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.

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

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

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.

Indian mobile users to hit 771 mn by 2013: Gartner – The Financial Express

via Indian mobile users to hit 771 mn by 2013: Gartner – The Financial Express on June 18, 2009

Bangalore: Indian mobile users will jump more than 90 per cent to 771 million by 2013 as companies expand networks to rural areas in the world’s fastest growing wireless market, research firm Gartner said.

India had 403.66 million wireless users at the end of April, Telecom Regulatory Authority of India figures showed earlier this month, second only to China that has more than 600 million wireless subscribers.

Cheap call tariffs and handsets are driving demand in India, where operators such as Bharti Airtel and Reliance Communications are now building telecom towers and networks to cover smaller towns and villages to hook new users.

Gartner, the world’s biggest technology research firm, sees mobile subscriber base growing at a compound annual growth rate of 14.3 per cent in the four years to 2013, up from an estimated 452 million by the end of 2009.

Revenues of Indian mobile phone companies will exceed $30 billion in 2013, rising at a compound annual growth rate of 12.5 per cent over the same period, it said.

“The Indian mobile industry has now moved out of its hyper growth mode, but it will continue to grow at double-digit rates … as operators focus on rural parts of the country, said Madhusudan Gupta, senior research analyst at Gartner.

Gartner, however, predicted a “significant drop” in average revenue per user (ARPU) — a key gauge of performance — as the bulk of new subscribers from the hinterland usually talk less on phones and some use mobiles just to answer calls.

Bharti, which is in talks with South Africa’s telecoms firm MTN Group to create the world’s No.3 wireless group, saw a drop of 15 per cent in its March quarter ARPU as it won more new users in rural areas. The research firm said voice tariffs would fall substantially in 2009 as new operators join the market.

The telecoms unit of Indian developer Unitech Ltd will launch mobile services with Norway’s Telenor in the December quarter this year, a top company official said on Tuesday.

Bharti’s rivals such as Reliance Communications, Vodafone Essar and Idea Cellular are also rapidly expanding their services across the country.

Related stories at

• http://www.ciol.com/technology/mobility/news-reports/indian-mobile-users-to-hit-771-mln-by-2013-gartner/18609121197/0/
• http://efytimes.com/efytimes/fullnewsxml.asp?edid=35243
• http://economictimes.indiatimes.com/Indian-mobile-users-to-hit-771-mln-by-2013-Gartner-/articleshow/4671022.cms

Bharti rules out foreign investment in DTH biz

18 Jun 2009, 0124 hrs IST, Rashmi Pratap, ET Bureau

MUMBAI: Bharti Airtel, India’s largest telecom operator, said that its direct-to-home (DTH) venture, Bharti Telemedia does not require the approval of the Foreign Investment Board (FIPB), as the investment has come from Bharti Airtel’s internal accruals.

Responding to questions raised by FIPB regarding foreign investments in Bharti Telemedia, the company said there is no cash flow or investment from any foreign entity into Telemedia either directly or through Airtel.

In a letter to FIPB, Telemedia said FDI investment into Airtel has been in accordance with the norms and cap in the telecom sector and duly approved by FIPB. “Further, there is no FDI investor who has invested in Airtel specifically for downstream investment in the DTH sector. Accordingly, Bharti Telemedia did not apply for FIPB approval as it was not seeking fresh FDI or overseas investment,” it added.

This communication has come in response to a query from FIPB, which said approval for Bharti’s DTH services was “subject to compounding” (confirmation) by the Reserve Bank of India. Bharti said that “compounding” was not applicable in this case as only Indian money has been invested in Telemedia and no foreign money was routed to the company.

The government had earlier said the shareholding structure provided by Bharti Telemedia did not have FIPB approval and this was not in accordance with existing FDI policy. Last year, the Information & Broadcasting Ministry had also raised questions about Bharti Telemedia not having FIPB approval for foreign investments coming into it on a pro-rata basis through investing firms, including Airtel.

According to the FDI guidelines for DTH, total foreign equity holding in a company should not exceed 49% and the FDI component within the foreign equity should not exceed 20%. Airtel has 40% stake in Bharti Telemedia, while the remaining is held by an “Indian company of the Bharti group”, a Bharti spokesperson said.

Bharti also pointed out to FIPB that under the revised FDI policy, as per Press Notes 2 and 4, announced in February this year, Airtel qualifies as a company “owned and controlled” by resident Indians and there is no indirect FDI into Telemedia through Airtel.

Under the revised Press Notes, a company is considered Indian if Indian promoters have a stake of at least 51%. Moreover, the investments made by such companies in any joint venture or downstream venture will be treated as Indian. Since a major part of SingTel’s 31% stake and Vodafone’s over 4% share in Airtel is routed through majority-owned Indian companies, Airtel is owned and controlled by Indians.

Airtel launched its DTH services in October last year. It competes with Tata Sky, Reliance Communications’ Big TV, Zee’s Dish TV and Sun Direct in this segment. The company hasn’t yet started disclosing revenues from DTH services separately. “We will start disclosing the operational and financial performance of DTH operations next year, once they become material,” Airtel CEO and joint MD Manoj Kohli said recently.

RComm in exclusive talks with Alcatel-Lucent for Rs 2,500 cr outsourcing deal- Telecom-News By Industry-News-The Economic Times

17 Jun 2009, 1128 hrs IST, ET Bureau & Agencies

Print EMail Discuss Share Save Comment Text:

NEW DELHI: Reliance Communications (RCom) is in exclusive talks with French telecom infrastructure provider Alactel-Lucent to award a $500million (Rs 2,500 crore) operations and maintenance contract.

Last year, Reliance and Alcatel formed a joint venture for network management services, with the Indian company holding 33 percent and the French company owning the rest.

Last week, Reliance Communications entered into a marketing JV with Krishak Bharati Cooperative Limited (KRIBHCO) for selling its products in rural India.

The JV company known as KRIBHCO Reliance Kisan Ltd is aimed at synergising the strengths of both companies to create a rural distribution model for sales of telecom and non-telecom products.

KRIBCO will hold 60% equity in the JV company with the balance 40% held by Reliance ADAG.

RCOM’s tie-up aims to be a counter to that of Bharti Airtel, which has a similar JV with Indian Farmers Fertiliser Cooperative (IFFCO), the country’s largest fertiliser PSU unit.

In May, Bharti and IFFO had formed IFFCO Kisan Sanchar Ltd (IKSL) and said that the JV would harness the power of telecom to add value to the farm sector. Here IFFCO has a 50% stake while Airtel and Star Global have 25% each.

via RComm in exclusive talks with Alcatel-Lucent for Rs 2,500 cr outsourcing deal- Telecom-News By Industry-News-The Economic Times.

Related stories at

• http://economictimes.indiatimes.com/Reliance-Communications-in-talks-with-Alcatel-Lucent-for-a-500-mn-outsourcing-deal/articleshow/4667231.cms

Revenue, not user base, to set telecom pecking order

17 Jun 2009, 0305 hrs IST, Rashmi Pratap, ET Bureau

MUMBAI: Subscriber numbers in India’s wireless story are losing their relevance today as far as determining the industry position of a service provider is concerned. t will be revenues and not subscriber numbers that could decide the pecking order in the world’s fastest-growing telecom market.

This is reflected in the latest revenue figures released by the industry regulator, Trai. Going by this, the top three operators in India are Bharti Airtel, Vodafone Essar and Bharat Sanchar Nigam (BSNL).

Airtel’s adjusted gross revenue (AGR) from wireless and wireline operations was Rs 7,998 crore for the March quarter. Vodafone Essar, which offers only mobile services, had revenues of Rs 4,456 crore during January-March 2009 on a subscriber base of 68.7 million. Reliance Communications (RCOM), which has the second largest customer base, reported an AGR of only Rs 2,998 crore on 72.6 million users during the quarter, making it the fourth largest in terms of revenues.

The revenues for the state-owned BSNL stood at Rs 3,943 crore making it the third largest. BSNL offers mobile services on GSM apart from fixed line services. Besides showing the revenue capabilities of an operator, AGR is significant, as it is the basis on which service providers pay licence fee and spectrum charges. Operators pay a revenue share licence fee to the government ranging from 6% to 10% of their AGR. Increasingly, operators are targeting revenue growth instead of a larger user base.

According to Bharti Airtel’s vision statement, the company’s aim is 20% increase in revenue margin per subscriber in the next few years.

Analysts contend that with more and more low-end users signing up for services, it is becoming difficult for operators to maintain margins and improve ARPUs (average revenue per user per month). In such a scenario, those who continue to grow revenues along with subscriber base will be the clear winners.

“As the new subscriber base is primarily drawn from tier III towns and rural markets, the incremental subscriber addition is not leading to a commensurate revenue upside for telcos. The catchphrase to evaluate a telco’s performance will be quality of subscribers rather than the number of new subscribers,” Acsendia Consulting principal analyst, Alok Shende told ET.

A smaller player like Idea Cellular, which operates in 13 circles, had AGR of Rs 2,389 crore on a subscriber base of 39 million. This is just about Rs 600 crore less than RCOM on a base which is almost half of that company.

KPMG director (telecom) Romal Shetty said, “Initially, everyone was going after subscriber numbers. Now, they are looking at quality of subscribers. This explains the emphasis on value added services (VAS), which bring in higher revenues.” He pointed out that low-end pre-paid users are now bringing in monthly revenues of as low as Rs 70 per month.

Tata Teleservices reported revenues of Rs 1,889 crore during the quarter placing it at sixth followed by state-owned Mahanagar Telephone Nigam (MTNL). Aircel, a relatively new entrant, is at the eight position, which had AGR of Rs 721 crore during the quarter.

Telcos’ wait for airwaves gets longer

17 Jun 2009, 0702 hrs IST, Joji Thomas Philip & Sandeep Gurumurthi, ET Now

The wait for additional airwaves, key for mobile operators to expand their customer base, has just got longer, with the telecom ministry deciding to make any decision on this only after the upcoming auction of third-generation spectrum, according to a top official in the department of telecom (DoT).

Communications minister A Raja and Finance Minister Pranab Mukherjee met twice on Tuesday, but were unable to reach a consensus on key issues related to 3G auctions such as the base price for these radio frequencies as well as the number of players to be allowed to offer these high-end services.

“No consensus as of now on the base price. We discussed various suggestions — whether we should go for uniform base price or opt for differential pricing, according to circle, depending upon commercial viability of that area,” Mr Raja told reporters after his second meeting with Mr Mukherjee.

As a fallout, the telecom ministry has decided that it will take a call on all issues related with second-generation spectrum, the airwaves on which all mobile services are offered at present, including the methodology for future allocations, the pricing for this scarce resource and the usage charges for utilising these airwaves only after the upcoming auctions of third generation spectrum, the official said on condition of anonymity.

The ministries are divided over the base price for the 3G auctions with DoT proposing a reserve price of Rs 2,020 crore for pan-India 3G spectrum and the finance ministry wanting it to be doubled. DoT has said it is open to hiking the reserve price to Rs 3,540 crore as a compromise.

The two ministers said for the first time that they were willing to look at a differential pricing formula to arrive at a base price for 3G auctions, vital for high-end services such as video conferencing and high-speed internet on the mobiles.

Industry analysts, however, say using a new formula to arrive at differential pricing for each circle will be a time-consuming process that will further delay the 3G auctions.

The development implies that existing telcos will not get 2G spectrum till the issue is settled. Now, they will have to invest heavily on infrastructure to ensure that the quality of services do not deteriorate.

At present, all telecom services are offered on 2G spectrum and these airwaves have been given to telcos based on their subscriber numbers. Put simply, additional radio frequencies are dished out as telcos as they add more subscribers. Currently, India follows a controversial practice of allocating spectrum based on companies’ subscriber base, and is the only country in the world that follows this method.

There are two key factors that have led to the communications ministry deciding to stop all 2G allocations until the completion of 3G auctions.

First, the spectrum panel in its report submitted last month had said the country should adopt the internationally-accepted auction system for issuing additional 2G airwaves to telcos. This committee, consisting of academicians, industry representatives, government officers and industry representatives, had suggested that the 2G pricing be market-linked and be related to the auction price of 3G spectrum.

Second, the committee had also suggested that all telcos who hold radio frequencies beyond the 6.2 MHz mark be charged a one-time fee for all the extra radio frequencies they hold, while adding that this one-time fee be calculated based on the 3G auction price.

The communications ministry can act on these recommendations only after the 3G auctions take place.

The larger implication is that all telcos will have to shell out huge amounts, both for the excess 2G radio frequencies they hold as well as for all additional allocations in the future.

Additionally, DoT’s move to freeze all 2G allocations is also set to impact all telcos. For instance, India’s largest telco, Bharti Airtel, is awaiting additional spectrum allotment of 1 MHz each in five circles.

Reliance Communications, which has start-up spectrum in all 22 circles in the country, is now eligible for the next tranche in six circles as it has reached the prescribed subscriber numbers in these areas. Other telcos such as Vodafone Essar and Idea Cellular too are awaiting additional spectrum in several circles.

With no airwaves allotments over the next couple of months, these operators will have to spend significant amounts in setting up new cellsites. Analysts say for most operators, it is, therefore, a tradeoff between increased capex and allowing the quality of services to deteriorate on account of the spectrum crunch.

This is because it is technically possible to have increased number of subscribers using the same amount of radio frequencies, provided operators spend significant amounts in building more base stations and subscribing to the latest technological innovations.

It is not just the large players that are impacted by the latest policy logjam. The government’s move to put all allocations on hold will also pinch small players and new entrants like Datacom, Unitech Wireless

and Swan Telecom, who are awaiting start-up spectrum in many regions.

Nokia Tops List of India’s Most Trusted Brands – BusinessWeek

From Economic Times of India June 17, 2009, 9:50AM EST

via Nokia Tops List of India’s Most Trusted Brands – BusinessWeek.

Nokia’s tagline of ‘connecting people’ certainly seems to have struck a chord with the Indian consumer. For a second year running, the handset maker has topped the prestigious, ‘Brand Equity Most Trusted Brands (MTB) Survey’. In second and third places are the two venerable consumer brands, Colgate, a four-time winner, and Lux, respectively.

The survey was unveiled last night at a glittering ceremony, which saw the who’s who of India’s brandsphere making their way to Mumbai from all parts of the country to be in attendance. The marque names included HUL MD Nitin Paranjpe, Nokia MD D Shivakumar, P&G MD Shantanu Khosla, Britannia MD Vinita Bali, BCG India MD Janmejaya Sinha, JWT CEO Colvyn Harris, Madison chairman Sam Balsara, Ogilvy India executive chairman & NCD Piyush Pandey and McCann Erickson India executive chairman Prasoon Joshi.

A clear indication that today the Brand Equity MTB Survey is the one study that marketers put their faith in. In this, the sixth year of the MTB survey, there are two new entrants into the top 10. Coming in at No. 6 is one of the oldest brands in India, Horlicks.

The brand, which has perennially been in the top 20, has finally managed to leapfrog into the coveted top 10. However, it is Reliance Mobile which is the star of this year’s edition, considering that it had failed to crack the top 20 in 2008. Telecom, as a category, is clearly on the ascendant. Airtel, BSNL and Vodafone have all surged up the charts to finish in the top 30, ranking 12, 19 and 30, respectively.

Hindustan Unilever, as has always been the case, continues to dominate the overall rankings with three brands (Lifebuoy, Lux and Pepsodent) in the top 10 and seven in the top 20. However, Pond’s, a brand from the HUL stable, also happens to be the biggest loser in the top 10, falling from No. 5 last year to No. 16 this year.

In the listing of the top 50 service brands, three out of the five brands are public sector brands namely SBI (13), LIC (17) and BSNL (19), perhaps an indication that public sector brands are perfectly capable of holding their own against their private counterparts.

The Brand Equity MTB survey is the largest, most diverse and most prestigious survey of its kind, with over 8,000 respondents nation-wide and is conducted by The Nielsen Company on behalf of Brand Equity. The detailed survey findings are available in today’s 12-page special edition of Brand Equity.

Also, watch out for all the action from the launch party and interviews with winners and India’s premier marketers on ET NOW, the soon-to-be launched cutting-edge channel for business news.

Vodafone approaches FIPB for NLD, ISP licences

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

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

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

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

in the country.

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

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

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

Airtel allowed to ‘unlock’ Apple’s iPhone

From www.ciol.com on June 16, 2009

MUMBAI, INDIA: According to Apple’s global support site, Bharti Airtel has been authorised to legally unlock the iconic 3G iPhone handsets in the country.

Thus enabling the Indian company to sell it to any user, not necessarily only an Airtel subscriber. The companys may also charge an additional fee for the unlocking, the website said.

This is in contrast to the existing practice of Apple in offering the iPhones — launched in two versions, 8 GB and 16 GB — bundled with the services of only two operators, Bharti Airtel and Vodafone-Essar.

In India, the 8 GB model costs around Rs 31,000, while the 16 GB is priced at Rs 36,000. Apple is also set to launch the latest version, iPhone 3GS, billed as the “fastest, most powerful iPhone yet”, on August 9.

Related stories at

• http://www.business-standard.com/india/news/airtel-allowed-to-%5Cunlock%5C-apple%5Cs-iphone/361195/

Airtel crosses 5-m user mark in Delhi

From The Hindu Business Line, June 15, 2009

New Delhi, June 15

Bharti Airtel announced that it has crossed the significant milestone of five million customers in the Delhi and National Capital Region circle. Airtel is the first mobile operator to achieve this landmark in a metro circle and added the last million subscribers in only 13 months in a circle that already boasts of a mobile penetration of almost 100 per cent. “The milestone of five million customers amply demonstrates the customers’ faith and reinforces Airtel&# 8217;s leadership position in the Delhi and NCR circle, backed by its seamless network and excellent customer service,” said a press release.

MTN may take GDR route for 25% stake in Bharti Airtel

15 Jun 2009, 0014 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: South African telecom major MTN’s proposed 25% stake in Bharti Airtel will be through global depository receipts (GDRs), if the plans by the two companies to mutually acquire equity to form a global cellular alliance stretching from the Cape of Good Hope to the Indian Ocean goes through.

A top Airtel executive involved in talks with MTN told ET that the GDRs will be listed on the Johannesburg Stock Exchange, shedding more light into the complex nature of the deal, which is set to test the new foreign direct investment (FDI) norms earlier this year.

This puts to rest all speculation regarding the deal and implies that the entire equity expansion of Bharti Airtel will be in the form of GDRs issued to MTN and its shareholders. According to the existing plan, MTN will buy a 25% stake in Bharti, while another 11% will be held directly by MTN shareholders.

Bharti, in turn, will acquire a 49% stake in MTN through a complex stock-and-cash deal. The size of the deal is estimated to be worth over $23 billion and both companies had agreed to hold exclusive talks with each other till July 31, 2009. The new company will have revenues of about $20 billion and over 200 million subscribers.

The GDR route scotches the speculation about Bharti Telecom, the unlisted holding company of Bharti Airtel, issuing fresh equity to MTN to give the South African telco a 25% economic interest in India’s largest mobile company. Bharti Telecom holds 45.3% stake in Bharti Airtel, and it was assumed that the deal would see MTN taking about 10% stake at Bharti Telecom with the issue of new shares to MTN.

Additionally, along with a stake in Bharti Airtel’s holding company, it was assumed that MTN and its shareholders would also be offered a combination of equity shares, convertible instruments, warrants at Bharti Airtel under a Scheme of Arrangement. Another model that was speculated about involved Bharti and its promoters including SingTel floating a special purpose vehicle (76:24 or 51:49) for the deal.

The new foreign holding norms give enough headroom for Bharti to route MTN’s entire holdings in it through GDRs on an expanded equity base. This is because, new FDI norms, notified under Press Notes 2, 3 and 4 by the previous UPA government, considers a company Indian-owned if Indian promoters hold a majority stake in it, and the investments made by such companies in any JV or downstream venture are also treated as Indian.

Hence Bharti Airtel, which had close to 70% foreign equity stake as per the old guidelines — where ‘beneficial ownership’ is interpreted to include indirect holding — has only close to 43% FDI under the new norms. This is because a significant part of SingTel’s 31% holding in Bharti Airtel as well as Vodafone’s entire stake are routed through majority-owned Indian companies.

Related stories at

• http://www.hindustantimes.com/StoryPage/StoryPage.aspx?sectionName=RSSFeed-Business&id=a45dfe22-9c89-4875-90fd-8b05cd3cbde8&Headline=MTN+may+take+Bharti+stake+through+GDRs

Win Free Talk Time With Airtel’s Talk Time Jackpot

From www.efytimes.com on June 13, 2009

Saturday, June 13, 2009:  Airtel is providing its pre-paid customers a chance to win a Talk time jackpot. This new offer guarantees the customer free talk time; the only thing that a customer has to do to avail this offer is to type ‘BEST’ and SMS it to 222 for knowing the Jackpot Recharge.

“We are delighted to launch this offer to all our pre-paid customers,” said Venkatesh V, CEO, mobile services, Bharti Airtel Ltd, Karnataka. “After pioneering affordable mobile services, Airtel is taking another step forward to connect deeper with its pre-paid customer base and delight them. This full talk time offer helps Airtel customers communicate more with their loved ones and stay more connected, sans cost barriers. We hope all our pre-paid customers utilise this ‘full value for money’ offer and benefit immensely from it”.

Every customer will get his full talk time option by means of a return SMS. On recharging for the Jackpot amount in the SMS received, the customer will get the default talk time online. The remaining talk time will be credited to the customer’s mobile account within the next 48 hours.

2G allocation: DoT to seek more time

Thomas K Thomas in The Hindu Business Line on June 13, 2009

New Delhi, June 12 The Department of Telecom will seek more time from the telecom tribunal to decide on the policy for allocating 2G spectrum for mobile operators.

The deadline to decide on the policy is today, according to a judgment given by the Telecom Dispute Settlement Appellate Tribunal in its order of March 31, 2008.

The tribunal had asked the DoT to finalise the policy one month after the spectrum committee submits its report. Since the spectrum panel submitted its proposals on May 13, the DoT would have to take its final decision by June 13, according to the directions of the TDSAT. The DoT had, therefore, put on hold fresh allocation of spectrum till the policy was finalised.

However, the DoT has taken a view that it needed more time to review the recommendations of the committee, which mooted sweeping changes in the way spectrum is allocated.

Differences over policy

There are differences between the spectrum panel and the Communications Ministry on the policy. While the panel suggested giving spectrum through an open auction, the Telecom Ministry is in favour of continuing with the existing subscriber-linked criteria. “Since it is not possible to take a final decision with one month in view of wide ranging implications and report being reformist in nature we may request TDSAT to grant more time for Government decision on the report,” said a top DoT source.

The DoT also plans to consult the telecom regulator before it takes a final view on the allocation procedure. Earlier, top Ministry sources had told Business Line that the panel’s report may not be acceptable since it will disturb the level playing field in the mobile segment between new and old players.

DoT sources said it will decide on spectrum allocation criteria within six weeks. This means that operators such as Bharti Airtel and Reliance Communications, which have sought additional spectrum in some of the circles, will have to wait till then.

Bharti, Vodafone to bring iPhone 3GS to India in Aug

12 Jun 2009, 0740 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: India’s leading GSM telecom operators — Bharti Airtel and Vodafone Essar — are set to bring Apple’s latest iPhone, called iPhone 3G S, to India in August. The new iPhone 3G S, which offers faster data speeds, a new camera, video recording, compass and voice control, was unveiled in US earlier this week.

In India, Apple has exclusive tie-ups with Bharti and Vodafone and this is one of the few markets where the US-based technology firm has a tie-up with two operators. Bharti and Vodafone jointly account for over 170 million of the over 400 million cellphone users in the country.

Apple had issued a guidance, saying the iPhone 3G S would make its debut in India in August, but refused to specify the date and the pricing for the country. The guidance also added that the handset would be launched in 31 other countries in August. Additionally, as per information made public by Apple, the iPhone 3G S will go on sale in 10 countries, including the US on June 19, and another 32 countries in the month of July.

Both Bharti Airtel and Vodafone Essar did not offer comments to a detailed query sent by ET.

In India, the new iPhone from Apple is set to face competition from smartphones such as Nokia’s N97 and similar offerings from BlackBerry and Samsung. Another handset that can be a potential threat to Apple’s new product is the Palm’s Pre which has just hit the US market, but is currently not available in India.

But, unlike handsets such as Nokia’s N97, the new iPhone 3G S will have a unique advantage as it has over 100,000 applications and also enjoys the support of the most vibrant and innovative developer community in this space. This implies, Apple’s product is more than just a technically superior handset, but more of a software platform with thousands of custom-made applications.

However, the catch is that the earlier model of the iPhone’s India entry has been a huge failure both in terms of sales (due to an unviable distribution model) coupled with a steep price tag and poor advertising which resulted in the brand failing to connect with customers here.

Also, customers in India who had followed Apple’s pricing globally during in other countries and believed that the iPhone would sport a similar price tag of $199 here were put off by the fact that they would have to shell out more than three time the amount to buy the product. Worse still, market watchers say that neither Apple nor Bharti and Vodafone Essar put in the efforts to explain the difference in market dynamics in India which led to the higher pricing here which left customers confused.

Market watchers and analysts also say that Apple’s decision to go in with only Bharti and Vodafone Essar in India was flawed, especially considering that GSM operators here are not major players in the handset retail space. This is because, GSM players rarely bundle handsets and restrict such offering to the lower-end phones in non-urban and rural markets.

For consumers, some of the new features that come with the iPhone 3G S include its ability to remember text that has been entered once, thereby eliminating the need to retype e-mail addresses, postal addresses or usernames, the digital compass which aids in navigation and a host of features that make it friendly for the disabled. Besides, it also comes with Apple’s own earphones along with a multi-button remote, but with a single control key and a mic.

Related stories at

• http://economictimes.indiatimes.com/India-to-ring-in-new-iPhone-in-August/articleshow/4647452.cms
• http://economictimes.indiatimes.com/Apple-hopes-to-fare-well-with-iPhone-3G-S-this-time/articleshow/4651934.cms