BSNL’s Nokia tender disqualification upheld

On 26 Aug 2009, 0041 hrs IST, Joji Thomas Philip, ET Bureau at http://economictimes.indiatimes.com/BSNLs-Nokia-tender-disqualification-upheld/articleshow/4934659.cms.

NEW DELHI: BSNL has overcome two major challenges in its attempt to award the world’s largest telecom contract, clearing the way for it to open price negotiations with the two companies it has shortlisted for the deal.

An ‘integrity panel’ set up with the permission of the country’s top anti-corruption body, the Central Vigilance Commission, has endorsed the state-run company’s decision to disqualify, on technical grounds, Nokia Siemens Networks from its Rs 35,000-crore tender to supply equipment for 93 million mobile phone  connections.

The Andhra Pradesh High Court, too, ruled on Monday that BSNL was justified in disqualifying NSN because it did not meet the technical requirements.

“We are glad both the integrity panel as well as the courts have cleared us of any wrong doing given the fact that there were allegations that we were not transparent with the selection process,” a top BSNL executive said. BSNL, the executive added, will immediately start price negotiations with China’s Huawei and Swedish company Ericsson. “The only possibility of this tender being further delayed is if NSN were to approach the Supreme Court.”

BSNL has been making huge operating losses in the past two years, only managing to stay in the black because of interest income from its accumulated cash reserves. It ran out of capacity to expand cellular services nearly 18 months ago and no new major contracts for mobile networks and equipment have been awarded in the past 24 months.

NSN said it has obtained the report of the integrity panel — whose members are former chief election commissioners TS Krishnamurthy and BB Tandon — and is “internally reviewing the contents.” A company official added that it has still not received the order of the AP High Court.

The panel was set up after NSN approached the anti-corruption body seeking a probe into its disqualification. It also filed petitions in the Delhi and Chandigarh High Courts as well as the AP High Court. While the Delhi High Court said the case did not fall under its jurisdiction, the Chandigarh High Court asked BSNL to get NSN’s bid evaluated by an independent panel. The AP High Court had in May asked BSNL to put on hold the tendering process until it took a decision.

In May, a year after the tender was floated, Ericsson was short-listed as the lowest bidder for the northern and eastern regions, while Huawei made the cut for the western, eastern and southern zones. NSN has argued before the courts that it was not given proper reasons for its disqualification and claimed all details that BSNL wanted were provided.

On the other hand, BSNL has maintained that all the four companies which were disqualified — NSN, China’s ZTE, Alcatel-Lucent and Nortel — were purely because of technical reasons.

BSNL executives have told ET that they suspect ‘vested interests’ are behind the legal challenges to delay its tender and stymie the state-run company’s expansion. They cited a similar petition in Delhi High Court in 2006 by Motorola, which delayed BSNL’s expansion plans by about a year. Motorola later withdrew the case. BSNL’s last tender in 2006 for about 43 million lines, then the largest, was finally reduced to 13 million lines after telecoms minister A Raja’s intervention.

The umbrella body representing all employee unions of BSNL has asked the telco’s management to act against NSN for delaying BSNL’s expansion plans.

NSN denies any such motive and says it has “long-standing relationship with BSNL” and “look(s) forward to supporting them in the future as well”.

DoT proposes tax breaks for 3G winners

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

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

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

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

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

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

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

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

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

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

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

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

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

Mittal, MTN chief meet Pranab, Khurshid to discuss merger

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

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

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

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

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

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

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

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

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

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

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

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

Communication to emerge as largest contributor to GDP: Study

On 25 Aug 2009, 1531 hrs IST, PTI at http://economictimes.indiatimes.com/Comm-to-emerge-as-largest-contributor-to-GDP-Study/articleshow/4932743.cms.

MUMBAI: The communication sector will emerge as the largest contributor to India’s GDP and one of the major growth-drivers of the country’s economy in the next five-years, a study said.

“The communication sector is predicted to emerge as the single largest sector of India’s economy, with a 15.4 per cent share, equivalent to Rs 8,65,031 crore, of GDP by 2014-15,” National Council of Applied Economic Research (NCAER) said in its recent study ‘Economic Impact of the Commnication Sector in India’.

The communication sectors share of the total GDP has increased from 0.7 per cent in the 1980s and one per cent in the 1990s to 3.6 per cent during 2001-08. In 2007-08, the sector accounted for 5.7 per cent of GDP, the study said.

The sector’s ranking in terms of contribution to total GDP has moved from 17 in 1980-81 to eight in 2007-08 and is further expected to surpass all other sectors by 2014-15, assuming that all other sectors grow at an average growth rate observed during 2001-08, it said.

India’s transformation from an agrarian to a services economy, communication is recognised as the fastest growing sector, growing by 25.7 per cent during 2001-08, the study said.

It further said, “It (communication sector) will be one of the major drivers of the Indian economy in the next five years”.

Sify targets voice telecom pie via VoIP

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

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

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

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

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

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

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

CDOT: 25 years of connecting India

From http://www.hindustantimes.com/News/interviewsbusiness/25-years-of-connecting-India/Article1-446342.aspx on August 25, 2009

Established in 1984 the Centre for Development of Telematics (C-DOT) has been responsible for developing state-of-the-art telecommunication technology to meet India’s need for telecommunication network. C-DOT’s Executive Director P.V.Acharya spoke to Hindustan Times. Excerpts:

After 25 years later, how would you describe the journey so far?

From the starting point of developing digital switching systems, C-DOT has traversed the complex Telecom landscape, developing products in the area of optical, satellites and wireless communication from circuit switching technology of yesteryears, C-DOT has proven its expertise in ATM and Next Generation Networks.

C-DOT was set up to meet India’s unique requirements. Has this objective been achieved?

C-DOT started as a mission oriented centre with a mandate not only to develop digital switches, but also to create a mass manufacturing and vendor’s base. Within a very short time, telecom switching products ideally suited to Indian conditions started revolutionising rural telecommunication in the form of small rural automatic exchanges for towns. This was followed by induction of higher capacity digital switches known as main automatic exchanges (MAXs).  C-DOT technology spread across the country through its licensed manufacturers with very strong technology transfer methodology.

C-DOT made a commitment to develop products in 36 months for Rs.36 crores. Twenty five years later, what is the road ahead?

C-DOT has realigned its efforts and defined its roadmap with a focus in four major directions keeping in view the relevance and need in the present scenario. The major developmental schemes in these directions, for the 11th Plan period (2007-2012) include the shared GSM Radio Access Network, which is currently under development, will give a fillip to business in rural India.

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

Indiagames COO Samir Bangara On Games On Demand, Off-Deck Billing, MGs And More

From http://www.medianama.com/2009/08/223-indiagames-coo-samir-bangara-on-games-on-demand-off-deck-billing-mgs-and-more/ on Aug 25, 2009

By Nikhil Pahwa

Indian Mobile gaming company Indiagames, a subsidiary of BSE listed UTV Software, reported a turnover of Rs. 46.4 crores and a profit-after-tax of Rs. 22.4 lakhs for the year ending 31st March 2009. MediaNama spoke to Samir Bangara, COO, Indiagames on a number of issues: on whether the company is primarily an IP Creation business, or a syndication business, drivers of the growth in the mobile gaming business in India, billing (and margins) for games on-deck and off-deck, and on games for the low-ARPU market:

How was the last year for Indiagames?

We experienced good growth, mainly in the Indian market. It has become a bigger and bigger chunk of what we do. The International business, lately, has been about the iPhone and also expanding our market. We had few launches last year, so International wasn’t as strong as it has been in the past, but our biggest title Bioshock is going live in the US market over the next month or so.

Is a majority of your revenue coming in from Syndication business?

A big chunk of it does come from the aggregation business. The international business is an IP driven business – comprising of our own games and branded games. In case of the domestic business, we are working with everybody except Gameloft. The new additions (for syndication) are Disney, which is a 30-33 percent grandparent of Indiagames through UTV. We will work increasingly with Disney in the US and European market. For example, they will publish Bioshock for us in the US market.

Bioshock was the game of the year on the XBox in 2007, it’s a big IP. We’ve licensed it for the mobile. We’re doing development in 2D, 3D, Java, Brew…the works. It’s been one of our longest development cycles, and one of the most expensive products. The game development would have taken over 10-11 months, then with fine-tuning, and receiving approvals, it took around 14-15 months.

Do you see yourself more as an IP creation company, or a syndication company?

Different geographies have different objectives. We have a blend of the games on demand business also coming into play in India. So, in the Indian market, it is a syndication driven business, and in months when we have massive big hits of our own…for example, 20:20 Cricket was a massive hit, embedded on a few million Nokia devices. If you include revenues from those items also, syndication will look slightly smaller in percentage.

Cricket is a big genre and we are doing multiple products. Our Cricket game for England vs Australia which was featured on the UK App store as a new and upcoming featured app. Last year, in December, our T20 Cricket Championship was the number one game on the Telstra deck in Australia. And then we do games like Ghajini which reduce our Syndication percentage. We don’t start the year saying Syndication should be X percentage. It could be as little as 45-50% and as high as 75-80%, depending on the original IP we’re launching and its success. For the last year, the Indian revenues contributed significantly.

The business leaders for development and syndication internally are different. We have a studio that is International focused and a studio that is Indian focused. The studios create a product, delivers it to the India publishing team for distribution in India and IG Fun for international publishing.

Which games are you releasing?

On the International side, the upcoming releases are Bioshock, Pentago, Mercury Meltdown (from sister company Ignition). We’re also doing an interesting version of our old faithful Bruce Lee in Q1 next year. This is around four generations ahead of what we’ve had so far. On the Indian side, we have the entire UTV portfolio, like Aage Se Right, What’s Your Raashi. We’ve launched Kaminey, which doing quite well, and will be doing Wake Up Sid, basically the entire portfolio from UTV.

How do you book revenues from your IP?

We book them as and when we get the information on downloads. The Indian market has become better in terms of data sharing and download reports – it is still not optimum, but significantly better than the past. We have live data for our off-deck business.

How do you explain Rs. 46 crores in revenues and a PAT of just Rs. 22 lakhs?

There are business that are in triple digit crores and not profitable. Mobile makes money, but the Games on Demand business is clearly in investment mode, it is loss making. We were running a 250-300 man call center at peak last year. We’ve been working at pretty fragmented levels with large operators like BSNL. The model that Hungama has launched is a nice compliment to us. Some big things have happened with GoD: Airtel is now bundling the GoD offering with their other services. Those kinds of things obviously give a boost to GoD, but they also come with certain costs.

You’re probably distributing the largest number of games in India, and we’ve heard the mobile games business in India has grown in the last year. What changed?

A big thrust has been the fact that the nuts and bolts are different. There are cheaper and more GPRS handsets, and no GPRS subscription charges with a pay as you go data download model. Operators make as much money through data traffic as they do through downloads – at least the top operators. They’ve opened up the walled garden, and mobile Internet is really taking off. The leading operators have 30-33 percent data capable handset penetration; of those, 25 percent go to the operator decks. Of that a fairly healthy number have played a game – sometimes 12-15 percent, or in some cases 25 percent.

Of the capable and live, we have a high gamer penetration number, but of the total instance, that is below 1-1.5 percent. What we see going forward is that the data capable handsets will increase. Also with operator decks opening up and we’re not only dependent on on-deck business.

But the billing is still through the operator even in case of off-deck?

You can use other options, but there’s nothing else of scale as of today.

Do you have better margins off-deck than on-deck, since you’re only using telecom operator billing, and not marketing?

Some operators do offer deltas for off deck, but not all. It varies from operator to operator. Logically speaking, you should have better margins, because that’s traffic you’re originating. Some of the operators have been more reasonable about it, and shared a slightly higher margin. It’s still not in the range that allows people to make that business blossom. In other cases, we’ll just take what we can. We have a fair amount of organic traffic on mobile, and remember that not everything that Indiagames does is not around gaming. A significant chuck of our business – around 30 percent odd – has nothing to do with gaming. We do wallpapers, tones, music, RBT. Effectively as a company, we have people in charge of different product lines. When we do movies, we do game rights and imagery rights.

In case of Ghajini, Imagery rights were a big contributor to our revenues. There’s a lot of music, as well as rights across all platforms.

Are Minimum Guarantee businesses viable?

We don’t have the money to throw around in senseless deals: when the MG is ridiculous, In the game business, we’re a lot more risk savvy, and we know how we can leverage that. The ARPUs are better, and we can use marketing to sell a game. Ghajini was an excellent deal for us, and we’ve since done deals at a rational MGs, and turned down those that weren’t rational. In Ghajini, we made around 3 times the MG in recoupment. If we’d done a traditional deal, paying them a packaged MG and then scrounging for recovering our money, we walk away feeling screwed, no one wins because the producers dont get the visibility. In our  syndication deals the money that the partners are making is on the top-ups, not on the MG.

What’s the outlook for this year with operator ARPUs declining and new users having lower balance on pre-paid?

This year we see ARPUs being a bit challenged because because the bulk of the subscriber growth is really coming from the lower end segments. We’re finding a challenge to find people with even Rs. 10 balance in their handsets. In FY10, we’ll see that that challenge is far more serious.

What about subscription based models like Airtel’s GamesClub and Reliance’s pay-per-play model?

There will have to be other such offerings with different tactics to be able to mine this segment of the user game. We’ve to figure out a way that they can afford the game. Subscription is the obvious one. As far as language barriers are concerned, games are close to being language agnostic.What we create in India, we can make multilingual.

NetworkPlay Signs On Airtel For CPM Advertising On DTH; Eyes Mobile, Video

From http://www.medianama.com/2009/08/223-networkplay-signs-on-airtel-for-cpm-advertising-on-dth-eyes-mobile-video/ on August 25, 2009

By Nikhil Pahwa

Capital18 funded advertising network NetworkPlay.in has inked a deal with Airtel DTH for advertising on DTH in India. Interestingly enough, NetworkPlay CEO & MD Rammohan Sundaram told MediaNama that the company is going to sell CPM based advertising on DTH. This obviously means that Airtel DTH needs to be able to measure the impressions and relay the data back to the advertiser – there has to be a feedback loop with Airtel DTH. So far, interactivity has been limited on DTH. The company will offer video and image based advertisements on the DTH boot screen, iTravel, iShop, iMatinee, iCity, iNews, iPizza, iAstro and other Airtel DTH services. According to Sundaram, Airtel DTH service has a penetration of over 1.3 Million households and growing at a rate of 16 percent month on month, and reaches a SEC A & B audience in over 4000 towns in India. The total DTH userbase in India is 13 million; Tata Sky (4 million) and Dish TV (5.07 million as of March 31, 2009) are the top operators.

Sundaram says that the tie-up with Airtel is exclusive and they have been working on the deal for 6-7 months now; they are also actively pursuing deals with other DTH operators as well. The company is looking to launch Video and Mobile advertising solutions in the next couple of quarters, but Sundaram declined to comment on further plans.

Of late, we’ve seen a significant amount of collaboration between Internet, Mobile and DTH companies, with multiple services like ticketing, shopping, matrimonial, job classifieds and others being enabled on DTH. The increasing digitization of platforms means that digital services can be enabled across Internet, Mobile, IPTV, DTH etc; it doesn’t have to be about the world wide web alone.

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

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

By Preethi J

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

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

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

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

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

Downloads: TRAI Data (PDF)

Other operators offering landlines and their user base:

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

Nuance To Launch Free-Flow Voice Based Song Search In India

From http://www.medianama.com/2009/08/223-nuance-to-launch-free-flow-voice-based-song-search-in-india/ on August 24, 2009

By Nikhil Pahwa

NASDAQ listed Speech and Imaging solutions company Nuance Communications is launching a voice recognition service with two operators in India, reports Mint. The service will be used to power song search.

Sumit Goswami, Head of Marketing (India/Asean regions) at Nuance told MediaNama that the service being launched is free-flow voice-based search. In case of a free-flow search, the product returns a result based on  an entire sentence spoken instead of a specific keyword. Voice is first converted into text, a database is queried, and a result is provided to the user. In our opinion, all voice based search will eventually have to be free-flow, and voice to text is especially important in India, given the dominance of voice based services, and the fact that text based services will have a limited role in rural India. Even for voice based services, the dialects will be difficult to understand, and the dictionary powering the voice-to-text service will learn with more usage.

At present, the product, Nuance Recognizer does voice-to-text search for 11 languages – Kannada, Malayalam, Tamil, Telugu, Oriya, Marathi, Punjabi, Bengali, Gujarati, Hindi and Indian English; two other languages are still under development. The product can be deployed for both song search and directory search, though it has been deployed previously in India for speech recognition for contact centres in the BFSI segment.

Nuance is going live directly with the telecom operators. Nuance expects the service to be live October or November 2009 – latest by the first quarter of 2010. The deployment will cover 70 percent of all the circles that those operators cover, Goswami said. Nuance powers a few languages for OnMobile Global as well, though OnMobile competes with the company for deployments after its acquisition of Telisma.

Goswami said that Nuance currently deploys products on a licensing model: For example, a contact center may have a requirement of 10,000 ports, and Nuance is paid per port. Why not a revenue share model, which Indian telecom operators seem to prefer? “We will have to change the model to a revenue share model for India, but that is not being done in the current case,” Goswami said.

Other companies in the voice-to-text space in India include Capital18 funded Ubona, mScriber, Google (their Blackberry app returns search results on the basis of a voice based query) and OnMobile owned Telisma. EnglishSeekho is also being powered by a voice to text technology.

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

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

By Preethi J

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

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

Devas MultiMedia:Looking To Raise Funds

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

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

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

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

Companies Eying ISP Space In India

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

The Wireline Alternative: Broadband Over Power

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

Bharti’s Chairman Grows More Confident of MTN Deal

From http://online.wsj.com/article/SB125084972837849039.html?mod=rss_india_news on August 24, 2009

By COSTAS PARIS

Bharti Airtel Ltd. Chairman and Managing Director Sunil Mittal said the second extension to talks with MTN Group Ltd. of South Africa signals that a deal may be worked out this time around.

“It gives us more confidence, but you never know with these things until the last moment,” Mr. Mittal said in an interview Friday.

Mr. Mittal’s comments came after Bharti and MTN extended their talks until Sept. 30 without giving a reason.

MTN and Bharti, India’s largest mobile-phone operator by subscribers, in May revived talks to create a telecommunications company with annual revenue of at least $20 billion and 200 million subscribers.

People familiar with the situation said Friday that Bharti and MTN have extended their talks to settle differences on pricing and the makeup of the combined entity’s board. The two companies have described their prospective deal as a $23 billion merger.

Mr. Mittal said he wasn’t in a position to confirm or deny whether Bharti would sweeten its offer.

A second person said MTN’s management and some shareholders are asking for an additional $1 billion from Bharti to complete the deal.

The person said there will be more clarity when MTN releases its half-year earnings on Thursday.

The basic terms announced in May would see Bharti accumulate a 49% stake in MTN, buying a stake directly for cash and newly issued global depository receipts, plus receiving MTN shares as part of the swap.

MTN would buy a 25% stake in Bharti for $2.9 billion in cash plus new shares, while stock received by its shareholders would take its stake in Bharti to about 36%.

Bharti, MTN Executives Meet with Indian Finance Minister

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

By MUKESH JAGOTA and R. JAI KRISHNA

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

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

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

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

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

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

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

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

Bharti is 30%-owned by Singapore Telecommunications Ltd.

8 of top 10 most valued cos lose Rs 36K cr; Airtel, BHEL gain

From http://www.hindustantimes.com/News/corporatenews/8-of-top-10-most-valued-cos-lose-Rs-36K-cr-Airtel-BHEL-gain/Article1-446149.aspx on August 23, 2009

Press Trust Of India

 

Eight out of the country’s top 10 coveted firms lost Rs 36,000 crore from their market cap during the week ended August 22, while power equipment maker BHEL and telecom major Bharti Airtel together added Rs 6,074 crore to their kitties.

Bharti Airtel gained Rs 1,348 crore, with its total market valuation at Rs 1,56,240 crore, while state-run BHEL added Rs 4,726 crore to its kitty and its market cap stood at Rs 1,12,482 crore for the week ended August 22.

Meanwhile, the country’s most-valued firm, Reliance Industries, lost Rs 16,628 crore last week, taking its total market valuation to Rs 3,03,544 crore at the end of the week.

The company had a market cap of Rs 3,20,172 for the week ended August 16.

Two state-run firms — ONGC and NTPC — together lost Rs 5,047 crore from their market valuations last week.

At the end of the week, ONGC’s market cap stood at Rs 2,54,825 crore and NTPC’s valuation was at Rs 1,68,908 crore.

The country’s largest iron ore producer, NMDC, lost Rs 3,231 crore from its market valuation and state-run trading firm MMTC lost Rs 5,049 crore from its market cap.

The total market valuation of NMDC stood at Rs 1,41,322 crore and MMTC at Rs 1,38,036 crore.

Tata Tele in talks with PC makers

Adith Charlie

On August 22, 2009 on the Hindu Business Line at http://www.thehindubusinessline.com/2009/08/22/stories/2009082250720400.htm

Mumbai, Aug. 21 Tata Teleservices looks to partner with laptop and netbook makers for promoting its mobile broadband service, Photon, among buyers of new computers.

The Mumbai-based firm is currently in talks with companies such as Lenovo, HCL, Dell, Toshiba and others for the same.

“We are looking to sign up with laptop manufactures to see whether they can incorporate the Tata Photon as a purchase device along with their laptops and also give special offers on the same. The days of people buying a laptop without going in for connectivity options have clearly gone,” Mr Lloyd Mathias, President- Business Development, VAS & Chief Marketing Officer told Business Line.

Tata Tele already has a tie-up with Hewlett-Packard; consumers can get a Rs 3,500 Photon Plus for Rs 1,200 when they buy a HP/Compaq laptop.

The company is expected to sign up with at least two more laptop manufacturers in the next few months.

NTT DoCoMo laments limited value-add in India

Thomas K Thomas on August 22, 2009 on the Hindu Business Line at http://www.thehindubusinessline.com/2009/08/22/stories/2009082250660400.htm

Tokyo, Aug. 21 Indian operators should give a higher percentage of revenue share to application developers in order to promote value-added services (VAS), according to Japanese mobile player NTT DoCoMo.

In Japan, for example, NTT DoCoMo gives away as much as 90 per cent of the revenues earned from VAS to the application developers. In comparison, most Indian mobile players keep 60-70 per cent of the income earned from applications.

“It will take a while for them to understand that giving a higher share to VAS players works to the operators’ advantage in the long run. But we will have to persuade them to take a lower share so we can get an ecosystem that supports good data services,” Mr Toshinari Kuneida, Senior Vice-President and Managing Director of Global Business Division, NTT DoCoMo, told Business Line.

Mr Kuneida said that NTT DoCoMo will talk to its Indian partner, Tata Teleservices, to change the VAS business model in India.

VAS contribution

In India, value added services contribute only 5-10 per cent to an operator’s revenues. In contrast, operators such as NTT DoCoMo get over 40 per cent of their average revenue per user from interesting data services. That is because while there is not much innovation happening in the Indian VAS segment, Japanese operators are giving services useful to the subscriber’s everyday life.

For example, NTT DoCoMo has launched a healthcare service that gives consumer details about his physical condition including how much he has walked in a day, his body mass index and how much he needs to cut down on food. The service is linked to a medical doctor’s device in the backend that receives data about the subscriber’s health and comes back with an advice. All this over the mobile phone.

In India, VAS are all SMS-based services with little innovation. Most VAS players do not find it feasible to invest in developing high-end applications since the operators are not willing to give more than 30 per cent of the revenue earned from that service.

But with Indian operators on the verge of launching 3G technologies, they will have to encourage application development if they have to start earning higher revenues from data services. Due to the cutting-edge applications being developed in Japan, players such as NTT DoCoMo are seeing 80 per cent of the total traffic coming from data services in that country.

Wireless Tata Telecom Has Bid for Aircel’s Tower Operations

At http://online.wsj.com/article/SB125084655798248997.html?mod=rss_india_news on August 21, 2009

By DEEPALI GUPTA

MUMBAI — India’s Wireless Tata Telecom Infrastructure Ltd., or WTTL, has made an initial bid for the telecom towers of mobile-phone operator Aircel Ltd., a director of the company that controls WTTL said Friday.

“We are currently studying Aircel assets after making an initial bid,” Quippo Telecom Infrastructure Ltd. Director Sunil Kanoria told Dow Jones Newswires.

WTTL is the second company after GTL Infrastructure Ltd. to confirm an interest in the tower operations of unlisted Aircel, in which Malaysia’s Maxis Communications BHD holds 74%.

Demand for passive network infrastructure such as towers has boomed in India – the world’s fastest-growing telecom market – as new mobile providers opt for leasing the infrastructure to reduce costs and roll out services faster.

Besides independent infrastructure providers such as GTL and WTTL, the other main providers of telecom towers in the country include Indus Towers Ltd. and Reliance Infratel Ltd.

Mr. Kanoria declined to give an estimate on the size or value of the stake WTTL plans to buy. GTL also hasn’t yet announced the details of its bid.

Local media reports have said Aircel was planning to sell a 51% stake in its tower business. Analysts estimate Aircel’s about 12,000 towers are valued at around 5 million rupees-6 million rupees ($102,312-$123,000) each.

Aircel officials weren’t available for comment.

WTTL is the result of a merger of the telecom tower operations of Tata group’s Tata Teleservices Ltd. and Quippo in January. While Tata Teleservices holds 51% of WTTL, its remaining stake and management control is with Quippo.

The company now has about 25,000 towers. At the time of the deal in January, the combined entity had about 18,000 towers, which gave it an enterprise value of 130 billion rupees.

WTTL has a target of having 60,000 towers in two years, excluding any addition from a potential acquisition of Aircel’s tower operations, Mr. Kanoria said.

It plans to spend 50 billion rupees to 55 billion rupees on building towers over the next two years, he said.

The expansion program is well funded for around six months, Mr. Kanoria said. For subsequent expenditure, the company plans to raise funds through debt and may also consider the equity route, he said.

Funds may be raised from existing shareholders or from an institution, Mr. Kanoria said. Eventually the company would look at a public listing, he added, without elaborating.

Nokia to Offer Phone Installments in India

From http://online.wsj.com/article/SB125067421010342617.html?mod=rss_india_news on August 19, 2009

By R. JAI KRISHNA

NEW DELHI — Nokia Corp. said it is looking to make handsets more accessible and affordable in India, the world’s fastest-growing and second-largest telecommunications market.

Nokia’s Indian unit plans to sell handsets in some rural areas under a program that allows the purchasers to pay in installments, the Finnish company’s chief executive, Olli-Pekka Kallasvuo, said Wednesday.

View Full Image

Associated Press

Nokia expects about 500 million cellphone users in India by 2010, up from 427 million now. Above, a girl on her cellphone in Mumbai.

“There is a lot of opportunity here [in India], and we need to make mobility more accessible to all people, including those in rural areas, which is the next frontier to be conquered,” Mr. Kallasvuo said.

The company has more than half the share of India’s mobile handset market, according to analysts. Nokia said it plans to roll out the installment plan to sell its handsets in 12 Indian states after a pilot program covering more than 2,500 villages in the southern states of Andhra Pradesh and Karnataka.

Under the pilot program, a microfinance organization bought handsets from Nokia and sold them to women in rural areas by charging them 100 rupees, or about $2, in weekly installments for as long as 25 weeks.

Nokia expects about 500 million mobile-phone users in India by 2010, up from 427 million now, Mr. Kallasvuo said.

“We believe that much of this growth will take place in non-urban markets and rural penetration in India is still very low at 13%,” Nokia said in a statement.

Global players find MTNL’s WiMax project terms unattractive

Disincentives

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

MTNL asking for too much of revenue share and branding

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

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

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

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

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

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

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

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

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

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

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

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