officials will also be there to discuss the issue with their counterparts in the Finance Ministry.

DoT plans to auction frequency for 20 of India’s 22 telecom service areas. The exercise has been delayed after the Finance Ministry suggested that the starting auction price of Rs 2,020 crore be doubled.

via Raja expects minimum Rs 25,000 cr from 3G, BWA spectrum bids- Telecom-News By Industry-News-The Economic Times.