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

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

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.

Unitech unit to launch mobile svcs in Dec qtr- Telecom-News By Industry-News-The Economic Times

Unitech unit to launch mobile svcs in Dec qtr

via Unitech unit to launch mobile svcs in Dec qtr- Telecom-News By Industry-News-The Economic Times on June 16, 2009

NEW DELHI: The telecoms unit of Indian developer Unitech Ltd will launch mobile services with Norway’s Telenor in the December quarter this year, Unitech Ltd’s managing director said on Tuesday.

Unitech Wireless, in which Telenor is taking a 67 percent stake, has got wireless spectrum in 21 service areas, excluding Delhi, in the world’s fastest growing wireless market, Sanjay Chandra told reporters.

SSTL hopes to break even in 3 years: Dy CEO

4 Jun 2009, 0006 hrs IST, Rashmi Pratap, ET Bureau

MUMBAI: Telecom company Sistema Shyam Teleservices, which is launching CDMA-based mobile services across the country, hopes to be able to pay for all its operating expenses within three years despite intense competition from a dozen other players in the market.

The joint venture between Russia’s Sistema and India’s Shyam Group is expecting to start generating enough money to be left with cash in hand after servicing debt by FY 2013.

Sistema-Shyam’s guidance on profits is interesting because analysts tracking the sector believe new players may not be financially strong and could be prime targets for acquisition. Deputy CEO T Narasimhan said Sistema Shyam will be able to break even by FY12 as there was still a lot of potential left in the India growth story.

“India is a huge market and remains under-penetrated. The cellular growth story is still unfolding and we have already roped in one million users,” he said. Sistema Shyam operates in Rajasthan, Kerala, Tamil Nadu and Kolkata, with spectrum for a pan-India operation. Both telecom operators and investors are bullish on the Indian market that has 400 million users in a population of 1.15 billion. New entrants like Loop Telecom, Datacom Solutions and Unitech-Telenor are expected to soon roll out their services.

According to UBS analyst Suresh A Mahadevan, new operators face challenges of brand building, distribution, organisation building, negative free cash flow, and scale. “We conclude it will take four to five years for EBITDA to break even and seven to eight years for net profit to break even,” he stated in a recent report on the sector.

Sistema Shyam CFO Sergey Savchenko said it is too early for the company to give any revenue targets as it is still rolling out operations and building scale.

“However, we do not see any difficulty in terms of finances. We hope to turn free cash flow positive in four years from now,” he said. He said this was possible because the company could reach the market in a very short time by sharing passive infrastructure.

“It takes time to set up your own towers. We have instead tied up with various operators for sharing passive infrastructure across India,” Savchenko said.

The company’s overall investment of $5.5 billion includes operating expenses like rentals for towers also. “Not all of it is capex. It has our opex too,” he added.

“Our tower portfolio will have 20% of our own towers while the rest will be in tie-up with other operators. This increases operating expenditure but reduces the roll-out time, and it is a huge saving,” he said. He ruled out any changes in the company’s shareholding in the near future. Recently, the Russian government bought a stake from Sistema in the company. Currently, Sistema has 73.7% share, Shyam group 23.8% and the public 2.5% in the company.

COAI Gets New Executive Council For 2009-10

From http://www.efytimes.com on June 02, 2009

Tuesday, June 02, 2009: The Cellular Operators Association of India (COAI), the main telecom industry lobby group of India, has announced a new executive council which has taken over the reins of the industry association. Suneeta Reddy, chairperson, Aircel Ltd and vice chairperson, COAI has been appointed as chairperson of COAI. Also Sanjay Kapoor, deputy CEO, Bharti Airtel has now become the vice chairperson of COAI for 2009-10.

During the COAI Annual General Meeting held on 29 May 2009 at New Delhi, outgoing chairman Asim Ghosh thanked the members for their unwavering support during his tenure as chairman. He reminisced fondly about his long association with the industry and the several challenges that the industry had faced and overcome in the last decade.

Ghosh noted that 2008 was a landmark year for the Indian industry as it had reached global scale. He pointed out that the job was never done and there would always be challenges ahead. He thanked Suneeta Ready for her support as vice chairperson, the executive council and the secretariat team for their efforts and contributions and wished them all the very best for the future.

Suneeta Ready, the chairperson elect, thanked the members for the trust and faith reposed in her. She emphasised that COAI had always stood for inclusive growth. She pointed out that the agenda for industry for the next 12 months included ensuring availability of adequate 2G spectrum, an early auction of 3G and BWA spectrum to facilitate the leap to the next generation of services, bridging of the digital divide, improving the financial viability of the industry and making it globally competitive.

Suneeta pointed out that with the imminent introduction of mobile number portability, the SIM card would become like a vote that could be exercised anytime by the consumers, and the industry should make all efforts to ensure that mobile is viewed as a service that adds value to the consumers lives.

The main members of COAI are: Aircel Ltd, Bharti Airtel Ltd, Datacom Solutions Pvt Ltd, Idea Cellular Ltd, Loop Mobile Ltd, Reliance Telecom Ltd, S Tel Pvt Ltd, Swan Telecom Pvt Ltd, Tata Teleservices Ltd, Unitech Wireless Pvt Ltd and Vodafone Essar Ltd.

Story at Financial Express on 30 May, 2009

New Delhi: The COAI Annual General Meeting held at New Delhi saw a smooth transition with the new Executive Council taking over the reins of the industry association.

The event saw the General Body ratify the nominations of Ms. Suneeta Reddy, Chairperson Aircel Ltd. and Vice Chairperson, COAI as Chairperson, COAI and Mr. Sanjay Kapoor, Deputy CEO, Bharti Airtel as Vice Chairperson of COAI for 2009-2010.

The nominations for the Executive Council were also ratified by the General Body.

Outgoing Chairman, Mr. Asim Ghosh thanked the members for their unwavering support during his tenure as Chairman. He reminisced fondly about his long association with the industry and the several challenges that the industry had faced and overcome in the last decade. He also noted how 2008 was a landmark year for the Indian industry as it had reached global scale. He pointed out that the job was never done and there would always be challenges ahead.

DoT against lock-in for promoters equity; mergers on cards

31 May 2009, 1053 hrs IST, PTI on http://www.economictimes.com

NEW DELHI: The fast growing telecom sector is set to witness another round of mergers and acquisitions

with the DoT recommending against lock-in of promoters’ equity, saying this would only hamper growth and competition.

The committee for finalising the views of the Department of Telecom (DoT) on lock-in period for promoters’ equity is understood to have submitted its report in this regard.

“Despite exponential growth and intense competition, the telecom industry even after 15 years of operation is cash flow negative. Capital efficiency of the sector is an important pre-requisite for achieving consumer interest in a sustainable manner.

“Further growth and coverage of the rural and remote areas would entail huge investments. Against the backdrop of economic downturn, it is a challenge to raise investible funds, and there is a need for valuable foreign investments,” the committee said.

“The lock-in period will only hamper growth of telecom market and competition,” it added.

The issue of lock-in period was raised as some of the new players inducted new partners to garner funds for rolling out network across the nation.

If accepted, this would lead to consolidation of telecom industry and according to analysts the business of mobile services may not be commercially viable in case there are more than four or five operators in a circle.

At present, there are eight to nine mobile operators in each circle and with the teledensity especially in the urban areas crossing 30 per cent, the commercial viability of players is at stake.

The committee also observed that the concept of fly-by-night operators has not been experienced in the telecom arena so far, the report of the committee said.

To call some licencees as fly-by-night operators for undertaking transactions, which are well within their licence terms, “is unfair and there is no need to impose any new condition on any of the access services providers,” it added.

The paid-up capital and networth requirement are prescribed to avoid non-serious and fly-by-night operators.

The committee, thus, recommended that there should not be any new condition regarding Lock-in of promoters equity on any access services licensees for development of telecom sector in India.

Although some of the new players like Unitech and Swan telecom have raised funds by issuing fresh equity to foreign partners but with this recommendation, if accepted, would help others including Datacom and Loop telecom to achieve roll out obligations faster.

Telecom tower cos find it futile to go solo

30 May 2009, 0308 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: The days of standing tall are virtually over. India’s standalone telecom tower companies are crumbling under the crushing weight of a credit crunch, few new orders, and competition from the gigantic tower networks owned by mobile phone companies themselves.

A spate of mergers and acquisitions will certainly help a few standalone tower companies survive to tell the tale. But market watchers say without a serious makeover of their business model, it may be hard to ring in sustained profits.

Just a year ago, standalone tower companies were enjoying exceptional good fortune in the world’s fastest-growing telecom market. Backed by foreign private equity funds in a two-year-old sector, these companies had enough cash in their war chest to start looking for acquisitions and even expanding overseas.

But the global economic recession, which began to make itself felt from the start of 2009, rudely brought this dream run to a halt. Capital is now hard to come by in this investment-intensive sector, forcing smaller players to look for mergers and sellouts.

The M&A list is getting longer by the day. Xcel Telecom, which was incubated by Dallas-based $4-billion multi-strategy fund Q Investments, is looking for the exit door. Xcel itself had acquired Tics Telecom, a Punjab-based telecom infrastructure firm, for an undisclosed sum before selling out to Nasdaq-listed American Towers (ATC) for Rs 700 crore.

ATC is also in talks with Gurgaon-based tower company Independent Mobile Infrastructure that is present in 10 circles with 400 towers.

Essar Telecom Infrastructure, the country’s second-largest independent mobile tower company, has also approached ATC for a possible merger or even a complete sellout. This is not the first time, though.

Earlier, ETI, which owns over 4,500 towers, was talking with Tata-Quippo for a merger, but could not make much headway. Last year, ETI was on the verge of sealing a merger deal with GTL Infrastructure, but the $2-billion deal fell through at the last minute.

Even Quippo Telecom Infrastructure, which till recently was vying with GTL Infrastructure to be the country’s largest independent tower company, had to merge with the tower arm of Tata Teleservices in December 2008 to take on larger players. The newly-created company could boast of over 18,000 towers and commanded an enterprise valuation of about Rs 13,000 crore ($2.6 billion).

Other standalone tower firms too are headed this way. Executives in the tower business say, South India-based firms such as Aster Teleservices & TVS Interconnect Systems are also reportedly on the block. But earlier this week, an executive with private equity firm New Silk Route, which owns majority stake in Aster, denied his company was exiting the tower company.

So what went so spectacularly wrong? Has this sale season been triggered by a mere cash crunch or is it the symptom of a deeper fault line in the business that has cracked open with the first tremors of a crisis?

BK Syngal, senior principal, Dua Consulting, and former chairman of VSNL, says the primary reason is that the business model of small players has failed.

“Over the past two years, all major telecom operators have hived off their towers and other related infrastructure into separate companies. Standalone players who have between 3,000 and 5,000 towers cannot compete with the hived off tower arms of the telcos in terms of scale,” he said.

“Scale is precisely the reason why Quippo and the Tatas merged their tower arms. From about 22,000 towers currently, we are looking at a portfolio of over 60,000 within the next two years. No player with less than 60,000 will be able to survive in the market,” said QTIL group president and MD Arun Kapur. “You need such numbers to cover about 70% of the country’s geographical area,” he said.

It may be a Herculean task. Indus Towers, a three-way joint venture between Bharti Airtel, Vodafone Essar and Idea Cellular, has over 100,000 towers, making it the largest tower firm in the world.

Bharti Infratel, which holds Airtel’s towers in circles where Indus is not present, has close to 30,000 towers. Reliance Communications has consolidated its 48,000-plus towers in a new entity called Reliance Telecom Infrastructure while the recently established Quippo-Tata combine has over 21,000 towers.

New entrants in the mobile phone business prefer to tie up with these larger established players rather than sign on standalone tower companies as it reduces risk as well capital investment.

According to industry estimates, this model can reduce capex by up to 60% and rollout can be much faster. For instance, Telenor, which picked up 60% stake in Unitech Wireless, entered into a tower sharing deal with the Quippo-Tata combine. The latter is also talking to other new players Sistema-Shyam and S Tel for similar deals.

QTIL’s Kapur says new entrants choose larger players because it brings down costs significantly. “We are perhaps the only completely independent tower company that is not linked to any operator. We already have committed business from the Tatas, Telenor and several other players. The higher the tenancy rate, the larger the savings for telcos as the overall costs come down. When costs are down, we can invest more in technology, R&D and increasing efficiency,” he said.

But this has been a huge blow for standalone tower companies. The new orders they were banking on, did not arrive after all.

An senior executive, who recently quit an independent tower company, says the slide started in the second half of last year. “We rolled out towers and then waited for telcos to sign on. But over the past six months, telcos have chosen to go with established larger players to minimise risk,” he said.

The scramble by small and medium tower companies to sell out or seek mergers will only intensify in the days ahead. Industry analysts say the market will soon shrink to four or five large players who are backed by service providers. For smaller players, the dream of cashing in on the Indian telecom success is turning out to be shortlived.

Datacom, Sistema to offer $300 mn IT deals

29 May 2009, 0008 hrs IST, Jessica Mehroin Irani & Ranjit Shinde, ET Bureau

MUMBAI: Datacom and Sistema Shyam TeleServices, two new entrants in the telecom space, have shortlisted Wipro, Tech Mahindra and IBM for an IT outsourcing contract of close to $150 million each. This is a boon for the IT service providers at a time when the slowdown has resulted in a drop in the number of books.

Videocon-promoted Datacom has received licences in all the 22 telecom circles in India and is in the process of launching its operations. “Yes, the three (IT vendors) have been shortlisted and are competing for the contract. The deal value has not been finalised,” said VN Dhoot, chairman of Videocon group.

Sistema Shyam TeleServices, a joint venture between Russia’s telecom giant Sistema and India’s Shyam group, is in the process of launching CDMA operations in 18 circles. Though the company did not confirm the names of IT firms, a source in the know said that it has invited bids from the three IT vendors mentioned earlier for IT infrastructure-related services in these circles. Sistema Shyam has recently launched operations in Kolkata taking its total number of active circles to four.

While IBM and Tech Mahindra declined to comment on the development, Wipro officials were unavailable for comment. On the exact structure of the contracts, it was not possible to ascertain that from Datacom. However, Sistema Shyam in an e-mail response, said that it would be a fixed value, short-term contract wherein the IT assets would not be obtained on a lease, but would be acquired by the telco. The scope of work broadly includes data centre construction, applications management services and infrastructure hardware supply and support.

Sistema-Shyam has already outsourced its IT requirements for its existing four circles. “Key vendors, who are working on our various IT projects, are Sitronics, Tech Mahindra, IBM, HP, Wipro and Oracle. Since our IT is based on a centralised model, the projects are uniform for all circles and are not taken separately,” CEO Vsevolod Rozanov told ET.

The new domestic telecom operators have kept the order book running for IT companies that have been hit by the slowdown. Earlier, Wipro had bagged a large full IT outsourcing project from Unitech Wireless worth approximately Rs 2,500 crore over a nine-year period. Most of the new service providers are expected to launch their services in the next 12 months. “We expect operators, such as Unitech, Swan and Datacom to commence by July 2010 given the regulatory pressures,” said India Infoline’s telecom analyst Bhavesh Gandhi.

Unitech Wireless awards $500m network contract to Ericsson

29 May 2009, 0715 hrs IST, Sanjeev Choudhary, ET Bureau

NEW DELHI: Unitech Wireless, a joint venture between Norwegian telco Telenor and Gurgaon-based realty firm Unitech, has awarded a $500 million (Rs 2,500 crore) to supply and manage all network equipment for its rollout of mobile phone services in three telecom circles.

Ericsson will be responsible for managing the network for five years in service areas of Bihar, Eastern and Western Uttar Pradesh, said a Unitech Wireless executive, who asked not to be named. Ericsson and Nokia Siemens Networks were the front-runners for the contract.

Unitech Wireless, which is 67% owned by Telenor, has licences to operate in all 22 telecom circles across the country. The company will miss the July deadline for the launch of its telecom services, as it still doesn’t have the infrastructure in place.

“We have tied up for towers and equipment. But our marketing and distribution set up is still not in place,” said Unitech Wireless chairman Sanjay Chandra. The services will be launched by the year-end , he said.

Ericsson operates in 175 countries and reported a revenue of $27 billion in 2008. It builds and manages the networks of Bharti Airtel in large parts of the country.

Earlier, Unitech had awarded a fiveyear equipment supply and management contracts to French telco Alcatel-Lucent for about $150 million for Kerala and Orissa. Unitech’s $225 million contract for Karnataka, Andhra Pradesh and Tamil Nadu circles had gone to Chinese telecom equipment manufacturer Huwaei.

Unitech Wireless recently awarded a nine-year IT outsourcing contract to Bangalore-based Wipro for around Rs 2,500 crore. It has also signed an agreement with Tata Teleservices for the sharing of towers.

Telecom M&As set to touch $50 billion within a span of four years

27 May 2009, 0408 hrs IST, SHALINI SINGH, TNN on http://www.economictimes.com/

NEW DELHI: If Bharti Airtel’s proposed $23 to $29 billion merger with South African operator MTN goes through, India’s telecom M&A market will come of age either crossing or getting close to the $50 billion mark within a span of four years.

The telecom sector has seen greater M&A deals than any other segment in the country. Since 2005, 15 M&A deals have been struck, crossing a value of $25 billion. If Bharti pulls off a marriage with MTN, this number can cross $50 billion.

This also reveals that the size of Bharti-MTN deal will be roughly equal to or more than the last 15 telecom M&A deals in the country, though it is different since the transaction size is driven by share-swap rather than pure equity sale.

M&As in the Indian telecom sector started in the late 90s with companies like Bharti, Hutchison (now Vodafone), and Birla-AT&T (now Idea) starting to buy out smaller cellular operators with one or two circle operations. The first large M&A deal began with Tata Cellular merging with Birla-AT&T. This was followed by their acquisition of Escotel and RPG.

Bharti made multiple acquisitions in the late 90′s to 2002. Hutchison first acquired Facel in Gujarat, and then BPL, to expand its footprint in Maharashtra, Tamil Nadu and Kerala.

Of the 15 M&A deals struck since 2005, the largest was Vodafone 67% acquisition of Hutchison Essar for $13.66 billion which placed the enterprise value of Hutchison’s mobile footprint in India at $18.8 billion in 2007.

The second largest deal in terms of valuation was more recently, in December 2008, when NTT DoCoMo bought 26% of Tata Tele for $2.7 billion, representing an enterprise value of $10.38 billion for Tata Tele.

Many Indian companies have sold stakes on more than one occasion, and between 2005 and 2008 the valuations of these companies have steadily gone up. Tata Teleservices, which received a valuation of $10.38 billion from DoCoMo in 2008, was valued at a mere $1.27 billion by Temasec in August 2006 when it parted with 9.9% stake.

Similarly, Providence and TA Associates valued Idea Cellular at approximately $3.9 billion at 2006-end. Subsequently, in mid-2008, Telecom Malaysia gave Idea an enterprise value of $7.6 billion and acquired 14.9% stake.

Two of the most recent acquisitions include Telenor in Unitech and Etisalat in Swan neither of which had, at the time of the acquisition, any subscribers or operations in India. These deals were valued at $1.7 billion and $2 billion respectively.

It is clear that India is one of the most attractive markets representing huge growth potential over the next five years. DoT, in its latest spectrum report, has forecast one billion mobile consumers by 2014. This would mean an average addition of 10 million subscribers per month for the next five years.

It is also clear that no market in the world can sustain 12 to 13 operators per circle which is currently the case in India. It is expected that in line with the M&A deals over the last three years, further consolidation is on the cards in the near future. Most telecom experts forecast three to four national players with two or three regional operators over the next two to three years as average revenues per user decline, markets start to slowly saturate, and mobile telephony moves from the current land grab mentality to a fight for switching high-paying customers between competing mobile networks.

It is, however critical that for India to move to an efficient number of market players from the present overcrowding, the government immediately start to review its April 2008 telecom M&A guidelines which place severe restrictions on inter-circle mergers within the first three years.

Telecom sector leads M&A activity in India

Thomas K Thomas on The Hindu Business Line dated 27 May 2009

New Delhi, May 26 The telecommunication sector has been a significant driver of mergers and acquisitions (M&A) in India accounting for the highest share of deals at 18.6 per cent and 22 per cent during the last two years with values of $5.7 billion and $11 billion in 2008 and 2007, respectively. If the $23-billion Bharti-MTN deal goes through, then the trend is expected to continue this year as well.

Mr Bundeep Singh Rangar, Chairman, IndusView Advisors Ltd, says: “This one deal worth $23 billion will almost match the value of the 280 cross-border mergers and acquisitions last year at $25 billion. It marks the grand entry of India as an acquirer in the international telecom industry, just as previous years saw India Inc. buying into international steel, auto and IT industries.” The value of M&A deals during the first four months of 2009 totalled $2 billion.

There have been a string of investments in Indian telecom companies since last year. This includes the deals between Tata Teleservices Ltd and NTT DoCoMo, Inc.; Unitech Telecom and Norwegian telecom firm Telenor ASA at $1.36 billion; Swan Telecom and Emirates Telecommunications Corp (Etisalat) at $900 million; and Bahrain Telecommunications Co and S Tel Ltd for $225 million.

Next in line
The Bharti-MTN deal could trigger similar deals in the Indian telecom space. Other operators, including Reliance Communications, Loop Telecom, Datacom, Idea Cellular and Aircel, could be the next to strike a deal with a foreign player.

A number of international operators, including AT&T, Kuwait-based Zain Group, Qatar Telecom and Telecom Italia SpA, are looking to enter the fastest growing telecom market in the world. Analysts say that M&As in the Indian telecom space could pick up pace because on the one hand domestic players are looking at foreign money to fund expansion plans and on the other international operators are exploring ways to move into emerging markets with their home market reaching saturation.

Huawei Technologies revenue doubles in 2008

24 May 2009, 1117 hrs IST, PTI on http://www.economictimes.com

NEW DELHI: Chinese Huawei Technologies has clocked 100 per cent growth in revenue from India in 2008 at USD 1.3 billion and is eying to retain it’s growth momentum this year.

“From India, we had revenues of 1.3 billion dollar in 2008, a 100 per cent growth over 2007 and hope to clock a similar growth in 2009. We are engaged with everybody existing and the new operators”, Huawei Corporate Affairs Senior V-P Yao Weimin told media.

Recently we bagged a four-year contract from Unitech Wireless valued at 400 million dollar, Weimin said. The contract covers three circles in southern India– Karnataka, Tamil Nadu and Andhra Pradesh, he added.

The company also got 3G contract from Bharti Airtel for its Sri Lanka operations.

We are hoping for a substantial growth in 2009, Yao said. Huawei is learnt to have been selected for providing GSM equipment for southern region of BSNL. It was dropped from supplying the same to western region due to security concerns.

It has won contracts from private players like RCom, BPL Mobile and Sistema-Shyam. Last year, Huawei had bagged Reliance Communications

(RCOM) contract valued at Rs 2,000 crore for its nation-wide GSM roll out.

DoT panel opposes lock-in on stake sales

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

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

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

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

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

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

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

Telenor now holds 49pc stake in Unitech Wireless

On www.ciol.com on May 20, 2009

MUMBAI, INDIA: Norway-based Telenor completed the acquisition for a 49 per cent stake in Unitech Wireless.

Unitech Wireless said that it received a sum of around Rs 1,130 crore in aggregate from Telenor Asia Pte Ltd on May 19, for acquisition of further 15.5 per cent per cent stake in Unitech Wireless by way of issuance of fresh shares therein.

Taking into account 33.5 per cent stake acquired by Telenor in the first phase by investing Rs 12.50 billion, the total stake of the Norwegian company in Unitech Wireless shall be 49 per cent of its total issued and paid-up equity share capital, Unitech said in a statement to the Bombay Stock Exchange.

In addition, Unitech Wireless has received a sum of around Rs 2.4 billion from Telenor as share application money for issuance of additional equity shares in order to maintain its stake at 49 per cent, post conversion into equity of bonds of Rs 2.5 billion issued by Unitech Wireless to an Indian shareholder, it added.

Meanwhile, Unitech is in the process of selling a 67.25 per cent stake in Unitech Wireless to Telenor for around Rs 61.2 billion, ‘The Wall Street Journal’ reported.

MTNL has maximum spectrum at 12.4 Mhz in Delhi, Mumbai

19 May 2009, 1902 hrs IST, PTI on www.economictimes.com

NEW DELHI: State-run MTNL has received the highest amount of spectrum in Delhi and Mumbai at 12.4 Mhz as on March 2009 while private GSM operators Bharti and Vodafone are not far behind at 10 Mhz each in the same period.

Bharti and Vodafone have 10 Mhz each in Delhi. But most importantly, the private operators have got 8 Mhz each in the key 900 Mhz band while MTNL has got 6.2 Mhz on the same band. 900 Mhz is the most efficient band which can accommodate large chunk of subscribers. As per the data compiled by the Department of Telecom’s spectrum division, Idea has got 8 Mhz of spectrum on 1800 Mhz band in Delhi.

In Mumbai, MTNL has got 12.4 Mhz of spectrum with 6.2 Mhz each on the 900 and 1800 Mhz band while Vodafone has got 10.2 Mhz followed by BPL at 10 Mhz and Bharti at 9.2 Mhz. Host of new operators including Swan, Datacom, Unitech and TTSL have got 4.4 Mhz each.

BSNL holds 10 Mhz of spectrum in most of the circles it operate such as Kolkata, Maharashtra, Gujarat, Andhra Pradesh, Karnataka, Tamil (Chennai), Kerala, Haryana, UP (East & West), Madhya Pradesh, Himachal Pradesh, Bihar, Orissa, Assam, North East, Jammu & Kashmir.

Alcatel-Lucent bags $150m Unitech deal

On timesofindia.indiatimes.com 16 May 2009, 0124 hrs IST

France-based Telecom firm Alcatel-Lucent on Friday said it has bagged a five-year contract of about $150 million from Unitech Wireless, a telecom venture of real estate major Unitech, to support the launch of the company’s GSM mobile services.

According to the five-year contract, worth $150 million, Alcatel-Lucent would deploy GSM/Edge networks for Unitech in Kerala and Orissa circles, a company spokesperson said. Unitech Wireless, in which Norwegian telecom group Telenor has a majority stake, has licences to operate in all 22 circles in India. However, the company is yet to launch its services. Alcatel-Lucent will build Unitech Wireless’ network and provide operations management under a comprehensive services contract.

Telecom tariffs may fall 25% this year

Business Standard: Rajesh S Kurup / Mumbai May 4, 2009, 0:41 IST

The mobile tariffs in the world’s cheapest telecom market are set to fall further by at least 20-25 per cent during the year, more so due to increasing number of telecom operators and infrastructure overcapacity.

With local call rates at 33 paise (BSNL) and STD rates at 50 paise per minute (most mobile operators), the country has the lowest telecom tariffs in the world.

To begin with, the industry is expecting the new licensees (including Loop Telecom, Datacom Solutions and Unitech Wireless) to commence operations in this year itself. This coupled with the expected expansion of operations of existing players like Aircel Cellular, Idea Cellular, Tata Teleservices and Reliance Communications (RCom) will have an impact on the mobile tariffs.

“Whenever new entrants commence operations in the country, there is a high chance of reduction in tariffs as they come in with innovative strategies and prices, including freebies. This will increase competitive pressure on other players who will have to launch similar products to compete in the market. Moreover, apart from tariffs, the price reduction would also be extended to handsets,” European handset major Meridian India CEO Rajiv Khanna told Business Standard.

Another reason is an expected overcapacity in towers. The Telecom Regulatory Authority of India (Trai) estimates that the country needs around 300,000 towers by 2010 to support the massive 10 million monthly subscriber additions.

At present, the sector has around 2,75,000 towers. Operators like Bharti Airtel, Idea Cellular and Vodafone and independent tower companies like GTL Infrastructure and Indus Towers are increasing capacity and the 300,000-mark will be crossed much before the deadline, if not this year itself.

“The increase in the number of players will benefit the consumers in terms of newer enriched applications, choice and affordability. The on-ground traffic is increasing, but quality of traffic is not, clearly indicating that there is a need for more capacity. The tower infrastructure availability is going at comfortable speed. The industry will have to now think of ways and means of handling the increasing capacity proportionately, but more resource effectively,” GTL Chief Operating Officer and director Charudatta Naik said.

The recent slash in termination charges from 30 to 20 paise for domestic calls, which the operators have begun passing on to the subscribers, is also pulling tariffs down. Termination charges are the charges paid by one operator to another for terminating the calls on the latter’s network.

Moreover, the expected allocation of additional 2G spectrum and auction of 3G spectrum will also lead to a further rate cut. “The new government will have to allocate 2G spectrum to operators for additional expansion plans, while 3G auction will also take place immediately after the government coming into power. While some players would get 3G spectrum, others will slash prices to thwart competition,” a Mumbai-based analyst said.

However, the price reduction is not all that good. According to Idea Cellular Managing Director Sanjeev Aga: “Indian companies are rolling our predatory prices without conducting proper studies, unlike in the US or developed countries. Price reductions coming in from desperate companies are anti-competition and these are not based on economic sense, and in the long run this would be anti-consumer and anti-industry.”

In the short-term, it is the customer who will reap the benefits of the tariff fall.

Huawei India bags $400 mn Unitech order

12 May 2009, 2011 hrs IST, PTI

NEW DELHI: Chinese telecom network equipment major Huawei Technologies on Tuesday said its Indian arm has received a contract worth about $400 million from mobile operator Unitech Wireless.

Huawei India will deploy the end-to-end telecom network for Unitech’s telecom venture. “The contract, based on a milestone model, is spread over five years and is worth about USD 400 million,” the Huawei spokesperson told media.

The contract covers three circles in southern India — Karnataka, Tamil Nadu and Andhra Pradesh, he added. Unitech Wireless, which received licence last year to operate in 22 telecom circles in the country, is yet to launch it’s services.

Wipro set to bag another telco IT deal

9 May 2009, 1210 hrs IST, N Shivapriya & Rashmi Pratap, ET Bureau
MUMBAI: Wipro, which has already bagged two large IT outsorcing contracts from telcos, is among the shortlisted contenders for another large outsourcing deal, this time from Swan Telecom. The other vendors that have made it to the shortlist include IBM and Tech Mahindra. UAE-based operator Etisalat owns 45% stake in Swan Telecom.

If Wipro wins this deal, the IT major would have won as many large outsourcing deals from telcos as IBM. Earlier this week, Wipro announced a nine-year deal with Unitech Wireless estimated at Rs 2,500 crore. In January 2008, it bagged a $600-million deal from Aircel Cellular. This deal is expected to be as large as the Unitech Wireless contract, said industry sources.

IBM has large outsourcing contracts from Bharti Airtel, Vodafone and Idea Cellular. Till the Aircel deal, it had a dream run, bagging all the large deals from telecos. Close to seven vendors had bid for the Swan Telecom contract, but about four of them could be in the final shortlist, said an industry expert, who did not wish to be named. He said operators may prefer outsourcing to a player other than IBM for competitive reasons. “Wipro could be a favourite to win because IBM already has three large operators with it. So, new operators may prefer not to go with it. Tech Mahindra’s niche focus may work against it in such contracts because the operators want vendors with a broad area of expertise,” the expert said. Compared to Wipro, Tech Mahindra is also a relatively new entrant into the domestic market.

Swan and other new operators are negotiating their IT contracts ahead of their equipment orders. In a response to a query on the company’s IT outsourcing plans, a Swan Telecom spokesperson said: “We are currently in the preparatory stages and will announce our plans for the Indian market at the appropriate time.” In a response to an email from ET, Wipro said: “Wipro does not comment on speculations and as a policy, we do not comment on specific clients or business.” New entrants like Unitech, Swan, Datacom and Loop are liable to pay penalty if they don’t launch services even after 52 weeks of spectrum allotment. Beyond 52 weeks, there is a grace period of three weeks. “We evaluated Wipro on all parameters — financial and commercial — and found the company extremely competitive. Also, being new in the (telecom) vertical, they brought a lot of freshness in approach and innovative ideas. We went about it objectively and Wipro had the team and infrastructure to support the project,” Aircel COO Gurdeep Singh had told ET about why the company decided to outsource to Wipro.