Business Today

Telecom's new wannabes

Unitech and Videocon are among them, but what about spectrum?

Print Edition: February 24, 2008

Incumbent operators cringe, customers rejoice. With the Department of Telecom doling out 121 new licences, there is a gaggle of telecom player wannabes that promises to hit the market soon. Some of them, like Unitech and Videocon (See Who’s Got What?), have no previous experience of operating telecom networks (but then, neither did Bharti Airtel or Reliance Communications, 10 years ago), yet incumbent operators must be fearful because in some metros and states (such as Delhi and J&K) there may be at least 10 to 11 networks to choose from.

In a metro circle like Delhi, where customers have a choice of four operators in the GSM category, cell phone users may now get to choose from a bouquet of 11 operators. Even Jammu & Kashmir, which has just three operators (Airtel, Dishnet and BSNL), will be able to choose from 10 service providers, as seven new operators are set to launch networks. While Mumbai and Kolkata will get four and five new operators respectively, (which is treated as one circle) will get seven new operators each. All that apart, there’s Reliance Communications, which already operates CDMA services across the country, but has received GSM licences for six new circles. Including the eight circles where it already offers GSM telephony, Reliance will now be present in 14 circles as a GSM operator.

The only hitch, industry watchers say, telecom’s new wannabes are likely to encounter is allocation of spectrum. “Licencees in the past have had to wait endlessly for spectrum to launch services,” cribs one. Telecom Secretary Siddharth Behera, however, brushes aside such remarks. “I think we have decided to grant licences only after exploring the availability of spectrum, and I am sure that there will be no room for disappointments,” he says.

Sanjay Chandra
Sanjay Chandra
Perhaps because of such assurances or otherwise, the newcomers, including Unitech, Swan (Reliance Communications had a 9 per cent stake in it sometime ago), Datacom Solutions (of Videocon) and Shipping Stop Dot (an Essar entity) are enthusiastically gearing up for launch. Unitech, which refused comment, is said to be scouting for an operating partner (apparently, foreign) for both capital and know-how. Videocon already partners US giant Verizon in long distance telephony in India, but could be looking for a different partner in this venture. “GSM services will be launched by the end of 2008, subject to the availability of spectrum,” says Venugopal Dhoot, Chairman, Videocon Group, that now has licences to operate in all 22 circles.

 BPL Mobile CEO S. Subramanium (BPL Mobile is an Essar company, too) also says that he’s waiting for spectrum to kick-start operations. “We are exploring fund raising options to enable us to start services simultaneously in at least 20 circles at the earliest,” he says, adding that the company plans to invest about “$2 billion (Rs 8,000 crore) initially to commence operations.”

Noida-based Shyam Telecom, headed by Chairman Rajiv Mehrotra, is another player that has now stepped onto the GSM turf in a big way. It already has a licence to operate in Rajasthan, but now with new licences can become a pan-India operator. One man who must be licking his wounds is B.K. Modi of Spice Telecom, which was denied fresh licences altogether because of insufficient networth. It will be interesting to see how many of the new licencees actually launch services, and how many encash it by selling out even before the first call is made on their networks.

— Amit Mukherjee

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