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.

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.

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

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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.