NEWS - TELECOM
Airtel enters international airspace
Bharti Airtel customers will soon be able to make and receive calls on their mobiles, send text messages and even access data while travelling on select international airlines, with India's largest mobile phone operator entering into an agreement with an inflight solutions firm. Bharti has tied up with AeroMobile, the world's largest inflight solutions company, which currently has agreements with several global carriers such as Emirates, Qantas, Malaysia Airlines and Turkish Airlines. Bharti will be the first Indian telco to offer this facility to its customers. Globally, several operators across Europe, the US and Australia offer inflight services. Bharti Airtel's chief marketing officer Raghunath Mandava said 434 international flights that has this facility had taken off/landed in India in April. AeroMobile, a UK-based company majority-owned by Norway's Telenor, is in the process of entering into tie-ups with more airlines and this number is set to increase, said Mr Mandava. "While AeroMobile has tie-ups with Emirates & Malaysia Airlines, not every aircraft on their fleet will have this facility. It will depend on whether the aircraft allotted on that route has been wired by AeroMobile. But, passengers will be informed during their bookings if the facility is available on the flight," he said. Airtel customers will only have to activate their international roaming to use the service. On the tariff front, the rates will be similar to what Indian customers pay when they avail international roaming in Norway. This is because, AeroMobile is majority-owned by Norway's Telenor. An outgoing call will cost Rs 188 per minute while it will be Rs 24 per minute for incoming calls. Passengers will be charged Rs 41 for an outgoing SMS while incoming SMSs will be free. Bharti did not give any revenue projections, but said it was targeting niche customers flying abroad. Passengers on international flights will not be able to use their handsets while flying over India as existing regulations do not permit cellular services on aircraft flying over Indian air space. "This facility will remain with the Captain of the aircraft. He can switch it on when the aircraft is outside the Indian air space, or turn it off, when it enters the country," Mr Mandava said. In March, Malaysia Airlines, announced that passengers using in-flight mobile services had exceeded 40% of the total. "Data devices such as BlackBerry are proving to be popular, with data traffic on some flights exceeding 2MB, the equivalent of 40 Black-Berry users sending and receiving email," the airline added in a statement. According to AeroMobile's website, caller ID will also function as normal during inflight calls. "Simply switch your mobile phone on inflight to access GSM services, just as you would while traveling abroad. You will be billed via your existing mobile phone service provider. GPRS and all other IP based services (e.g. internet) is available. More applications will become possible once higher speed satellite communications services become available," the company website says. AeroMobile has an agreement with the world's largest aircraft maker Boeing whereby the latter will install this technology in all the new planes it manufactures.
Bharti Airtel customers will soon be able to make and receive calls on their mobiles, send text messages and even access data while travelling on select international airlines, with India's largest mobile phone operator entering into an agreement with an inflight solutions firm. Bharti has tied up with AeroMobile, the world's largest inflight solutions company, which currently has agreements with several global carriers such as Emirates, Qantas, Malaysia Airlines and Turkish Airlines. Bharti will be the first Indian telco to offer this facility to its customers. Globally, several operators across Europe, the US and Australia offer inflight services. Bharti Airtel's chief marketing officer Raghunath Mandava said 434 international flights that has this facility had taken off/landed in India in April. AeroMobile, a UK-based company majority-owned by Norway's Telenor, is in the process of entering into tie-ups with more airlines and this number is set to increase, said Mr Mandava. "While AeroMobile has tie-ups with Emirates & Malaysia Airlines, not every aircraft on their fleet will have this facility. It will depend on whether the aircraft allotted on that route has been wired by AeroMobile. But, passengers will be informed during their bookings if the facility is available on the flight," he said. Airtel customers will only have to activate their international roaming to use the service. On the tariff front, the rates will be similar to what Indian customers pay when they avail international roaming in Norway. This is because, AeroMobile is majority-owned by Norway's Telenor. An outgoing call will cost Rs 188 per minute while it will be Rs 24 per minute for incoming calls. Passengers will be charged Rs 41 for an outgoing SMS while incoming SMSs will be free. Bharti did not give any revenue projections, but said it was targeting niche customers flying abroad. Passengers on international flights will not be able to use their handsets while flying over India as existing regulations do not permit cellular services on aircraft flying over Indian air space. "This facility will remain with the Captain of the aircraft. He can switch it on when the aircraft is outside the Indian air space, or turn it off, when it enters the country," Mr Mandava said. In March, Malaysia Airlines, announced that passengers using in-flight mobile services had exceeded 40% of the total. "Data devices such as BlackBerry are proving to be popular, with data traffic on some flights exceeding 2MB, the equivalent of 40 Black-Berry users sending and receiving email," the airline added in a statement. According to AeroMobile's website, caller ID will also function as normal during inflight calls. "Simply switch your mobile phone on inflight to access GSM services, just as you would while traveling abroad. You will be billed via your existing mobile phone service provider. GPRS and all other IP based services (e.g. internet) is available. More applications will become possible once higher speed satellite communications services become available," the company website says. AeroMobile has an agreement with the world's largest aircraft maker Boeing whereby the latter will install this technology in all the new planes it manufactures.
Sistema Shyam to roll out mobile in Delhi and Mumbai by December
Sistema Shyam Teleservices (SSTL) , a JV between Russia’s Sistema and the Shyam Group, is targeting a 10% market share in the Indian mobile turf in the next five years. Unperturbed by the slowdown, the company is committed to its 22-circle expansion plan by mid-2010, including rollouts in the high-stakes Mumbai and Delhi circles by December. This was indicated by SSTL’s president & CEO Vsevolod Rozanov at the company’s high profile launch of CMDA mobile services in Kolkata on Thursday. "SSTL is targeting around 35-40 million subscribers in five years. We plan to start services in 2-to-3 new circles every quarter. Next in line are the circles of West Bengal, Bihar/Jharkhand. Number portability will also drive growth for us." At present, SSTL operates CDMA mobile services in Rajasthan, Tamil Nadu and Kerala. It offers CDMA mobile services under the MTS brand with around five lakh subscribers. Incidentally, SSTL believes entry into the super-competitive Mumbai and Delhi circles will help it also grow its non-voice revenue. "We are looking at VAS and data services as future revenue streams and we expect Mumbai and Delhi will provide such opportunities," said Mr Rozanov. On the network front, SSTL plans to expand the number of its BTS sites from the present 4,000 to 20,000 by next year. "We have already invested $1.2 billion and are committed to our declared $5.5-billion investment plan over the next 3-5 years. The meltdown has not changed our plans," Mr Rozanov said. SSTL will evaluate possibilities for an IPO next year. The Russian government’s proposed investment in the company has also progressed. "The Russian government has announced a budgetary allocation of $670 million to acquire around 20% stake in SSTL. The deal is likely to be completed in the next two months. But Sistema will continue to enjoy a majority shareholding in SSTL," Sistema senior vice president Sergey Cheremin said. The company currently has 1,500 people on its rolls and plans to take its headcount to 8,000 people as its expands across the nation. Even though SSTL has a GSM licence, it will currently focus only on CDMA as it feels this technology can provide cost competitive service in the Indian market.
Russian govt to infuse $670 mn in Sistema Shyam
The Russian government is likely to pick up equity amounting to $670-700 million in Sistema Shyam TeleServices Ltd (SSTL), a joint venture between Russia-based telecom major Sistema and Shyam Group in India, by the end of this financial year. After the deal, Sistema, which holds a 74 per cent equity stake, might have to shed 20 per cent of it, while Shyam will maintain its 23.5 per cent stake. "The Russian government has already approved infusing about $670 million. We are negotiating with the government regarding the stake sale and valuations. After we get the approval, we will seek Foreign Investment Promotion Board (FIPB) clearance in India," said Vsevolod Rozanov, president and chief operating officer, Sistema Shyam TeleServices, at a press conference here today to announce the commencement of the company's mobile services in Kolkata. The JV company, which aims to have at least a 10 per cent market share in mobile services in the next five years, has prepared a capital expenditure plan of about $5.5 billion over the period in India. Of this, about 40 per cent would come through equity participation by the two companies and the Russian government, said Rozanov. So far, the company has invested about $1.2 bn in India for spectrum allocation and other infrastructure. Sistema Shyam is hoping to have a pan-India presence by the middle of next year. Under the MTS brand, the company now operates in Kolkata, Tamil Nadu, Kerala and Rajasthan cellular circles, with a subscriber base of 9,20,000. It will commence operations in the West Bengal circle soon, said Rozanov. "We intend to cover one circle per month. After West Bengal, we will enter Bihar and Jharkhand, followed by Maharashtra, Delhi and Haryana by December this year,” he added. Meanwhile, the company said it was planning to launch its services in Delhi by August, a move that is likely to intensify competition among the seven telecom players in the national capital.
Govt may levy spectrum transfer fees on telcos going in for M&As
TELECOM operators buying another telco may have to pay 10–20% of the acquisition price to the government. A government committee looking into spectrum-related issues is examining the possibility of specifying a certain percentage of the deal size as spectrum transfer fee in case of a merger and acquisition (M&A) in the telecom space. Members of the committee ET spoke to said it was also considering another option of charging a portion of the market value of the spectrum held by the seller as the spectrum transfer fee. The market value could be determined based on a recent spectrum auction in that particular telecom circle or a comparable one, or after extrapolation from past auctions. In this case, the fee will differ from circle to circle. After its latest meeting this week, the committee has also recommended that the government provide a huge discount on the spectrum transfer fee for a period of 12 months from the date of announcing the new policy to stimulate consolidation in the industry. Last week, as first reported by ET, the committee set up to resolve the controversy over allocation of spectrum to telecom operators had asked the government to modify its policies to allow M&A in the industry and opposed a three-year stock sale ban on companies that acquired telecom licences last year. The committee, which comprises government representatives, telecom regulator Trai, telecom technology experts and industry executives, had recommended that a ‘spectrum transfer fee’ be imposed on all M&A, but had not specified how this fee could be arrived at. Current regulations don’t encourage M&A in the telecom space. For instance, if a large operator like Bharti Airtel were to buy out a new player, then the combined entity would have to return excess spectrum within three months. At present, airwaves are allotted to telcos based on their subscriber base. In this instance, if Bharti has about 8 MHz of airwaves across the country, the acquisition of a new telco, which has 4.4 MHz of start-up spectrum, will take its figure up to 12.4 MHz. Since Bharti will not have the requisite subscriber base to hold onto so much spectrum, it would then have to return spectrum held by the new player. The government had also rejected an alternate framework that would have allowed operators to hold on to this excess spectrum after the merger until they reach the subscriber-linked eligibility criteria. In its earlier draft report, the government committee had conceded that some new players may sell their spectrum or merge with another company, thus making huge profits without rolling out any network. “Such gains can be moderated by levying a spectrum transfer or merger charge on all such transactions. Allowing such moderated gains is a small price to pay for moving to a market-based mechanism for spectrum allotment,” it said. The committee added that the market should be allowed to determine the optimum number of operators by facilitating spectrum transfers and mergers. MONEY CALL Telecom operators buying another telco may have to pay 10–20% of the acquisition price to the government Govt panel also considering option of charging a portion of the market value of the spectrum held by the seller as the spectrum transfer fee Market value could be based on recent spectrum auction in that particular telecom circle or a comparable one AUTO DIAL Current regulations don’t encourage merger and acquisitions in telecom space For instance, if a large operator like Bharti Airtel were to buy out a new player, then the combined entity would have to return excess spectrum within three months Panel maintains that market should have a say in deciding No. of operators by facilitating spectrum transfers & mergers.
TELECOM operators buying another telco may have to pay 10–20% of the acquisition price to the government. A government committee looking into spectrum-related issues is examining the possibility of specifying a certain percentage of the deal size as spectrum transfer fee in case of a merger and acquisition (M&A) in the telecom space. Members of the committee ET spoke to said it was also considering another option of charging a portion of the market value of the spectrum held by the seller as the spectrum transfer fee. The market value could be determined based on a recent spectrum auction in that particular telecom circle or a comparable one, or after extrapolation from past auctions. In this case, the fee will differ from circle to circle. After its latest meeting this week, the committee has also recommended that the government provide a huge discount on the spectrum transfer fee for a period of 12 months from the date of announcing the new policy to stimulate consolidation in the industry. Last week, as first reported by ET, the committee set up to resolve the controversy over allocation of spectrum to telecom operators had asked the government to modify its policies to allow M&A in the industry and opposed a three-year stock sale ban on companies that acquired telecom licences last year. The committee, which comprises government representatives, telecom regulator Trai, telecom technology experts and industry executives, had recommended that a ‘spectrum transfer fee’ be imposed on all M&A, but had not specified how this fee could be arrived at. Current regulations don’t encourage M&A in the telecom space. For instance, if a large operator like Bharti Airtel were to buy out a new player, then the combined entity would have to return excess spectrum within three months. At present, airwaves are allotted to telcos based on their subscriber base. In this instance, if Bharti has about 8 MHz of airwaves across the country, the acquisition of a new telco, which has 4.4 MHz of start-up spectrum, will take its figure up to 12.4 MHz. Since Bharti will not have the requisite subscriber base to hold onto so much spectrum, it would then have to return spectrum held by the new player. The government had also rejected an alternate framework that would have allowed operators to hold on to this excess spectrum after the merger until they reach the subscriber-linked eligibility criteria. In its earlier draft report, the government committee had conceded that some new players may sell their spectrum or merge with another company, thus making huge profits without rolling out any network. “Such gains can be moderated by levying a spectrum transfer or merger charge on all such transactions. Allowing such moderated gains is a small price to pay for moving to a market-based mechanism for spectrum allotment,” it said. The committee added that the market should be allowed to determine the optimum number of operators by facilitating spectrum transfers and mergers. MONEY CALL Telecom operators buying another telco may have to pay 10–20% of the acquisition price to the government Govt panel also considering option of charging a portion of the market value of the spectrum held by the seller as the spectrum transfer fee Market value could be based on recent spectrum auction in that particular telecom circle or a comparable one AUTO DIAL Current regulations don’t encourage merger and acquisitions in telecom space For instance, if a large operator like Bharti Airtel were to buy out a new player, then the combined entity would have to return excess spectrum within three months Panel maintains that market should have a say in deciding No. of operators by facilitating spectrum transfers & mergers.
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