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.

BSNL scouts for pvt partners for Internet Data Centres

The Hindu Business Line on 31 May 2009

Thomas K. Thomas

New Delhi, May 30 Bharat Sanchar Nigam Ltd has invited bids from private players to set up Internet Data Centres (IDCs) in various parts of the country on a revenue sharing basis.

The centres are expected to be set up over the next six months after which the PSU will go for outsourcing contracts for services such as Web hosting, co-location, data warehousing and Internet managed services.

A data centre is a facility where customer can outsource the management and day-to-day operations of their Web sites or other IP connected applications. Customers can purchase the server hardware, rack space, bandwidth and network equipment. In addition, customers get a secure place to physically house their equipment with regulated power, dedicated Internet connection, security, and fire detection equipment.

Although some companies have chosen to address their requirements in-house and to maintain complete control over their Internet Infrastructure, the pressures of provisioning IT Infrastructure are increasingly leading a lot of corporate houses to consider outsourcing their e-business infrastructure requirements.

Private telecom players such as Reliance Communications and Tata Communications are already offering such services. Then there are Internet Service Providers such as Sify which are also in this segment. These private players may bid for the BSNL project.

According to the expression of interest floated by BSNL, the private partner will have to invest the entire amount required to set up the IDCs. BSNL will provide its national communication infrastructure as the backbone for the proposed centres.

As part of the shared hosting services, BSNL plans to bundle in free email accounts, depending on the package customer subscribes to.

“Outsourcing the management and monitoring of mission-critical Internet operations is crucial for stability in an increasingly complex networking environment. Beyond the sheer complexity of infrastructure itself, the uncertainties of ever-changing relationships with telcos, Internet Service Providers (ISPs), and rapidly changing technologies often render it difficult for businesses to make the best choices. BSNL’s managed services will provide cutting-edge industry expertise to speed up the time-to-market, in the most cost-effective manner,” said a BSNL official.

The PSU is also planning to offer messaging solutions which will enable customers to outsource their entire e-mail operations.

BSNL has been increasingly adopting the public-private partnership model for its new services. It has, for example, partnered with Soma Networks for offering WiMax based broadband services in three States. Similarly, the PSU has roped in HFCL to roll out its IPTV services.

Analysts said that the franchisee model lowers the risk and cost for the PSU since the private partner invests all the money required for the project.

Atom technologies Ties Up With Sahayata

From http://www.efytimes.com on 30 May 2009

Saturday, May 30, 2009: atom technologies has announced the formalisation of its association with Sahayata, a micro-finance institution (MFI) headquartered in Udaipur, Rajasthan recognised for working in the area of socio-economic development of women from weak economic backgrounds. atom’s m-collections solution model will provide Sahayata with a fully developed mobile solution for distributing loans and managing collections of loan repayments.

Sahayata provides micro loans to rural women, who women are self-employed and operate small businesses to support there livelihood. As these women are located in deep rural areas, it’s very difficult for Sahayata to reach them for disbursal tracking and loan repayment collection. atom’s mobile based m-Collections solution provides better reach to these geographical locations by using mobile connectivity.

Sahayata’s employees i.e. Sahayaks carry Java MIDP 2.0 mobile handsets with m-collection application loaded in it. This application helps them connect directly with the backend operations of Sahayata for real-time transaction recording to speedup the process.

“I am sure our m-collections application will help Sahayata reach out efficiently in those rural areas, who are really in need of micro-credit for their continuous livelihood,” said Dewang Neralla, director, atom technologies.

“We are happy to be associated with the dedicated and intellectually gifted team at atom technologies, and look forward to optimally utilising their customised mobile solutions for microfinance to the benefit of our customers by providing them with a best-in-class service experience,” explained Ajay Verma, managing director and CEO, Sahayata.

MVNOs get nod to start ops

30 May 2009, 0010 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: The Telecom Commission, the highest decision making body of the communications ministry, on Thursday cleared the proposal to allow Mobile Virtual Network Operators (MVNO) to launch operations in India.

MVNOs offer mobile services without owning cellular networks or airwaves (spectrum) on which telecom signals travel. Their business model involves buying airtime from existing operators that own telecom infrastructure and selling it to consumers under their own brand. Companies, such as the UK-based Virgin Mobile, British Telecom and Japan’s KDDI, have based their telecom strategy on MVNO model. Currently, there are over 300 MVNOs operating globally. The entry of MVNOs is set to further increase competition in the world’s fastest growing mobile market.

Following the commission’s approval, the government will soon issue a formal notification along with guidelines for MVNOs to operate in India. In August 2008, Trai asked the government to permit MVNOs and said that entry of such players would be a ‘natural progression towards enhancing free market principles and contributing to the efficient use of existing telecommunication infrastructure’.

So far, the communications ministry had been unable to release the guidelines for MNVOs, as the department of telecom (DoT) and regulator Trai had not found consensus on key issues. The commission, while clearing the proposal, has said MVNOs cannot go for multiple parenting in India. This means, an MVNO can tie-up with only an operator in an area for their services. On the other hand, an existing operator can tie-up with any number of MVNOs.

The commission also said that MVNOs would be given licences for a 20-year period.

DoT executives had earlier told ET that several MVNOs from across the world had shown interest in launching operations in India. The auctions of 3G spectrum and the launch of these high-end services is expected to serve as a catalyst and attract virtual operators to India, as many players that operate in this space globally specialise in high-end value-added services. Many of the new telecom companies, who were granted telecom licences last year, may partner with MVNOs, as it would bring them additional revenues and help contribute towards the creation of sizeable capital value especially in a sector where margins are razor-thin and further reduction of tariffs is not feasible.

Telecom policy awaits TRAI nod

30 May 2009, 0029 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: The communication ministry will seek telecom regulator TRAI’s endorsement before going ahead with the new policy, which will determine the allocation of additional airwaves to all existing telecom companies, a top government official said.

The spectrum panel, in its report submitted last month, had said that all telcos should be allowed to buy, sell and transfer airwaves for a fee, while adding that the country should adopt the internationally-accepted auction system for issuing additional airwaves to telcos. The panel comprised representatives of the government, telecom regulator TRAI, telecom technology experts and industry executives.

“We will send the panel’s report to TRAI. Since TRAI had earlier made recommendations on the issues addressed by the panel, we feel that their views should be sought on the report too,” telecom minister A Raja told ET. The panel had also suggested several changes in India’s telecom M&A norms to allow consolidation and had criticised the current policy stating that it had led to fragmentation of the sector by allowing about 15 players per circle.

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. The panel had said that only the start-up spectrum, which is the minimum amount of radio frequencies that is required to launch mobile services, should be given for free to existing telcos.

All subsequent allocations should be only through auctions, it said. As per the current policy, all telcos share 2-6% of their annual revenues with the government as a fee for using the radio frequencies allotted to them. The committee had said this fee should be a flat 3% irrespective of the quantity of radio frequencies that is held by a telecom company.

In another development, the communications ministry has also decided to oppose the finance ministry’s demand of doubling the 3G auction base price to Rs 4,040 crore. DoT has told the Prime Minister’s Office that the base price must not be higher than Rs 2,020 crore for pan-India 3G spectrum.

Differences between several ministries over the floor price for the auction of 3G airwaves and also over the number of players to be allowed to offer these high-end services in an area had forced the cabinet to refer the matter to a Group of Ministers just prior to the general elections. The auctions could not be held prior to the polls as GoM failed to meet to find a solution to these issues.

While DoT in its 3G policy has said that the base price for pan-India 3G spectrum would be Rs 2,020 crore and that for broadband access technologies, such as WiMAX, would be Rs 1,010 crore, the finance ministry had demanded that this price be doubled. The issue got further complicated as the planning commission, the department of industrial policy and promotion and the IT ministry opposed doubling of the base price.

RCOM joins the QIP queue

30 May 2009, 0136 hrs IST, ET Bureau

MUMBAI: Reliance Communications (RCOM) has joined the list of companies planning to raise funds through the Qualified Institutional Placement (QIP) route.

The country’s second-largest mobile service provider said on Friday that it will seek shareholder approval to garner funds from qualified institutional investors.either through a share sale or an issue of a variety of instruments including fully convertible, partly convertible or non-convertible debentures with warrants or any other security, it said in a statement to the stock exchanges. Although the company did not say how much it planned to raise sources close to the development said it may be around $500 million.

RCOM said the funds will be raised in one or more tranches. The proposed exercise shall not result in increase in the company’s paid-up capital by more than 25%, it said. RCOM said the funds may be utilised to finance the company’s plans to participate in the upcoming auction of frequency spectrum for 3G and Wi-Max services. A banking source said Reliance Infrastructure, another firm which is part of the Anil Dhirubhai Ambani Group (ADAG), may also opt for a similar exercise. A spokesperson for the group, however, denied any QIPs by RCOM and R-Infra when ET had sent him a query on last Friday.

HC slams spectrum allocation policy

30 May 2009, 0233 hrs IST, TNN on http://www.economictimes.com

NEW DELHI: The Delhi High Court on Friday slammed the government’s first-come, first-serve spectrum allocation policy in the telecom sector and equated it with selling “cinema tickets.”

Days before telecom minister A Raja is to take charge for the second time in Sanchar Bhawan, a division bench comprising Justice Mukul Mudgal and Justice Valmiki Mehta expressed deep reservations with the telecom policy. While hearing a petition challenging the spectrum allotment policy of the government, the HC said, “prima facie we find that spectrum has been allocated in a worst manner and public exchequers have lost thousands of crores (rupees).”

Its observations came after the DoT counsel failed to give satisfactory reply to the question, as to how much spectrum the government has allotted and how much remained with it. “We find it very strange that public exchequer and valuable resources have been involved and misused in this way. … We are completely astounded,” the judges remarked, clearly unhappy with the manner in which the policy was framed.

The ministry has been in the eye of storm for allocating spectrum on first-com e, first-serve basis.

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.

Interview with the new Telecom IT Minister

From The Hindu Business Line on 30 May 2009

New Delhi, May 29 The Communications and IT Minister, Mr Andimuthu Raja, expects telephone tariffs to come down to as low as 10 paise a minute for local calls and to 25 paise a minute for domestic long distance calls as a result of the decisions taken by him in the previous tenure.

Mr Raja, who has been appointed as the telecom minister for the second consecutive time, said that auction for third generation spectrum is on top of the agenda and should be completed in two months.

The Minister said that the decisions taken by him during the previous tenure to bring in more mobile operators should lead to lower tariffs. “Local calls at 10 paise a minute and inter-State calls at 20 paise a minute is my motto. I would work towards enabling world class telecom services to the masses at competitive and affordable rates,” Mr Raja said.

On the issue of auctioning 3G and broadband spectrum, Mr Raja said that he will soon take the policy to the Cabinet. He added that he expected higher revenue generation from 3G auction as a result of a revival in the markets.

For the IT sector, the Minister said that he will speak to the Prime Minister and the Finance Minister to extend tax incentives under Software Technology Park of India until 2012. Introduction of IT at the lowest level of governance will also be on the Minister’s agenda. “I want to make the functioning of the government offices paperless through the introduction of technology,” Mr Raja said. He said that his Ministry will promote manufacturing of electronic hardware in the country and encourage investments under the new semiconductor policy.

On the revival of postal services, the Minister said he will take measures to bring India Post at par with the global standards. Mr Raja will be assisted by two Ministers of State, Mr Sachin Pilot and Mr Gurdas Kamat.

Industry reacts positively

The industry reacted positively to Mr Raja’s appointment. Mr T.V. Ramachandran, Director-General, Cellular Operator’s Association of India, said, “There will be continuity in the positive measures which were being planned by the Communications Ministry. We are sure that Mr Raja will take effective measures to take Indian telecom sector to the next level of growth.”

Mr S.C. Khanna, Association of Unified Telecom Services Providers of India said, “We have always been supportive of Mr Raja’s policies. We hope that he will continue to enable new players to emerge in the market. He should allocate up to 6.2 Mhz of spectrum to the new players instead of 4.4 Mhz as is being suggested.”

The Internet Service Providers said that the Minister should re-look at opening up net telephony because it is in line with the stated objective of bringing affordable communication to the masses.

“It is good that Mr Raja has got another innings as the telecom minister. He understands the sector well and knows what needs to be done from day one. Any new person would have had taken time to study the various reform measures required for this sector,” said Mr Rajesh Chharia, President, Internet Service Providers Association of India.

Mr Raja is expected to take charge of the Ministry next week as he along with other Cabinet Ministers from the DMK party have gone to Chennai.

India To Have 492 Million Mobile Phone User By End-2009 – Indus Body

From http://www.nasdaq.com on 29 May 2009

NEW DELHI -(Dow Jones)- A cellular industry body Wednesday said it expects India to have some 492 million mobile phone users by the year-end, compared with 392 million at the end of March.

The Cellular Operators Association of India – which represents more than a dozen telecommunications companies offering GSM services – expects the industry’s mobile subscriber base to reach close to 900 million by 2012.

GSM is short for global system for mobile communications technology, and three of four of India’s 391.76 million users are on this platform.

“Even with the subscriber base of 900 million, the teledensity would be just 72.4%,” COAI said.

Bharti Airtel Ltd., India’s largest telecommunication service provider by number of subscribers, had some 96.73 million users at the end of April.

FRC 101: RCom’s New Scheme For GSM Subscribers

On www.efytimes.com on 29 May 2009

Friday, May 29, 2009: Reliance Mobile GSM Service has launched a new FRC priced at Rs 101 for all new GSM subscribers in Karnataka. The Rs 101 FRC is bundled with a core talktime of Rs 75 along with additional 100 local SMS with a validity of 30 days.

The launch of Rs 101 FRC is part of Reliance Mobile’s ongoing Customer Experience Programme. This offer provides special tariff to its subscribers offering calls to any Reliance Mobile GSM and CDMA at 30 paise/min, calls to other network at 60 paise/min and STD calling at Re 1.

The new Rs 101 FRC also offers Reliance Mobile GSM subscribers night calling to Reliance GSM or CDMA network at 5 paise/min applicable between 11pm and 6am. This FRC 101 is available until the end of June.

Tata Comm’s Prateek Pashine Joins WiMAX Forum Board

On www.efytimes.com on 29 May 2009

Friday, May 29, 2009: The WiMAX Forum has added Tata Communications as a new member to its board of directors. Prateek Pashine, chief operating officer, retail broadband unit, Tata Communications, will serve as the representative to the WiMAX Forum board.

“Electing Tata to the board demonstrates the WiMAX Forum’s commitment to the Indian market and signifies the company’s importance to the WiMAX ecosystem worldwide,” said Ron Resnick, president and chairman, WiMAX Forum. “As one of the leading global Internet and voice operators, Tata Communications has demonstrated its confidence that WiMAX is the leading 4G technology, and they have articulated their plans to bring broadband services to consumers in India through WiMAX.”

“The strong representation by global operators to the WiMAX Forum board shows how evolved the WiMAX ecosystem has become,” added Pashine. “Various researches have predicted that India will play an important role in the development of the Global WiMAX ecosystem, and we will bring that perspective to the forefront within the Forum. Markets like India have unique product and business model needs which we expect would lead the way for other markets and operators around the world.”

“I believe that India can soon be the largest market for WiMAX worldwide. Our goal is to develop a profitable business model and offer a range of affordable devices and services to our customers. As a member of the WiMax Forum board, Tata Communications can encourage accelerated development of low cost WiMAX technologies products,” added Pashine.

Prateek Pashine, COO, retail broadband unit, Tata Communications has been with the Tata Group since 1995. He is also currently the chair of the Wireless Broadband Alliance which is a global body involved in the expansion of roaming data services.

Currently, Tata Communications is an active member of the WiMAX Forum India Chapter (WFIC) and holds leadership positions in three of the chapter’s four working groups.The WiMAX Forum’s membership base represents a WiMAX ecosystem which supports the more than 472 WiMAX network deployments in 139 countries.

RCom may rope in Hrithik as brand ambassador

From Financial Express on May 29, 2009 at 1734 hrs IST

New Delhi: Anil Ambani-led Reliance Communications is planning to launch a Rs 150-crore advertising campaign for its nation-wide GSM services and is believed to be on the verge of signing Bollywood star Hrithik Roshan as its brand ambassador.

According to sources, Reliance Communications is planning a Rs 150-crore media campaign for its GSM services featuring its new brand ambassador, Hrithik Roshan.

Sources said the company is in the final stages of signing an endorsement deal with Hrithik, who would be the official face for the company’s mobile, data and DTH businesses.

When contacted, the company spokesperson declined to comment.

The three-year deal with Hrithik is believed to be worth over Rs five crore annually and excludes the fees payable for appearances and events, sources said adding the overall deal could touch Rs 10 crore annually. The new campaign is expected to be on air in the first week of June.

This is Reliance Communications’ first advertising campaign for its GSM service, which was launched on commercial basis in January 2009 and has since then added over 13 million subscribers.

Tata Tele says ‘Yes’ to M-commerce

On http://www.ciol.com/ on 29 May 2009

NEW DELHI, INDIA: Tata Teleservices has announced its partnership with ICICI Bank to offer mobile banking services to Tata Indicom subscribers registered for mobile banking with ICICI Bank. Now these customers can avail of banking services with just a click of the button. The subscribers can now manage their finances while on the move using their Tata Indicom mobile phone via iMobile, a Brew based application.

Elaborating on the tie-up, Zubin Jimmy Dubash, assistant Vice president, Tata Teleservices Limited, said: “By having the largest private Bank – ICICI Bank we have just moved one step further towards Mobile commerce. We are glad to partner with ICICI Bank to explore a highly efficient value added service for all our Tata Indicom customers. The mobile phone has enormous potential when used as a tool for financial services, it is likely to revolutionize the sector in a similar manner that the ATM did for banking and cash, years ago.”

With the initiative we aim at offering convenience of currently accessing ICICI Bank’s financial services with the help of Tata Indicom mobile. We are confident that, mobile banking will accelerate significantly in the coming years.” he added.

Tata Indicom through mobile banking application will allow its subscribers to transfer funds to any Bank account, Pay bills, top up prepaid mobile recharge. View account balances, last five transaction history, presented bills, credit card payment due date, etc. Not only this, the customers can also, locate an ICICI Bank branch, ATM and phone banking numbers. The service also provides the subscribers the opportunity to access the credit card, demat and Loans services, to name a few.

The iMobile application can be downloaded onto the handset through, BREW catalogue on our server on all the handsets. The customers need to have a data enabled handset that supports this application. The current handsets supporting the application are Samsung T Nimbus, Samsung Bliss, Samsung NX1 LG 6335, and Pantec 715, Samsung Max.

India is 2nd-largest CDMA market

29 May 2009, 0004 hrs IST, ET Bureau

MUMBAI: India has become only the second country in the world to have more than 100 million CDMA-based (code division multiple access) mobile phone subscribers after the US, which has 157 million CDMA users, according to an industry body.

While India overtook China to become the second-largest CDMA market, the country’s leading service provider Reliance Communications (RCOM) has become the second-largest CDMA service provider behind the USA’s Verizon Wireless, the CDMA Development Group (CDG) said here on Thursday. Tata Teleservices is ranked fourth in the list of top global players, behind China Telecom.

It took CDMA, which competes with the GSM (global system of mobile communication) platform globally, six-and-a-half years to reach the 100 million mark in India after being introduced in December 2002. GSM is much more popular, accounting for 80% of the global market, according to its promoter GSM Association. While there are 475 million CDMA users in the world, GSM standard is being used by over three billion people. In India, the GSM user base is close to 300 million.

CDG executive director Perry LaForge attributed the rapid growth of CDMA users in India to a wide selection of affordable devices and technologies offering CDMA voice and data services in urban and rural areas. “CDMA allows a rich telecom experience, especially on the data side, and we are confident that experience will only get better, especially as 3G arrives and we are able to unleash the full potential of applications and services,” Tata Tele MD Anil Sardana said.

In March 2009, both RCOM and Tata Teleservices launched high-speed mobile broadband services. “As we look to the next 100 million subscribers, CDMA mobile broadband is already satisfying the demand for affordable high-speed wireless data services while CDG initiatives will further increase the selection of CDMA voice and data devices,” Mr LaForge said.

Qualcomm, the makers of the CDMA standard, will bring the benefits of advanced CDMA technologies to India, its senior vice-president (India and South Asia) Kanwalinder Singh said.

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.

Govt to step up rural wireless connectivity

29 May 2009, 0050 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: The communications ministry has drawn up detailed plans to spend part of the Rs 25,000 crore in the Universal Service Obligation Fund (USOF).

The plans include setting up over 5,500 telecom towers in far flung areas, providing wireline broadband connectivity to all rural kiosks, rolling out WiMAX services in rural India, augmenting the optic fibre cable connectivity of the country and funding technology innovations.

From 2002, all telecom operators have been paying 5% of their annual revenues towards this fund, and so far, the unutilised amount in the USOF has crossed the Rs 25,000 crore.

Every consumer, who makes a phone call (mobile and landline) contributes towards the USOF. It has been a long pending demand of the industry to reduce or do away with the levy especially since studies by sector regulator Trai has shown that it would not cost more than Rs 12,000 crore to connect the whole of rural India.

The department of telecom (DoT) will soon invite bids from companies who run long distance networks where the government will fund up to 40% of the optic fibre expansion plans of successful bidders.

All telcos have long distance arms that carry STD traffic on optic fibre. An STD call on the mobile is first carried to the nearest telecoms tower and transferred along the optic fibre to the tower that is closest to the person who receives the call. But, telcos who receive support from the USOF for setting up towers and laying fibre must compulsorily share their infrastructure with other operators.

The DoT has also decided to fund the commercial rollout of products linked to improving quality of services or making telecom operations more economical. It has shortlised about 10 companies who have been asked to demonstrate their products on a pilot basis in rural India, following which it will fund the commercial rollout of successful pilots.

These companies include Telsima Communication for WiMAX services, Artheon Electronics, STM Softech, Radio Innovation Sweden, Vanu, Tulip IT services, Param Hasna System and software, Vedekon from Ukraine and Measurement & Controls India Ltd. Radio Innovation Sweden has been shortlised for its solutions that enable super economical coverage of GSM, Vanu for its multi-operator shared telecom towers concept, Vedekon for its WiMAX solutions.

The communications ministry is of the view that these new avenues to disburse this fund will help increase the country’s tele-density, especially in rural India. While the overall tele-density of the country is just under 40%, rural tele-density is still under the 10% mark.

Axiata rules out Idea stake hike

29 May 2009, 0157 hrs IST, ET Bureau

MUMBAI: Malaysia’s Axiata group (earlier Telekom Malaysia) is not looking at raising its stake in Idea Cellular. Any increase in Axiata’s stake beyond 20% will require the consent of promoter Aditya Birla group under the terms of the agreement signed by the parties in June last year.

“We are not in any way raising our stake in Idea Cellular. We are working together with the Idea management and the Birla group for growing the company. We are not mulling any open offer as well,” Axiata group executive director and CFO Yusof Annuar Yaacob told ET on phone from Kuala Lumpur.

Mr Yaacob said, “Our focus at the moment is to complete the merger between the two entities Spice and Idea. Once completed Axiata’s stake will be raised to about 20%. The existing agreement between Axiata and Aditya Birla group clearly stipulates that we can only increase our shareholding in Idea Cellular with prior consent from the Birla group.”

The two sides are awaiting court approvals for the merger, which is expected to be completed in the next four-five months. There have been reports that Axiata, post merger, will go for an open offer to increase its stake to 26%, which will give it veto powers. “There is no basis for this speculation,” a top Idea Cellular official said.

Idea scrip closed at Rs 78.65 on BSE on Wednesday, almost unchanged over the previous close of Rs 78.85. Axiata entered Idea after BK Modi-led Spice Communications agreed for a merger with the telco. Axiata held 39.8% in Spice. Idea acquired Spice in a three-step transaction, beginning with purchase of 40.8% from Modi group for Rs 2,700 crore. It, along with Axiata, then made an open offer to acquire 20% stake in Spice from other shareholder. Idea is also taking over 39.8% from Axiata by exchanging 49 Idea shares for 100 Spice shares.

Meanwhile, Axiata has acquired a 14.99% stake in Idea Cellular for Rs 7,300 crore. It would further increase the stake by about 4.3% on account of share swap and will end up with about 19.3% stake in Idea. Spice Communications will be de-listed post the completion of the merger. After the equity infusion from Axiata and merger with Spice, the Aditya Birla promoter group stake will come down from 57.7% to 46.5%.

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.

BlackBerry gets an Indian rival

29 May 2009, 1008 hrs IST, IANS on www.economictimes.com

MADURAI: The little-known maker of Red Chery – a mobile application used for receiving mails from free and corporate email accounts – is dreaming big: eating into a market straddled by BlackBerry of Canada’s Research In Motion and other similar service providers.

To make this happen, the Rs 15-crore software product company, AJ Square Consultancy, is banking on an aggressive pricing strategy, and hoping to rope in two million (20 lakh) subscribers by this fiscal-end.

“With an average revenue per subscriber of Rs 110 per annum, which is about a tenth of what existing players charge, we hope to earn around Rs 22 crore from 20 lakh subscribers by the end of this fiscal. We may even offer this service free at a later stage,” AJ Square managing director Boaz Augustin said.

Like other similar products, Red Chery is a mobile application used for receiving mails from any of the free email accoun accounts (Yahoo, Gmail, Hotmail and Rediffmail) and corporate email accounts (MS exchange and IBM Lotus servers) on a mobile handset.

“Red Chery is platform, telecom and mobile instrument independent. One can read emails like a short messaging services,” Augustin added. AJ Square will be focussing on the corporate sector to push Red Chery. According to Augustin, the company will offer services in Singapore and Europe once it stabilises its Indian operations and gets venture capital to the tune of $25 million.

“We are open to dilute up to 45 per cent stake.” The 200-employee Madurai-based AJ Square is into development of e-commerce and gaming software for European companies.