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

Multiple SIM usage to impact top line margin for telcos

Bhaskar Hazarika & Sanjeev Sharma

New Delhi, December 20: The increasing usage of multiple SIMs will have an adverse impact on the revenue of operators in the long-term. With dual and three SIM phenomenon there will be a fragmentation in the minutes of usage on the operators.

According to a Macquarie report, “Subscribers take-up activity is becoming increasingly irrelevant, with dual and three SIM phenomenon increasingly visible. Minutes of usage fragmentation across multiple SIMs from different operators will pressure telcos top line.”

According to data from the Cellular Operators Association of India, GSM operators (excluding GSM SIMs for the two large CDMA operators Reliance Communications and Tata DoCoMo) added 11.1 million SIMs in November. In October the GSM operators added 10.3 million SIMs, 8.6 million in September, 9.3 million in August.

President of Indian Cellular Association, Pankaj Mohindroo said that there has been significant increase in the number of multiple SIM usage among the subscribers. “According to industry estimates the dual SIM card handset users in the market is around 25 million. If you take in to account the Delhi circle there are 25 million subscribers compared to the total population of 17 million. This clearly states that the number of SIM cards has surpassed the total population,” he said.

Chief corporate affair officer of Idea Cellular, Rajat Mukherji told Financial Chronicle that multiple SIM usage is witnessed predominantly in the circles where the tele-density is relatively higher. “The premium markets are witnessing the growth of multiple SIMs. However, there is a clear distinction between the voice and the non-voice segment. When an individual uses two SIM cards, he makes clear distinction in his usage pattern --- one for voice usage and the other for data, vas services,” he said.

Mukherji added that a lot of BlackBerry subscribers have their second phone, which is used primarily for calling. “Since the tariffs are already low for almost all the operators, we do not see any tariff arbitrage in this case. This is an industry wide phenomenon, which all the operators are likely to face,” he added.

Emails sent across to Vodafone, Bharti Airtel and Aircel did not elicit any response.

With cloud of uncertainty hovering over the mobile number portability (MNP), the consumer is left with no other option than to get an additional SIM card for his use. It may be noted that the existing SIM card continues to be under usage, only to retain the number. Mobile number portability was earlier slated to be launched on December 31, but has been deferred by three months. The operators have expressed their inability to launch the service stating that the implementation of the service is not complete.

© Financial Chronicle