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.

Global players find MTNL’s WiMax project terms unattractive

Disincentives

Operator will have to partner a company that has no expertise in the area

MTNL asking for too much of revenue share and branding

——————————————————————————————————————————————

Thomas K. Thomas on August 15, 2009 in The Hindu Business Line at http://www.thehindubusinessline.com/2009/08/15/stories/2009081551020400.htm

 New Delhi, Aug. 14 International WiMax operators eyeing MTNL’s franchisee contract are unhappy with the conditions specified by the state-owned company in the tender document.

Some of the operators have told MTNL that the terms were restrictive as they permit only system integrators (SIs) or original equipment manufacturers (OEMs) to bid.

“We met senior MTNL officials and have told them the disadvantages of allowing only SIs and OEMs to bid. This will mean that an international operator, who has all the experience to take forward MTNL’s WiMax services, will have to necessarily partner with a company that has no idea of rolling out broadband services,” said a foreign operator looking to bid for the WiMax project.

Another operator said that while an SI did not have any idea of rolling out a WiMax network, OEMs would not like to partner with MTNL and become competition to the private players, who could be their clients. “An equipment vendor can never become an operator. It will lead to a clash of interest with its other customers,” said the operator.

Foreign players have also pointed out that MTNL was asking for too much in terms of revenue share and branding conditions whereby it has been made mandatory to use the PSU’s name to sell service.

“Why would a foreign player invest in setting up a network if it has to offer services in MTNL’s brand and also offer a large part of the revenue to the PSU?” asked a foreign player. However, MTNL officials said several system integrators and original equipment manufacturers have expressed interest.

“We are not forcing anyone to bid. These are the terms and conditions that we have put out for the benefit of MTNL. We are not responsible for another operator’s business case. Having said that, there are a number of OEMs in the WiMax space who are adopting new business models whereby they set up the network and also manage it. There are foreign players we know who are talking to such OEMs to jointly bid for this project. We hope to get a good response,” said an MTNL official.

A number of players, including SOMA, Yota, UQ Communications and Spice Group, may bid for the MTNL project, which envisages wireless broadband services in Delhi and Mumbai. But foreign companies such as Yota and UQ will have to partner a system integrators or an original equipment manufacturer if they want to bid.

SOMA is on a stronger wicket because it is both an operator and an original equipment manufacturer.

MTNL will enter into a revenue sharing agreement with successful bidders.

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.

CBI arrests 2 senior MTNL officials on graft charges

From The Financial Express on June 16, 2009

New Delhi: The CBI has arrested two senior officers of the MTNL for allegedly demanding a bribe for releasing pending bills of a complainant.

A CBI spokesperson said Vinay Kanwal, Deputy General Manager (Finance), posted at Rajouri Garden, and R K Gupta, Chief Accounts Officer, were allegedly caught while accepting Rs 32,000 — the first part payment of bribe amount of Rs 60,000.

The CBI said a private contractor was given contract for house keeping work for the office of GM, MTNL, Rajouri Garden for the period from July 2008 to May 13, 2009.

“As the two accused officials were demanding a bribe of Rs 60,000 to release the payments of pending bills and also for extension of the contract work, the contractor lodged a complaint with the CBI,” the official said.

He said searches were also conducted at the residence of accused persons.

“Cash amounting to Rs four lakh, five bank pass books having a balance of Rs 3.2 lakh, documents of two flats and other incriminating documents were recovered from the residence of Gupta, while certain incriminatory documents were recovered from the residence of Kanwal.

“Both the accused persons were produced in the court of CBI Special Judge, Tis Hazari, and remanded to judicial custody,” the official said.

Vodafone approaches FIPB for NLD, ISP licences

From http://www.economictimes.com on June 16, 2009

NEW DELHI: Mobile services company Vodafone Essar has applied for Internet Service Provider

and national long distance licence and has approached the Foreign Investment Promotion Board (FIPB) for approval.

The company officials confirmed that the operator has applied for these two licences and aims to become a full-fledged communication service provider

in the country.

FIPB, on June 19, may take up the proposal, sources said. If Vodafone Essar, in which the UK-based mobile firm Vodafone holds majority stake, gets the national long distance licence (NLD) it will help the company save operating expenses for carrying STD traffic, instead of hiring other mobile company’s network for the purpose.

All the top mobile operators like Reliance Communications, Bharti, BSNL and MTNL have their own NLD infrastructure.

The company is also planning to enter the internet service segment in which all other major mobile operators like BSNL, Reliance Communications and MTNL has a presence.

3G Rollout: Raja meets PM; discloses agenda for 3G roll out

Source PTI, From Hindustan Times on 11 June 2009

Setting the ball rolling for 3G mobile telephony, Telecom and IT Minister A Raja today met Prime Minister Manmohan Singh and discussed the agenda for launching the much-awaited services and auction of spectrum.

Official sources said that Raja met Singh in the morning and briefed him about the ongoing issues, including roll-out of 3G and wireless broadband (Wimax) services.

The Department of Telecom (DoT) has to decide on the reserve price for spectrum as it had differences with Finance Ministry. The matter may be taken directly to the Cabinet Committee on Economic Affairs (CCEA) or will be referred to a Group of Ministers (GoM).

DoT had proposed a reserve price of Rs 2,020 crore for an all-India spectrum of five MHz, while the Finance Ministry had pegged it at around Rs 4,040 crore.

Asked whether the reserve price of spectrum came up for discussion between Raja and Singh, sources said the minister mentioned about the number of players to be considered for 3G in the first round of auction of spectrum and its pricing.

Raja had earlier told PTI that he would like to start the process of auctioning of spectrum within three months and roll out the services by the end of this calendar year.

3G allows users access to high-speed data and voice services. State-run BSNL and MTNL are the only two operators to offer this next generation service in the country, while private players are awaiting spectrum to be apportioned.

Related stories at

• http://www.financialexpress.com/news/raja-meets-pm-discloses-agenda-for-3g-roll-out/474318/
• http://economictimes.indiatimes.com/Cabinet-to-take-a-call-on-3G-auctions-soon/articleshow/4642138.cms

Telcos dial Africa for new pastures

Manoj Gairola, Hindustan Times on June 7, 2009

After tasting success in domestic markets, it’s ‘Dial Africa’ for Indian telecommunication companies. And it’s not the high-profile, twice-rejected MTN alone that’s attracting Indian firms.

While the government-owned Mahanagar Telephone Nigam Ltd (MTNL) is in advanced discussions for telecom licences in four countries, Bharat Sanchar Nigam Ltd (BSNL) is formulating its strategy to enter the continent.

Adding their bit are the Essar group, Tata Communications and Reliance Communications, all of which have licences for telecom services in African countries and are looking to expand their operations.

Bharti Airtel is negotiating with South Africa-based MTN for a “two way deal” that would allow it to own 49 per cent equity in South African giant MTN.

“We are evaluating a proposal to acquire a company that has licences in four to five countries,” said R.S.P. Sinha, chairman and managing director (CMD), MTNL. “Africa is a lucrative market and we would like to acquire a licence through auction if there is an opportunity.” However, in most countries, licences have been auctioned.

“Funding is not an issue for our Africa expansions,” Sinha said. “We have done all the ground work.” MTNL is presently a service provider in partnership with Tata Communications (formerly VSNL) and Telecommunications Consultants India Ltd (TCIL). “We will enter into Africa on our own,” said Sinha.

MTNL not the only government-owned company eyeing the African market. “We are looking at an expansion in Africa,” said Kuldeep Goyal, CMD, BSNL. “Whenever we find right opportunity we will grab it.”

Essar group has acquired a telecom licence in Uganda. “Africa is an important market for Essar’s telecom business and we are working towards building a strong brand in this market,” said Srinivas iyengar, CEO, Essar Telecom Kenya. “We would be looking at opportunities to establish a pan Africa footprint in future.”

The company plans to offer services in a joint venture with a local company, Kenya Telecom Uganda Ltd. It already has a licence in Kenya and plans to expand in other countries.

“We find African markets promising and have recently hiked our stake in Neotel (of South Africa) to 56 per cent from 26 per cent,” a senior Tata Communications official said. “We view this as a beach head to the rest of the African markets as and when right opportunities arise.”

Why Africa?

“African countries have just started moving on the development path,” said RK Upadhyay, CMD, TCIL. The company has been executing telecom infrastructure projects in Africa for past 20 years and is present in 30 countries. “There is expected to be enormous growth in telecommunications in next five years. Whenever, development takes place in a developing economy, the need for telecom services increases,” Upadhyay said.

“Africa has a low teledensity and high average revenue per user,” said Goyal. This explains why Indian providers want to go to. India has a teledensity (number of telephones for a population of 100) of about 40 per cent. In many African countries the teledensity is below 20 per cent (See table).

Besides, the continent’s average revenue per user is high. Against Rs 250 per month in India, the number in some African countries including is about three times as much.

Reliance has a licence in Uganda for offering mobile, fixed line, Internet, national and international long distance services, in addition to WiMax and Wifi services. It plans to acquire licences in other countries, a senior official said.

BSNL staff union open to discussing IPO plans

Thomas K Thomas on The Hindu Business Line on June 5, 2009

New Delhi, June 4 In what could be a softening of stance, the employees union of Bharat Sanchar Nigam Ltd said that it was prepared to discuss the company’s proposal for an Initial Public Offering.

While the union maintained that it was still opposed to the idea of listing BSNL’s shares on stock exchanges through an IPO, its officials said that they were prepared to hear what the management and the Communications Ministry had to offer.

Speaking to Business Line, Mr V. A. N. Namboodiri, General Secretary, BSNL Employees Union, said, “If they call us we are ready to discuss the IPO issue with the Government.”

Govt proposal

Asked whether the union will agree to the proposal if the Government offered them sops in terms of bettering their pay package, Mr Namboodiri said, “We have not come to that stage yet. We will hear what they have to say. So many of the promises made to us by the Government at the time of corporatising BSNL are still to be met. ”

Mr Namboodiri, however, categorically said that there was no change in the union’s stance on the proposed IPO and it would strongly oppose the move. But sources said that the union may push hard some of its long-standing demands related to higher pay, promotion, absorption, allowances, giving ‘maharatna’ status to the PSU, pension and employees stock option. The union may also seek assurances on paper from the Government about the employees’ job status.

Asked why the union was opposing the proposed listing, Mr Namboodiri said, “Look at MTNL, which got listed much earlier. It does not have money to even pay the salaries. And see what has happened to VSNL. The name itself has been changed. What assurances can the Government give that we will not face the same fate after divesting BSNL’s stake,” Mr Namboodiri said.

Actual listing

While the actual listing of BSNL may still be some time away, the fact that the unions have agreed to discuss the IPO proposal could be an opening for the management to negotiate a way out.

The State-owned telecom company had approached the Government last year with a proposal to divest 10 per cent stake to the public in a bid to raise about $10 billion. The company was hoping to use the funds for its expansion. However, the plans got shelved after the unions rejected an offer from the Communications Ministry to improve emoluments. With the unions agreeing to discuss the issue again, this time the BSNL management could sweeten the deal.

Related stories at

• http://economictimes.indiatimes.com/BSNL-may-sweeten-employee-share-issue-plan-to-win-over-trade-unions/articleshow/4629192.cms

Excerpt from above:

With a revised offer, BSNL is hopeful of a breakthrough, as the management is confident that a large number of employees and the smaller unions are open to negotiate on the stock offer. In a bid to win over some of the employee unions, BSNL is also likely to widen the scope of the discussions related to the listings to include other issues, such as long-pending employee demands for higher wages, allowances, promotions and other benefits in line with private sector companies.

Besides, the BSNL management may also ask the Centre to give the company ‘maharatna’ status, which the unions have been demanding for over a decade now. According to ministry officials, the Centre may also take a leaf out from a Danish government strategy and use a portion of the proceeds toward employee pension funds and for training and re-deployment of a huge number of the PSUs employees.

The government may announce a funding package for retraining large sections of the BSNL workforce for redeployment into new data-driven businesses, such as broadband.

A top BSNL executive said that the company had already begun informal talks with leaders of different employee unions, while adding that one of the proposals being considered was to sweeten the earlier offer. But the executive also clarified that since formal talks were yet to begin, the new offer had not been presented to the employee unions yet.

The new UPA regime is keen on BSNL’s listing, and it hopes that a 10% stake dilution in the company will fetch over Rs 40,000 crore. Mr Raja, who retained the portfolio in the new UPA administration, had recently said that he had asked BSNL’s management to hold talks with the employee unions and address the latter’s fears on listing.

Last year, Mr Raja said that BSNL would list at Rs 300-400 per share, pegging its valuation at $37-45 billion, which is not even half of the $100billion valuation that the company’s management has been claiming since January 2008.

However, a top BSNL official had then clarified to ET that this was only the bookvalue of the company and did not include its asset value. The executive also added that the minister’s figure was only to make a point that this (Rs 300- 400 per share) would be the minimum that employees can expect, when it gets listed.

BSNL readying WiMax tender for rural broadband project

From The Hindu Business Line by Thomas K Thomas on June 04, 2009

New Delhi, June 3 To boost its plans to roll out WiMax-enabled broadband services in the rural areas, state-owned Bharat Sanchar Nigam Ltd will shortly launch a Rs 1,500-crore project to buy 7,000 WiMax base stations to set up Common Service Centres (CSC) across the country.

The tender document for this project is being prepared and BSNL will invite Expression of Interest from equipment manufacturers to supply WiMax gear.

This comes even as BSNL scrapped another tender for appointing franchisees for rolling out WiMax-based broadband services across the country. This project had run into controversy after it came out that five of the six short-listed bidders had similar corporate details, including contact e-mail, address, lawyers and auditors. BSNL will float a new tender for appointing franchisees.

Three phases

The PSU plans to roll out WiMax in three phases. Phase One will set up the broadband infrastructure in the rural areas. A part of this project has already been given to the Chinese vendor Huawei and a relatively unknown entity from Tamil Nadu, Gemini. The two vendors are to set up 1,000 base stations to connect an equal number of remote blocks. The new tender for another 7,000 base stations will be floated in a week.

In the second phase, BSNL plans to roll out broadband infrastructure in the urban areas. While Huawei has been selected for rolling out services in Punjab, Telsima has emerged the lowest bidder in Kerala. The PSU is expected to award the contracts to these vendors shortly. Tender for other circles will be floated later.

The third project was on a franchisee model which has now got scrapped.

Only Two operators

BSNL and MTNL are the only two operators to have got the spectrum for rolling out WiMax broadband services.

However, neither has been able to get going on the WiMax project though each has launched third generation mobile services. Cancelling the franchisee tender will only delay further the broadband services roll out.

MTNL unveils pre-paid 3G service for Rs 300

2 Jun 2009, 1650 hrs IST, PTI on http://www.economictimes.com

NEW DELHI: State-run MTNL today brought 3G services to the masses by introducing a prepaid option for this high-end service at just Rs 300.

Announcing the launch of the pre-paid 3G service, company CMD R S P Sinha said, “MTNL is launching 3G Jadoo Prepaid Services so that customer should be able to avail the latest 3G/3.5G services at an affordable price”.

Since pre-paid is the preferred by customers, the 3G service will be available for only Rs 300 with lifetime validity, whereby a customer can make local video calls at Rs 1.8/minute and data download at Rs 3/MB.

In addition, a subscriber can also choose any of the data coupons to avail free data downloads coupled with free video calling to suit ones individual requirement, Sinha said. Sinha expects the launch of pre-paid 3G services to increase it customer base.

He said the PSU has around 400 subscribers for its recently-launched 3G service and expects 2,00,000 to 3,00,000 users for in the first year of operations.

The company introduced 3G services in Delhi in December and in Mumbai last month.

The state-run telecom operator expects to add new capacity to accommodate 8,00,000 users, he said.

Same story in Financial Express at http://www.financialexpress.com/news/mtnl-unveils-prepaid-3g-service-for-rs-300/470071/

Story from The Hindu Business Line dated 03 Jun 2009

MTNL launches pre-paid card for 3G services

Our Bureau

New Delhi, June 2 To get more users for its third generation mobile services, state-run Mahanagar Telephone Nigam Ltd (MTNL) on Tuesday launched a pre-paid option that will enable customers in Delhi experience high-speed data connectivity at an upfront cost of Rs 300.

MTNL had launched its 3G services in January but has only 400 subscribers till now. The pre-paid option is expected to drive up the demand for the company. Mr R. S. P. Sinha, Chairman and Managing Director, MTNL, said he expected at least two lakh 3G users within the first year of operations.

Initially, the services were launched in NDMC area in New Delhi with 50 base stations.

Extended coverage

Now, MTNL has extended 3G coverage to Trans Yamuna, Central Delhi, South Delhi and NCR of Gurgaon with 225 base stations. The company will soon cover Noida, Dwarka, Karolbagh, North-West and the remaining areas in and around the capital.

The 3G pre-paid services are available at Rs 300 with lifetime validity, and a customer can make local video calls at Rs 1.8 a minute and download data at Rs 3 for each MB.

In addition, a subscriber will have to buy data ranging between Rs 99 and Rs 2,500 coupons. MTNL has bundled free data download of 50 MB with a trial coupon for Rs 99. Heavy users can pay Rs 2,500 a month for unlimited data download.

The PSU will add new capacity to accommodate 8 lakh users. Since 95 per cent of existing mobile users are on pre-paid, MTNL expects more demand for the 3G service.

Mr Sinha said the service has given an advantage to the state-run company over private players.

MTNL and BSNL are the only operators to have got spectrum for offering 3G services.

3G-WIMAX : Simplifying the future

On http://www.ciol.com by Sunny Sen on 02 Jun 2009

INDIA: Amongst the innumerable potentials 3G has, network manageability is perhaps the most important one. In the coming years, with increasing Internet usage, a huge explosion of data will happen over networks. The other major area where 3G would make a difference is in the billing process.

For infrastructure providers 3G will be a value-add during slowdown, as they would get to put in a lot of new developments. Layout of next generation networks that are 3G compatible will help in better manageability of services over the networks. Even service providers believe that 3G would make the entire mobility space much more accessible. The government, though, has to look at 3G with a much broader perspective. The broadband connection, as they have not reached the set target, will also benefit with 3G coming to India.

Looking at the manageability front, 3G will not only help in managing new services, but also fall in line with 2G and 2.5G services. It will give a whole new experience of network management at the back end. “As a 3G network is downward compatible, SPs would prefer to upgrade their existing networks so that with increased bandwidth they can offer high-bandwidth applications and services to their 3G customers, as well as serve more 2G and 2.5G customers on the improved network,” says Vish Iyer, vice president, service provider, Cisco India & SAARC.

3G Billing Process

In India there is a larger base for pre-paid customers compared to post-paid and so there is a greater need to simplify processes for the same. With 3G services there is a new advent in the next-generation voice, data and content services. And 3G billing services will give operators the opportunity to handle and retain the loyalty of pre-paid subscribers.

“Billing systems must cope with the dichotomy in business processes and the complexity in operations for accurately billing pre- and post-paid subscribers. This is a challenge that operators must address as it adds additional pressure to the bottom-line,” says Paresh Shah, vice president, information management, Convergys India. For post-paid customers it would help the operators to offer innovative services on demand like real time balance tracking and notifications. This will actually become the handiest tool to operators as they are working to limit credit exposure from post-paid subscribers and provide the necessary cross subscription discounts and invoice generation that subscribers demand.

“In 3G, services priced differently will be posted in one bill. Apart from that a number of new parameters for calculating charges can be used like number of packets, uploading and downloading data, QoS, location and content. This will give rise to complex methods of billing,” says Tamal Bardhan, marketing head, Usha Comm.

Easier Manageability

Not only on the billing side, but also on the network deployment side 3G is taking things forward. Solutions and services are getting simpler and handier. Enterprises and vendors have already started making futuristic deployments for the new business opportunities that 3G would bring in the network space. 3G’s most important attribute will definitely be better infrastructure management.

“3G will help service providers manage their existing infrastructure better and remain competitive in a mobile number portability (MNP) regime. It will also generate a more addressable market to the GSM service providers. They can go back to their existing customer base and provide them with enhanced data services” says Animesh Sahay, head, telecom business, India and SAARC, Juniper Networks.

GSM and VAS are two other areas where 3G would be having a great impact. We are seeing a growth of around 5 to 6 mn users per month in these areas. The bandwidth provided right now is nowhere close to what we would have once 3G services are started. This would essentially lead to easy trafficking of data over the networks.

3G will not only make its presence felt in cities and towns but also bring in better and faster networks to rural India. “Looking at the country’s broadband penetration through copper and coax; wireless technologies are becoming prominent. 3G and WiMax will ensure that remote and rural areas get networked. Thus 3G is a positive sign of the growth of the Indian telecom industry provided the government supports it equally,” says Jayesh H Kotak, vice president, product management, D-Link India.

In the years to come 3G would make a lot of difference in making business models more innovative. 3G and WiMax will help solve the problem of low broadband penetration in India to a great extent. It is high time the government realizes the need and use of 3G. In a fast growing economy these technologies have the power to change the development roadmap of the country.

Data Matters

The current 2G network limits the download speed to nothing more than 30 to 40 Kbps, though the ISPs claim to provide much more. Even after the use of Edge technology one gets 384 Kbps of uplink and 171 Kbps of downlink. 3G is expected to sort out these problems. For enterprises 3G would bring in a lot of scalability and performance based application cutting short time constraints. 3G networks will be 2G and 2.5G compatible as well. Consolidation would bring down the costs for the company.

Apart from the bandwidth, 3G would also enable compressed data over the network. This would in turn maximize and increase WAN link by reducing the frame size, thereby allowing more data to be transmitted over the link. Though at this point we do not need much data compressibility as the transmission will be through fiber.

3G allows for transferring voice in networks much more efficiently than 2G and enables efficient VoIP in the future. This leads to decreased cost per bit and voice minute for the operator, and eventually for consumers. “Today’s networks are many times more efficient than early 3G networks and will evolve to LTE which is again three times more efficient than current 3G networks,” says Randep Raina, head, 3G India, Nokia Siemens Networks.

Looking Ahead

Will things stop only with the infrastructure developments of networks in Delhi? BSNL and MTNL are very differently placed in comparison to other private players. It is not yet known when 3G auctions will happen and which companies will be in the spectrum run. With a huge amount of investment only to acquire license, a lot of other costs would be involved when it comes to network building and implementation.

But the high costs will lead to new services making its way into the market, especially the urban areas. “Unlike 2G, in 3G one has to come up with very innovative applications and tariff plans. If operators are able to come up with new services there surely is a lot of money to be made,” says Subhendu Mohanty, country head, home & networks, mobility business, Motorola.

It perhaps goes without saying that vendors are looking at 3G because it is one of the areas that would bring them enough revenues. For instance, in case of Motorola their deployments for MTNL in Delhi alone are close to Rs 300 crore.

Undoubtedly, 3G will definitely bring in manageability. With obsolete billing processes and difficult round ups it is an urgent need for the communications industry to head towards 3G. For quite some time, 3G has been a vision and a topic of discussion, but unfortunately, implementation is nowhere in sight.

WiMAX Forum Global Congress

From The Hindu Business Line on 02 June 2009

New Delhi, June 1 Indian telecom players including Tata Communications, MTNL, BSNL and Sify will participate in the annual WiMAX Forum Global Congress 2009 in Amsterdam from June 2-3. This annual congress will be led by players that are active and involved in the growing momentum of WiMAX ecosystem globally. Thought leaders from 40 operator companies, 14 analysts, 7 regulators and 3 investors from 40 different countries ar expected to participate in this meet. – Our Bureau

Airtel user base swells by 2.8 mn in April

2 Jun 2009, 0142 hrs IST, Durba Ghosh, ET Bureau

NEW DELHI: Leading GSM operators Bharti Airtel and Vodafone Essar have added 2.8 million and 2.7 million subscribers in April, continuing their respective growth momentum. The second-largest mobile operator Reliance Communication added just over 2-million subscribers last month, according to data released by telecom regulator Trai on Monday.

GSM operator Aircel added about 1.1 million new subscribers in April taking its total subscriber base to 19.5 million. Tata Teleservices, a CDMA operator, added about 0.6 million new users in the given month taking its subscriber base to 35.7 million. Idea Cellular and Spice Communications together added a notch over 1-million subscribers in April. State-owned telco MTNL added 47,045 new subscribers in April.

RCOM, the country’s largest telecom operator on CDMA technology platform

, had launched GSM-based services in January with schemes providing free talk time up to Rs 900 and this resulted in its subscriber numbers surging between January-March. The free scheme was taken away by March-end, which resulted in subscriber additions falling in April.

RCOM had outperformed the industry in these three months, it added 5-million new users in January and over 3-million new subscribers in February and March. In comparison, the largest mobile operator, Bharti, added 2.7 million new users

each in January and February 2009 and 2.8 million in March.

RCOM now has a mobile subscriber base of 74.8 million and Vodafone Essar’s total subscriber base stands at 71.5 million, while Bharti Airtel leads with 96.7 million total subscribers. Vodafone Essar also saw a drop of about 0.07 million users in its monthly additions in April and the telco added just over 2.7-million subscribers as against 2.84 million in March.

With this, Bharti Airtel regained the number one position in terms of subscriber additions by a few thousand users as it increased its customer base by 2.8-million users in April.

In March 2009, Vodafone Essar had beaten Bharti Airtel in monthly subscriber additions for the first time. Trai also said that India’s mobile base had crossed the 400-million mark in April, inching close to the target of 500-million users by 2010, set by the Department of Telecom (DoT).

The total wireless subscriber base now stands at 403.66 million, while the total telecom base, which includes that of landline is 441.47 million, Trai added. But, the number of new mobile connections added in April saw a 23% drop compared with 15.64 million new additions in the previous month.

Raja puts BSNL-MTNL merger on back-burner; BSNL may be listed

1 Jun 2009, 1939 hrs IST, PTI on http://www.economictimes.com

NEW DELHI: Telecom Minister A Raja on Monday virtually ruled out the BSNL-MTNL merger saying it is difficult due to lack of identical factor between them. “Identical factors are not there legally for BSNL-MTNL merger,” Raja said.

The Minister, who assumed charge today, however, said the Department was keen on listing of BSNL and advised PSU management to start talks with the Employees Union for taking the company public. The union has been opposing the listing.

Late Communication Minister Pramod Mahajan had proposed the merger and was revived by Raja’s predecessor Dayanidhi Maran for synergy purpose. Government holds 56.25 per cent in MTNL and it is listed in NYSE and in India. BSNL is 100 per cent owned by government.

MTNL provides telecom services in Delhi and Mumbai, while BSNL serves the rest of India.

On plans to list BSNL in the bourses, Raja said the management has been advised to initiate talks with the employees union.

“We want to list BSNL… We want to create a consensus for it. We have asked the BSNL management to talk to the union”, said the Minister. Estimates suggest that BSNL is worth 100 billion dollars and dilution of 10 per cent stake would help the company raise 10 billion dollars (about Rs 48,000 crore).

Story in The Hindu Business Line on 02 June 2009

Decision on BSNL listing after talks with unions

New Delhi, June 1 The Communications and IT Minister, Mr A Raja, on Monday said that decision related to listing of Bharat Sanchar Nigam Ltd will be taken after discussing it with the company’s employee unions.

While BSNL had approached the Government seeking permission to go for an initial public offering, the employee unions had objected to it. The PSU is planning to offload about 10 per cent stake to the public. “We have to build a consensus around it,” Mr Raja said.

Mr Raja also ruled out the possibility of merging the two PSUs – BSNL and MTNL.

On the issue of auctioning spectrum for 3G services, the Minister said that he will seek approval from the Cabinet Committee on Economic Affairs.

The previous Government had referred the matter to a Group of Ministers but since some members of this GoM is not in the new Cabinet, the policy for 3G could be reverted back to the CCEA.

“We need to be clear on whether to get the approval from the CCEA or for a new GoM,” Mr Raja said.

BSNL readies $10-b war chest for overseas buys

From The Hindu Business Line on 29 May 2009

Our Bureau
New Delhi, May 28 Following moves by private telecom players to acquire international operators, State-owned Bharat Sanchar Nigam Ltd is readying a $10-billion corpus for its own global ambitions.

The company is scouting for a consultant to advise the PSU on the international plan. The PSU has also set up a separate business unit under a General Manager ranked officer to look aggressively for opportunities in foreign markets. While the other telecom PSU, Mahanagar Telephone Nigam Ltd, has invested in a few international markets such as Nepal and Mauritius, this is BSNL’s first real move to go beyond India. Though the company had expressed interest to bid for licences in Tunisia and Oman earlier it did not go through with the plan.

According to BSNL officials, the company is open to all forms of investments including merger, acquisition, strategic partnership, or buying new telecom licences for starting greenfield operations. While the company is looking for opportunities across all geographies, it is more interested in the African and Middle East markets.

BSNL sources said the acquisitions will be funded from the company’s cash reserves. The money raised through a possible IPO could also be used for the international move.

The biggest fixed line player in India with 35 million subscribers. BSNL is the fourth largest mobile operator after Bharti Airtel, Reliance Communications and Vodafone Essar. Most of the other big players in the country already have some investments in the international market.
BSNL’s revenues have been dipping the past few years owing to high competition and low margins.

BSNL would be among the few government-owned companies worldwide looking to go beyond their domestic turf. Chinese telecom operators are also targeting operators in the African continent.

According to analysts, BSNL has the advantage of operating in a low-cost market such as India. It could replicate the low-margin, high-volume business model in other emerging markets such as Africa.

BSNL has the experience of operating millions of rural telephone lines. Most African countries are similar to India in terms of the large rural population. BSNL also has about three lakh employees who can be deputed to manage networks of international operators post a successful foray.

Pointer to the future (Bharti-MTN deal)

On The Hindu Business Line on 29 May 2009

Thomas K. Thomas
The merger talks between Bharti Airtel and South African telecom company, MTN, is a pointer to an emerging trend in the Indian telecom growth story. Saturated urban markets, declining average revenue per user, tighter domestic acquisition laws and the desire to achieve global scale are driving Indian telecom operators to other emerging markets.

That the largest and most profitable mobile operator in the country is looking for markets elsewhere in the world is a clear indication that there is not much juice left in the Indian telecom market. This is similar to what Vodafone went through in the earlier part of this decade, when it decided to move out of its traditional, but saturated, European market to other emerging markets.

Growth rate
A recent report from the Department of Telecommunications leaves no ambiguity on what the policy-makers think about the future growth prospects of the Indian cellular market. The report states that though the mobile subscriber base is increasing at a scorching pace, the growth rate will taper off by the end of next year.

Using the S curve model of growth, the DoT has projected that the telecom sector will reach an inflexion point (the point at which maximum growth rate will occur) when the mobile density reaches 44 per cent. Considering that the current tele-density is close to 35 per cent, it is expected that the inflexion point will be reached by the end of 2010, after which growth rate of mobile subscription is expected to decline.

In addition, Indian operators have been struggling with falling monthly billings because the new additions are coming from semi-urban and rural areas where subscribers are not willing to spend more than Rs 100-Rs 200 a month on mobile usage. Therefore, even though the mobile user base is expected to increase from 400 million at present to 900 million by 2013, operators are not betting on a proportionate increase in revenue generation.

Mouth-watering proposition
In comparison, other emerging markets such as Africa, Latin America and West Asia offer a mouth-watering proposition. These markets are at the point where India was in 2003. The telephone penetration levels there are low which means huge potential in terms of higher subscriber addition. The African telecommunication market, for example, is estimated to grow at roughly 40 per cent and is expected to continue to show higher growth for much longer period after the Indian market stagnates.

Also, the average revenue per user is much higher at Rs 600 in these emerging markets compared to Rs 250 in India. By foraying into such territories, Indian companies can hope to cash in on higher margins.

The domestic merger and acquisition norms have also made it impossible for existing telecom companies such as Bharti and Reliance Communication to acquire other large operators within India. On the other hand, a deal with South Africa’s MTN will give Bharti access to nearly 100 million subscribers across 21 countries.

However, Indian companies also have to deal with challenges related to higher cost of acquisitions, different regulatory environments and competition from European and Chinese telecom majors which are also eyeing these emerging markets.

Mixed success
So far, Indian players have had mixed success in their attempts to go global. While Bharti Airtel, Tata Communications and Reliance Communications have had a fair share of success in the long-distance segment through acquisition of cable networks, including Tyco Global and FLAG, they have failed to acquire telecom licences in countries such as Qatar, Kenya and Saudi Arabia. The reason for the partial success has primarily been the pricing of the acquisitions. Most of the successes for Indian telecom players have come in cases where the deal came cheap.

For instance, both Tata Group and RCom acquired Tyco Global and FLAG respectively when the global undersea cable market was facing a bandwidth glut. In 2004, Tata paid just $130 million to acquire Tyco Global Network, which had 60,000 km of cable spread across three continents. Similarly, Bharti bagged licences for Seychelles in 1998 when mobile services were just beginning to reach consumers.

Competitive bidding
However, Indian telcos have lost out whenever competitive bidding has taken place. For example, Bharti and Reliance lost out in the race to acquire a licence in Saudi Arabia after Kuwait Mobile Telecom Company bid a whopping $6 billion. Indian operators also lost out to France Telecom when 51 per cent of Telkom Kenya was up for grabs. France Telecom coughed up nearly $400 million for 2.8 lakh fixed-line telephone subscribers.

Since Indian operators are already working on thin margins, given the low tariffs in the country, they cannot afford an expensive buy to maintain profitability. The other reason is that home-grown operators are still small in scale compared to global giants such as Vodafone, giving them a lesser chance of winning a competitive bid.

One advantage that Indian operators have is that they have mastered the game of working on high volumes, building economies of scale, and cost management through innovative outsourcing deals and infrastructure-sharing agreements.

Bharti’s talks with South African major MTN, if successful, will take the low-cost business strategy to a new level. Markets such as Africa are also similar to that of India — predominantly agriculture-based with a large rural population — which again works to the advantage of Indian operators. The Bharti-MTN deal, therefore, could show the way to other Indian players.

Companies such as Reliance Communications, MTNL and BSNL have been eyeing countries such as Tunisia, Egypt, CIS and the Gulf region to expand their footprint.

For a company such as MTNL, foreign markets offer an opportunity to go beyond Delhi and Mumbai. The PSUs profits have been dipping over the past few years and the company is, therefore, betting big on the foreign telecom forays.

Showing the way
But the window of opportunity is closing fast. Most of the emerging markets in the African continent, for instance, are already controlled by European players such as Vodafone and France Telecom. The Bharti-MTN deal would create a most formidable rival there. Other Indian operators looking for a similar deal still have options such as Kuwaiti-based Zain, which is in 24 markets across Africa and West Asia and may be a bid target. The Egypt-based Orascom, which has operations in 11 countries, could be another possible partner. Then there are regional players such as Telekom SA, which may be open to a possible alliance. Partnering with an Indian company will also give these foreign operators a foothold into the fastest growing market in the world.

Bharti Airtel’s $23-billion deal with MTN, if successful, may spark the consolidation of mobile phone markets across Africa and West Asia. But Indian operators may have to move fast if they want to continue the telecom growth story.

Mobile operators cross connections over 11-digit number plan

Ishita Russell / New Delhi May 25, 2009, 0:14 IST on Business Standard

Differences are growing among mobile operator lobbies over a government proposal to introduce an 11-digit access code in place of the existing 10-digit code from January 2010 for mobile services to accommodate a rapidly growing subscriber base.

Meanwhile, the government has also amended the national numbering plan to allow sub-levels of 8 to be used as access codes for mobiles. This means that from February 9 this year, mobile numbers may also start with the number 8.

The need for a new numbering plan has arisen because India’s mobile subscriber base has grown at a faster pace than expected. The numbering plan that is applicable now was formulated in 2003 on a forecast of 50 per cent tele-density by 2030. This made numbering space available for 750 million telephone connections, comprising an anticipated 300 million basic and 450 million cellular mobile connections.

With India adding over 10 million mobile subscribers every month, the country is already just short of 400 million mobile subscribers and the telecom penetration level stands at over 37 per cent. Therefore, the Department of Telecommunication (DoT) has had to re-examine plans to accommodate more subscribers.

GSM-technology service providers, which account for the bulk of mobile services in the country, welcomed the addition of the 8 level but objected to the 11-digit numbering plan, saying it would inconvenience incumbent subscribers.

“The increase of one digit in the existing numbers is unnecessary; there is a sufficient quota of numbers. The opening up of the sub-levels of 8 has also created new options for numbering,” said T V Ramachandran, Director General, Cellular Operators’ Association of India (COAI), the GSM operators’ lobby which represents such service providers as Bharti and Vodafone.

COAI has contended that in addition to the 98, 99, 93, 94, 92 and 97 codes in use by mobile phone operators, the 91 code is vacant and can be used as can the 96 code, which was meant for pagers.

Also, DoT has allocated exclusive two-digit codes to three operators — 92 for Tata Tele, 93 for Reliance Communications and 94 for BSNL (all three provide CDMA and GSM services), a move that has also been opposed by COAI since other operators have do not have exclusive codes. “DoT should also open up these numbers,” said Ramachandran.

Agreeing with COAI, telecom analyst Mahesh Uppal said, “Although 11 digits mean that you have nine billion more numbers to allot, it also means that it is more inconvenient for the consumer at the end of the day”, especially since the existing 400 million-odd subscribers will also have to change their numbers.

“Other options like the 8 sub levels should also be explored to avoid confusion,” he added.

CDMA operators, however, say opening up sub-levels of 8 is not enough for the industry that adds over 10 million subscribers to its base every month and an 11-digit numbering is necessary.

“There are already about eight established players in the telecom space and at least three more will be added during the year, so we will need more numbers to cater to the expanding mobile subscriber base,” said S C Khanna, secretary general of CDMA lobby Association of Unified Service Providers of India.

This is not the first time phone numbers will be modified in recent years. A few years ago, the government had added the number 2 in front of all BSNL and MTNL fixed line phones across the country.

DoT puts 3G, TCIL stake sale on Cabinet panel’s agenda

Thomas K Thomas on The Hindu Business Line on 22 May 2009

New Delhi, May 21 The Department of Telecom has listed five issues on the agenda for the new Cabinet Committee on Economic Affairs including finalising the reserve price for 3G auction and sale of stake by Telecommunications Consultant of India Ltd in Bharti Hexacom.

The other issues for which DoT has sought decision from CCEA includes a proposal to allocate Rs 450 crore for setting up a interception and monitoring system and revival of Tamil Nadu Telecommunications Ltd. Provision of equal pensionary benefits to the absorbed employees of MTNL as available to employees of BSNL has also been listed for consideration by the CCEA.

Of the five issues listed by DoT, the most important one for the telecom sector will be the reserve price for 3G services. DoT had initially proposed to set the base price at Rs 2,020 crore for 5 Mhz spectrum pan India. This was, however, objected to by the Ministry of Finance as it wanted to earn higher revenues from selling spectrum. The Finance Ministry had suggested to double the base price to over Rs 4,000 crore.

To resolve the issue, DoT took the matter to the CCEA which, in turn, asked a Group of Ministers to find a consensus. In the case of TCIL, DoT had given its approval to divesting its 30 per cent stake in Bharti Hexacom, a company which offers mobile services in Rajasthan. The stake sale has been hanging in the balance for more than three years. In this case too, the Department of Economic Affairs had raised apprehensions over the proposed sale on the grounds that with the ongoing economic turmoil, the government may not be able to get the right value for its stake.

Bharti to launch sub-Rs 8,000 Net PC

Leslie D’Monte / New Delhi May 22, 2009, 0:14 IST on www.business-standard.com.

Low-cost computing and broadband penetration in the country is expected to get an added boost, with India’s largest telecom operator, Bharti Airtel, launching a low-cost online computer powered by Microsoft and Nivio.

The Airtel Net PC is a plug-and-play online computer, inclusive of a 15-inch LCD monitor, keyboard, mouse and Nivio companion (which enables the PC to connect to a backend Linux-run server for storage and applications) and priced at Rs 7,999 exclusively for Airtel broadband customers.

It will initially be available at Airtel Stores and NEXT Electronic Stores in Delhi, Gurgaon and Noida from tomorrow. If customers do not want the monitor, the package costs Rs 4,999.

The hardware and software (genuine Windows XP) for the Net PC is being provided by Nivio, while the internet connection provided by Airtel. The Net PC consumes only around 5-10 watts of electricity. Airtel will provide 10 GB space to store documents, photos, presentations at a central location (Airtel’s own data centres), and regular original software upgrades, according to K Srinivas, joint president, Bharti Airtel.

The Net PC (also referred to as the Network PC) is an industry specification for a low-cost personal computer designed primarily for internet use and small businesses. They are also sometimes known as thin clients, since they are light weight and lack CD-ROM drives or hardware expansion slots. There are limitations, though. Users, for instance, cannot download software on the Net PC nor are these low-cost machines meant for playing games.

“It costs only around Rs 9,000 (including taxes and installation) as a one-time investment with no recurring costs on maintenance/upgrade, etc. Moreover, there are no upgrades required, since the computing power is provided by the globally distributed NivioGrid. There are no data loss worries since all the data is backed in the NivioGrid in real time. And it’s really portable, since the user can also access any work s/he does from any internet-connected computer around the world. It is like accessing a web-based email,” says Srinivas.

Airtel, according to Srinivas, is initially targeting around 1 million subscribers (its existing broadband customer base plus new customers). “We expect first-time buyers of computers to go for these Net PCs. Additionally, households that have kids may opt for these machines instead of investing in pricey computers. Moreover, there are small businesses which can use these Net PCs to only pay for services and applications they need. They need not worry about viruses, crashes or security since we take care of the backend,” says Srinivas. Airtel expects to have a pan-Indian rollout (beginning with the metros and 25 towns) once “we gauge the initial response and iron out the glitches, if any”.

Chennai-based Novatium Solutions had earlier launched the Nova netPC and has tied up with BSNL, MTNL and Tata Indicom for broadband services. It expects to have 200,000 subscribers nationally for its Nova netPC by the end of this fiscal. Nova netPC is currently available in Kerala, Uttar Pradesh, Tamil Nadu, Bangalore, Cuttack, Bhubaneswar, Haryana, Lucknow and the North East telecom circle. It is also available in some regions of New Delhi through a tie-up with MTNL. The company hopes to roll out the service across the country soon.The product uses a globally-patented desktop utility delivery model (DUDM) and supports Linux, Mac and Windows operating systems. The netPC is priced at Rs 2,999 excluding taxes, installation charges and the cost of the computer monitor (which works out to a pricing that’s similar to Airtel’s).

Bharti, Infy, TCS, Wipro among world’s top tech cos

Press Trust Of India, New York, May 22, 2009

Telecom player Bharti Airtel and IT firms Infosys, TCS and Wipro have made it to the list of 100 best performing technology companies in the world, compiled by American magazine BusinessWeek.

The ‘Infotech 100′ list for 2009, based on shareholder return, return on equity, total revenues, and revenue growth is topped by Amazon.Com for the second straight year.

Ranked at the sixth position, telecom giant Bharti Airtel leads the pack of Indian companies featured in the list. The three IT majors – Infosys, TCS and Wipro find a place in the top 50. Infosys is ranked 25, TCS is at the 30th spot and Wipro is placed at the 43rd position.

The “2009 ranking of the tops in tech showcases companies that managed to thrive even in the face of a bruising global recession,” the magazine said. At the second spot is Oracle followed by SAP (3), Inventec (4) and IBM (5).

Two American entities led by India-origin CEOs also find a place in the top 100. Francisco D’Souza-led Cognizant Technologies is ranked 51 while Adobe Systems headed by Shantanu Narayen has cornered the 99th spot.

Bharti Airtel is ahead of South African telecom entity MTN Group (12th rank), maker of Blackberry phones Research In Motion (14), technology giant Apple (19), software major Microsoft (22) and Google (37), among others.