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.