Wireless broadband bids may hit Rs 5,500 cr

BWA bidders eyeing LTE and 4G

Bhaskar Hazarika

New Delhi: With 11 companies filing for pre-qualification in the auction of the only two available slots of broadband wireless access (BWA) spectrum in each circle, the price bids could see stiff contest.

According to an ABN Amro equity research report, “Participation by global players like Qualcomm could intensify the BWA bidding. The higher competition could drive the BWA bid price to $1.2 billion (Rs 5,500 crore).”

This will be way above the reserve price of Rs 1,750 crore that the government has fixed.

According to the report, of the 11 pre-qualification applicants, seven are existing holders of the unified access service licence and internet service provider licence.

“Unlike in 3G, we expect bidders to take a pan-India approach, given the nascent market. While we estimate the BWA spectrum final bid at $1.1 billion to $1.2 billion, factoring in high competition, we do not rule out irrational bidding,” the report says

“The reason could be the participation of global players such as Qualcomm,” the report says. ‘Non-serious’ players may bid with a view to eventually monetising the licence or spectrum, it adds. The ABN Amro report says it has assumed four to five ‘serious’ bidders in each BWA circle.

The seven existing licence holders are Bharti Airtel, Vodafone, Reliance Communications, Idea Cellular, Tata Communications, Aircel and Tikona. The four new players that want to enter the filed are Qualcomm, Spice, Augere Mauritius and HFCL.

The auction of the BWA spectrum will be held on two days after the completion of the 3G auction. A senior official of the DoT said,“It is an unusual phenomenon. We did not expect such intense competition in BWA. The interest surpasses that shown in 3G.” He added that the BWA spectrum was efficient for long-term evolution and 4G services. Through BWA, operators would be able to offer high- speed wireless data services. Should the government allow voice-over-internet protocol (VoIP) or internet telephony, operators could use BWA to offer voice services as well. For BWA services, DoT will auction radio frequencies in the 2.3 GHz band unpaired and in blocks of 20 MHz. Sistema Shyam Teleservices president and chief executive Vsevolod Rozanov said that his company, as a new player, was not looking into 3G or BWA. “However, we see BWA as a business potential for India,” he said.

© Financial Chronicle

Unlocked Apple iPhone 3G S for India in April

The device will be available for one-year lock-in

Bhaskar Hazarika

For the first time an official, unlocked iPhone will be available in India. By midApril, Apple will launch the iPhone 3G S in India, more than 10 months after its global launch reports Bhaskar Hazarika in New Delhi.

The high-end handset will be sold in the open market, not necessarily only through Apple stores or telecom operators.

However, there is another lock-in condition  a buyer of the new model cannot change the operator for one year. The handset will get automatically locked if the SIM card is changed during the period.

The open-market sale indicates Apple has learnt its lessons in India, which gave a lukewarm response to the iPhone 3G launched in August 2008. A person close to the development told Financial Chronicle that the model, locked and tied to specific telecom operators, gave little Indian business to Apple. Hence, the change in strategy.

According to market estimates Apple has sold at the most 30,000 iPhone 3G handsets through Airtel and Vodafone in India. No data from Apple were available.

However, the iPhone 3G S, launched globally in June last year, is already available in the Indian grey market.

The industry estimates that Indian grey market sales of iPhone 3G and 3G S could be between 80,000 and 1,00,000 handsets.

Among operators Airtel and Vodafone will offer the new model. But Apple is also in talks with other operators. With India readying for 3G services, it makes sense for Apple to dovetail its marketing strategy to the needs of the Indian market. An email sent across to Apple failed to elicit any response.

Last week Bharti Airtel in an official statement said the iPhone 3GS would be launched in India in "the coming months". It did not specify any date.

The iPhone 3G S is sold globally in two models: 16GB and 32GB. On the AT&T network in the US the 16GB model is available for $199 (about Rs 9,950) and 32GB for $299 (Rs 14,950) on a bundle offer with a two-year lock-in.

Compared to the earlier iPhone 3G, the iPhone 3G S is faster and with longer battery life. It supports speed of 7.2 mbps and has a 3 megapixel auto-focus camera.

© Financial Chronicle

DoT to lift S Tel ban

FIPB to take a call on S Tel stake hike application today

Bhaskar Hazarika & Sanjeev Sharma

New Delhi: The controversy over the lawful interception issue for new telecom operator S Tel could end in a couple of days.

A top official in the department of telecom (DoT) on condition of anonymity confirmed to Financial Chronicle that the issue had been resolved and the permission for unrestricted services would be granted to the company.

Lawful interception is a technological process through which security agencies can intercept voice as well as data signals transmitted across telecom networks.

"There have been issues over lawful interception in three circles, Himachal Pradesh, Orissa and Bihar, and for which DoT had sent a notice to S Tel. The matter has been now resolved and the clearance certificates will be issued within a couple of days," the official said.

According to him, the lawful interception permission is granted by security agencies and renewed from time to time.

The official said that the reason why S Tel was told to stop services in the three circles on March 5 was that the operator had failed to maintain the interception guidelines there. "Once the software for interception is installed or restored, as promised by the company, DoT will lift the ban," he added.

S Tel's chief executive officer, Shamik Das, told Financial Chronicle, "We have had talks with DoT and the matter is getting resolved. We are expecting a communication from the department." S Tel also met communications and minister A Raja to resolve the issue of lawful interception.

S Tel had earlier challenged in the Supreme Court the DoT decision to advance the cut-off date for applying for new 2G licences from October 1 to September 25 in 2007.

The company has licences to operate in six circles and has begun operations in three where it has 8,00,000 subscribers. Das said the company was waiting for spectrum to start services in the remaining three circles --North East, Assam and Jammu & Kashmir.

In January S Tel grabbed 20 per cent of all new subscribers. It added to its base 3,64,000 subscribers in that month.

S Tel is a joint venture between the Chennaibased Siva group and Bahrain Telecom Company (Batelco), which has 42.7 per cent in the telecom company. S Tel has sought approval from the foreign investment promotion board (FIPB) to hike the foreign direct investment in it to 49 per cent. The application will be taken up for consideration on Friday.

© Financial Chronicle

Price war to infect post-paid and international roaming charges

S Tel and Uninor garner substantial subscriber addition in January

Bhaskar Hazarika & Sanjeev Sharma

New Delhi: The price war sparked by new entrants like S Tel and Uninor in prepaid rates, that has helped them garner a substantial number of subscribers, may now be looming on the postpaid rates, corporate connections, wireless data, international roaming and SMS.

According to analysts, competitive pricing is likely to spread. The director for telecom at KPMG, Romal Shetty, said that the short term would be difficult for the operators but positive growth was possible in the long term.

"We will next see a fall in tariffs of other services such as international roaming, data services and postpaid," Shetty said. In January mobile operators added 19.9 million subscribers. Vodafone added 2.74 million, Bharti Airtel 2.85 million and Tata Teleservices 2.98 mil- lion.

On the other hand, S Tel added 3,64,000 in three circles and Uninor 1.33 million in eight circles.

According to a Macquire equities re- search report, "A further ramp-up and rollout of services by greenfield entrants will likely lead to a further cut in prepaid rates. The report says that as greenfield op- erators Uninor and S Tel ramp up their GSM services, competition will intensify, hurting the revenue market share and profitability of older GSM operators.

Industry net additions, says the report, reached 13.9 million, helped by a ramp-up by the newcomers, with Uninor capturing 33 per cent of the net additions in its eight circles and S Tel cornering 20 per cent in January.

Uninor's executive vice- president of corporate af- fairs, Rajiv Bawa, said that in a market this competitive, there was bound to be price competition in all telecom products. "But our view also is that a differentiation based only on pricing is always shortlived. It will last only as long as the next lower offer. A long- term dif- ferentiation has to be based on much more  better cus- tomisation of the product for distinct consumer needs and an overall focus on quality of service," he said.

"For Uninor, it is much more than how many paise are raised every second," he added.

Commenting on the pressure of margins on oper- ators, Bawa said, "Some op- erators look at subscriber additions at any cost. Others look at a low-margin, high- volume play. Then some others seek to deliver the lowest costs, but to a certain kind of customer. Irrespec- tive of the approach, howev- er, it is clear that the tele- com sector requires a long- term commitment and long- term business ambition.And the model must make for a sound business case."

The CDMA operators lobby, Association of Unified Service Providers of India's secretary-general, S C Khanna, said the market was under pricing pres- sures. "However, we do not see further cuts, but there will be competitive offers and packages for cus- tomers," he said.

The chief corporate officer of Idea Cellular, Rajat Mukarji, said, "We are in a hyper competitive market. But this is not sustainable in the long term for new opera- tors, as they do not have the coverage others have. Serv- ices such as wireless data are niche segments not mass subscriber services. It is difficult to forecast if the competitive pricing will enter these segments."

The CEO of S Tel, Shamik Das, was not avail- able for comment. Bharti Airtel and Vodafone did not respond to the calls made by Financial Chronicle.

© Financial Chronicle

3G auctions slated on April 9

DoT to issue NIA for prospective bidders on Thrusday

Bhaskar

New Delhi: The government has announced to hold the 3G spectrum auctions on April 9. The Notice Inviting Applications from prospective bidders will be issued tomorrow. The last date for receiving applications from bidders is on March 19. The government will hold mock auctions on April 5 and 6. Two days after the 3G auctions are held, the government will start the auction for Broadband Wireless Access (BWA) or WiMax spectrum.

© Time

Twice-failed Econet little threat to Bharti-Zain deal

Sixth time name change due for Zain Celtel Nigeria BV unit

Bhaskar Hazarika & Sanjeev Sharma

The effort by Bharti Airtel to acquire the Africa business of Zain for $10.7 billion is unlikely to be stalled by efforts of Econet Wireless, a five per cent stakeholder in Zain Celtel Nigeria BV — if history is an indication.

Econet has raised objections to the deal, saying that under the agreement with Celtel (now Zain) it has the right of first refusal. A spokesman for Econet Matt Ridsdale confirmed that the company had objected to the deal between Bharti and Zain. But this is not the first time that Econet has raised objections on sale to a third party — without success.

Bharti and Zain are in exclusive talk till March 25 to forge a deal whereby the Indian telecom major will pick up the African assets of the Kuwait-based company.

In 2003 when Vodacom of South Africa acquired the Nigerian unit, Econet raised objections. But Vodacom was able to acquire the unit. In 2006, Celtel a subsidiary of Zain picked up 65 per cent stake in the company. Once again, Econet moved the court. Again it was unable to stall the deal.

In a statement Econet said it was pursuing arbitration proceedings against Celtel and others to challenge the transaction by which Celtel attempted to purchase a majority stake in Vee Networks (now Zain Nigeria).

“Under the terms of the original shareholders agreement, Econet had the right of first refusal over the stake, a right which was denied in 2006. In those proceedings Econet made an application for interim measures to prohibit Celtel (now Zain), from selling, transferring, disposing of, dealing with or otherwise encumbering the disputed stake until such time as the Arbitral Tribunal has published its final award,” the statement said adding that it was in response to this application that Celtel had provided certain undertakings to preserve the status quo. And these undertakings should be applicable in the case of Bharti’s move to acquire Zain Africa, it said.

The history of telecom in Nigeria is a convoluted thread. Zain’s Nigeria unit was set up as Econet Wireless Nigeria in 2001, named after the South African holding company Econet Wireless International.

In 2003 Vodacom of South Africa entered into talks to buy the company. Econet declined the takeover offer. Despite Econet’s objection, in 2004 Econet Wireless Nigeria was renamed Vee Networks and branded Vodacom. Econet moved the court against the move.

Within less than two months, Vodacom pulled out of the contract. The Nigerian ministry of finance took over the management control of the company and it was branded V-Mobile. In May 2006, Celtel International, a subsidiary of MTC Group (now Zain) reached an agreement with Nigeria to acquire 65 per cent in V-Mobile for $1.005 billion. In September 2007, MTC Group, re-branded the unit to Zain and by August 2008 it had done so for all Celtel operations in Africa.

Econet had started legal proceedings against Vee Networks shareholders and Celtel seeking to declare the sale as void. The case is pending in the court.

If the proposed Bharti-Zain deal goes through, the Nigeria unit will be re-branded for the sixth time.

© Financial Chronicle

Telecom babus have no official mail IDs

WPC employees do more paper work as they do not have official email IDs

Bhaskar Hazarika

New Delhi: India might move to the faster wireless broadband once the government decides to auction the WiMax and 3G spectrum, but the employees of Wirless Planning and Coordination (WPC), wing under the ministry of Communications and IT responsible for spectrum management, are yet to be connected with an official email address.

An official in the ministry of communications and IT told Financial Chronicle that apart from the Wireless advisor and five to six deputy wireless advisors, the majority workforce of 500 people does not own an official email address. “When the country is moving to the next generation technology and we are talking about broadband wireless access spectrum and high speed data on 3G, the authority responsible for frequency management does not have access to email. The employee grade above only the deputy wireless advisor has access to an official email,” he said.The government is planning to conduct the auctions for the 3G and WiMax spectrum by the end of this year.

WPC is the national radio regulatory authority responsible for frequency spectrum management, including licensing and caters to the needs of all wireless users in the country. The government before allocation of spectrum consults WPC on spectrum issues. On the recommendations of WPC, spectrum is allotted to operators depending upon the availability. The Department of Telecom has also allotted official email addresses to officials only above the rank of assistant advisor and assistant director. With India moving ahead to implement next generation technologies, the authority is yet to implement it in their respective departments. “For the government employees email is treated as a perk and not a facility. You are allotted email addresses after an official is promoted to a certain level,” said the communications ministry official.

But other government ministries such as finance and petroleum have allotted official email addresses to employees. An official in the finance ministry said, “Employees are allotted official email addresses but most of them prefer to use their personal emails. We have access to official email.”

© Financial Chronicle