Govt Says No To New Telecom Licences In A Crowded Market

[savramesh 37]

The Economic Times

11 Apr 2009, 0140 hrs IST

CHENNAI/KOLKATA: The communications ministry has decided against granting fresh telecom licences against 343 pending applications, as it looks to prevent unhealthy competition in an already crowded market.

“We have received 343 applications after September 25, 2007, and the government does not intend to grant further licences in the foreseeable future, as there are enough players in the market to ensure competition,” the department of telecom (DoT) said in an internal note dated March 25. DoT has given licences to every company that had applied before September 25, 2007.

DoT’s move will also impact three operators — Tata Teleservices, Sistema-Shyam and Swan Telecom — that have applied for dual-technology licences under which telcos can offer services based on both GSM and CDMA platforms. DoT has sought the Telecom Commission’s (TC) nod to include dual-technology licences of these companies in some circles, along with the other pending applications. The commission is the apex decision-making body of the communications ministry.

Tata Teleservices, which currently offers services using the CDMA platform, has also been awarded GSM radio waves in most areas of the country. However, in three circles — Assam, North East and J&K — the company had applied late for GSM spectrum, DoT said. According the DoT note, the Tatas had applied for GSM licences in Assam in March 2008, and for North East and J&K in December 2008.

Similarly, while Sistema-Shyam has already been awarded CDMA air waves across the country, DoT wants to put its application for a pan-India GSM licence on hold. This is because the company had applied for a GSM licence and spectrum only in March 2008, the note added. Another company that is likely to be impacted is Swan Telecom. Swan has already been issued GSM licences and spectrum in 13 circles and DoT has placed its request for CDMA spectrum.

DoT’s decision to not process these 343 applications also implies that several companies, such as AT&T, Ispat, Moser Baer, DLF and Tulip, which applied for licences between September 26, 2007, and October 1, 2007, will not get second-generation (2G) telecom licences from the government. Some 46 companies had applied for 2G telecom licences, of which 24 applied between September 25, 2007, and October 1, 2007. The government has not accepted any fresh applications for telecom licences after October 1, 2007.

Telecommunications minister A Raja had initially announced that DoT would accept applications for telecom licences until October 1 2007, and this resulted in about 46 companies applying before this date. However, Mr Raja subsequently advanced the deadline to September 25, 2007, which resulted in a few select Indian companies, including Swan, Datacom, Unitech, Loop and STel, getting telecom licences.

Edited April 13, 2009 by savramesh

[commonman 228]

what happened to the "Competition is good for the Consumer" theme? or was it a ploy to allow late entry to some favoured co.?

[SUDYEcaZ 67]

There should be Spectrum for competition.

Already enough players in each circle....down 5 years we might c consolidation of players...

[KumaarShah 143]

The saying, "The more the merrier" in the above case will not hold true.

IMHO, we now have enough competition already. There will be atleast a dozen operators in each circle - both GSM and CDMA. So this is enough for competition. Else we will reach a stage where we will buy a new SIM card every fortnight or month, just to try out the services. Just imagine if there are another couple of dozen operators offering services. What will happen then? Do you think we will get free calling? There will be cartelisation (much like Airtel, Voda, !dea did some time back) and we as consumers will be hit badly.

Edited April 11, 2009 by KumaarShah

[ravi_patent 28]

.and till now everybody seems to be a part of the cartel (termination charge reduction without the subsequent reduction in call charges is a good example).let us see how MVNO's are going behave..

Edited April 11, 2009 by ravi_patent

[savramesh 37]

Business Standard

Rajesh S Kurup / Mumbai April 13, 2009, 1:16 IST

New telcos to invest $2 bn

Firming up their rollout plans, the new telecom licensees will invest around $2 billion in the next four months for the rollout of their services.

The investment, necessitated by regulations, is significant as it comes at a time when other sectors are shying away from fresh investments due to the ongoing economic slowdown.

“The new players will have to commence operations soon, as the conditions of spectrum allocation require a company to fulfil certain rollout obligations (depending on the circle of operations), including launching of services within a stipulated period. Now that the companies were awarded spectrum last year, the government is putting pressure on them to start operations,” Gartner Principal Research Analyst Naresh Singh said.

The Department of Telecommunications (DoT) mandates that a company has to commence the rollout within six months of getting spectrum. It also states that phone firms have to cover 10 per cent of all district headquarters in the licensed area within one year and 50 per cent of the district headquarters in the licensed area within five years.

Companies like Shyam Sistema (which has got spectrum for 22 circles), Unitech Wireless (21 circles), Datacom Solutions and Loop Telecom (both received spectrum for 20 circles), and Swan Telecom (14 circles) are gearing up to commence 2G operations in the next six months. STel (5 circles) and Tata Teleservices (which already has CDMA operations) are also getting ready for GSM operations.

The new telecom licensees were awarded spectrum during the previous allocations in February 2008, after the companies paid Rs 1,651 crore as licence fee.

These companies will invest around $2 billion in the next four months, according to an independent industry research. Further, announcements of commencement of operations are expected in the next four months, with telcos expected to undermine each other by launching predatory tariffs and plans, according to a telecom analyst.

The telecom companies are also in talks for infrastructure sharing with tower companies. For example, Quipo Telecom Infrastructure will lease out towers for the rollout of Unitech Wireless’ entire circles and 40 per cent of Swan Telecom’s tower requirement. The infrastructure provider is also in advanced stages of discussions with STel and a couple of new players.

“The requirement of towers is huge, as the companies are looking at commencing operations at the earliest. And due to the difficulties in raising funds, companies are increasingly opting for sharing of towers rather than setting up their own. There is an increased demand for leasing of towers,” said Quipo Telecom CEO Probal Ghosal said. “Absolutely true”, agreed Vikas Arora, Vice President (marketing) of GTL, another passive telecom infrastructure provider. The company, which already provides infrastructure to existing operators, is also in talks with new licensees.

“It is always our belief that passive and ultimately active infrastructure will have to be shared to reduce composition of capex in the operators’ business plan. Furthermore, the ready availability of infrastructure will lead to quick market penetration,” Arora said.

The new players are also in talks with vendors for equipment and active infrastructure. While companies like Loop Telecom (a subsidiary of Loop Mobile) have placed equipment orders with ZTE, Datacom Solutions is in advanced stages of discussions with Huawei. Shyam Sistema, Swan and Unitech Wireless are also close to announcing the names of the vendors.

On the other hand, some of the established players which had received spectrum for their expansion plans are making additional investments. Idea Cellular has committed Rs 1,000 crore investments in the next 3-4 months (for rolling out services in Chennai, Tamil Nadu, West Bengal and Kolkata circles), while Aircel Communications has announced investments of $5 billion in the next three years.

[savramesh 37]

New telecos have a long road ahead for break-even

Economic Times

13 Apr 2009, 0413 hrs IST

MUMBAI: New telecom operators are likely to face rough weather in the world’s fastest-growing telecom market. They will turn free-cash flow positive not before seven years. New entrants like Telenor-Unitech, Swan Telecom and Videocon’s Datacom Solutions face challenges of brand building, distribution, spectrum availability, organisation building, negative free-cash flow and scale, according to a recent UBS report.

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