Tatas, Aircel Only Takers For Mtnl 3G Airwaves

[Honest 836]

Tatas, Aircel only takers for MTNL 3G airwaves

The Economic Times l 1st January 2011 l New Delhi

Tata Teleservices and Aircel are poised to bag third-generation spectrum in the lucrative Delhi and Mumbai metros as they are the only bidders for MTNL’s offer to share its 3G network with two firms that pay the highest price.

Aircel had won 3G airwaves in 13 circles and Tata Teleservices in nine when these frequencies were auctioned last year, but both these companies had failed to bag spectrum in Delhi and Mumbai. They had lost out to the country’s three largest mobile phone companies by both revenues and customers—Bharti Airtel, Reliance Communications and Vodafone Essar—in these metro cities, which are estimated to account for a fifth of the mobile industry’s revenues.

MTNL had set `1,400 crore as the base price per operator when inviting bids from other telecom service providers to use its 3G frequencies, which enable services such as video calling and high-speed internet on phones.

The state-owned operator will make a minimum of `2,800 crore from this deal. “The financial bids of both Tata Teleservices and Aircel will be opened in January—it is possible that the bid amount may be comparatively higher than the base price,” a top MTNL executive with direct knowledge of the development told ET.

“There is also a revenue-share component—this depends on the type of 3G service offered—for instance, there are different slabs for voice and video calls, high-speed internet and other data services,” this executive added.

Both Tata Teleservices and Aircel declined to comment, but a top executive from one of these companies confirmed that they were the only mobile phone companies to have submitted bids to MTNL.

Talks on for roaming alliances

All the six private players that won 3G airwaves are in talks with each other for strategic roaming alliances to offer these high-end services across the country. Such alliances have been made necessary since no player had won pan-India 3G airwaves during the auctions.

So far, only two private operators—Reliance Communications and Tata Teleservices—have launched 3G services.

The deal also involves the winners sharing 3G airwaves outside these metro cities with MTNL when the latter’s customers are on roaming. Between Aircel and Tata Teleservices, the duo jointly has 3G airwaves in all circles except Himachal Pradesh. Put simply, the deal will also enable MTNL to offer third-generation services on a pan-India level, except in Himachal Pradesh, for which it is in talks with BSNL.

MTNL’s shares closed 2.91% higher on Friday at Rs 54.85 on BSE. For Tata Teleservices, which is yet to launch GSM-based mobile operations in Delhi, the deal with MTNL will enable the company, in which Japanese major NTT DoCoMo has a 26% stake, to kick off both second- and third-generation cellular services in the city.

While private operators were given 3G spectrum in September 2010, state-owned telcos MTNL and BSNL were given these airwaves in late 2009. Both BSNL and MTNL then matched the winning bids by private companies in the auction process.

MTNL had taken a Rs 7,000-crore loan to pay for 3G airwaves in Delhi and Mumbai, and company executives said the spectrum-sharing deal will enable them to meet interest costs and also partly service this loan.

Idea Cellular, which had won 3G airwaves in 11 circles, but not Delhi and Mumbai, did not put in a bid. An industry executive said Idea’s failure to participate was yet another indicator that the Aditya Birla group company along with Bharti Airtel and Vodafone Essar was working out a strategic to offer third-generation services on a pan-India level.

These three GSM telcos jointly have 3G spectrum in all circles except Orissa. Bharti had bagged 3G airwaves in 13 circles and Vodafone Essar in nine. They also jointly own the world’s largest telecom infrastructure company, Indus Tower, enabling them to share mobile networks for 3G rollout.

[Karthik R 246]

Put it this way, Tata Docomo, which is yet to receive start up spectrum in Delhi, can offer both 2G voice plus 3G data service with this agreement with MTNL?

They are going to come up with some unbelievable tariffs and plans to break into the saturated market and tempt subscribers to join them

[vvinayakpai 26]

^^^^^^^^

Also this ia spectrum sharing agreement with MTNL. No fresh spectrum is confferred to Tata Docomo by this agreement. What about the congestion on the networks of both Docomo and MTNL?

[inception 75]

so when Tata docomo 3G users roam to Delhi/Mumbai his 3G experience will be on MTNL's 3G network! Certainly roaming with 3G will be costly. But who is using tata docomo 3G ??

[me_saket 73]

I think it's strategic fit For Docomo to enter into Most lucrative circle of mumbai(very close to for TTML)

And to overcome uncertainty by entering into mtnl With ready Spectrum of 2G and 3G airwave.

As We all know MTNL is still lagging to add more subscriber in there 3G n/w, So with Docomo,

It will be win-win situation for both without any n/w congestion. With relif to MTNL to pay it's Debt(whch they were not ready to take and imposed by govt)

Also it's very cheap for docomo and aictel to get Spectum At just half cost compared to rel,voda and airtel(Delhi-3316 cr, mumbai-3247 Cr)

In Nutshell

So docomo/aircel need not manage 3g network

Get spectum at half cost

Roaming for other circle subsciber.

Possible MTNL will outsource there subsciber to these operator for managing/marketing them.

Ready network ,can start getting subsciber/income from Day 1.

Cheaper tariff compared to rel,voda and airtel bcoz of low cost and revenue sharing agreement.

If tripalate agreement between MTNL+AIRCEL+DOCOMO will resolve there Roaming issue completely, as They overlap only punjab+karnatak+kerala circle.

So wiating for this deal to be realized.

This also shows that Consolidation between operator is on move.

Docomo being Stong player may buy MTNL and aircel in future.

Edited May 30, 2011 by me_saket

[Honest 836]

Yes, agreed with Saket. It will be a win-win situation for all the three operators....MTNL, Docomo and Aircel.

[Karthik R 246]

In a related development, State-owned BSNL is set to invite bids from private operators to share its third generation airwaves, a company official told ET.

The telco is of the view that it can raise between Rs 2,500 crore to Rs 5,000 core over five years if it were to enter into roaming arrangements with two players for its third generation airwaves.

"Having tracked MTNL's success in attracting bids (for sharing its 3G airwaves by entering into roaming agreements, we are working to put in place a similar model," BSNL's acting chairman and managing director Gopal Das told ET.

BSNL has 3G airwaves in all circles except in Delhi and Mumbai. The telco had to shell out over Rs 10,000 crore for these airwaves, as it had to match the bids by private operators.

The 3G auctions, which took, place last year failed to throw up a pan-India licence holder. The country's top two mobile firms—Bharti Airtel and Reliance Communications (RCOM) —each won 13 of the 22 telecom zones on offer while other major operators Vodafone Essar, Idea Cellular and Tata won a total of nine, 11 and nine circles, respectively.

Analysts also say in a bid to retain their high-end users, all telcos are set to enter into roaming agreements with each other, a move that can enable them offer high-end data services even in those regions where they have not bagged 3G spectrum. This is not spectrum sharing, but a commercial pact where operators can offer its customers 3G services on another operators' platform.

For BSNL, which has failed to make any significant progress in attracting 3G customers, despite having a first mover advantage, the revenues from sharing 3G spectrum will help the company reduce its losses. BSNL saw its overall revenue fall from Rs 32,842.30 crore in 2007-08 to Rs 30,169.42 crore in 2008-09 and further to Rs 27,913.44 crore in 2009-10 and has reported revenues of Rs 13,823.96 crore for the first half of the current financial year (2010-11). BSNL's fall from grace is best explained from the fact that its annual revenues were over Rs 40,000 crore for the year-ended March '06.

ET had earlier reported that BSNL, which suffered from rampant political interference and neglect under former telecoms minister A Raja, had recently announced a loss of Rs 1,823 crore for the year to end-March , a first for the company since it was set up, while also adding that the actual losses are as high as Rs 5,955 crore during this period. The telco only managed to reduce its losses due to its Rs 4,132 crore income from non-telecom related activities.

Courtesy : Economic Times