Mumbai: The Essar group, a steel-to-shipping conglomerate that controls a 33% stake in Hutchison Essar Ltd (HEL), India’s fourth largest mobile telephony firm is bidding for mobile telephony licences in West Asia, Africa, and South Asia, in an effort to tap a booming telecom market in these regions, according to an executive in charge of the group’s telecom business.
“We are bidding for cellular licences overseas in about 13-14 countries,” said Ajay Madan, president, business development, telecom, Essar Group.
“Some of these countries have virgin markets which are underserved and offer a lot of potential to grow. We are close to signing one licence in the next three months and expect to sign another subsequently,” he added, but refused to name any of the countries.
Nigeria, where the cellular telephony business is booming because there is effectively no landline network, and Iran, are among the countries that Essar is targeting. Competition for licences in Africa and West Asia is intense, licence fees are steep, and network roll-out costs are substantial. The group hopes to win and operate two licences.
Several Indian telcos including the state-owned Mahanagar Telephone Nigam Ltd, the Sunil Bharti Mittal-controlled Bharti Enterprises, and the Anil Ambani-controlled Reliance Communications Ltd, and Videsh Sanchar Nigam Ltd are also eyeing the telecom market in Africa.
Vodafone Group Plc., which has acquired a 67% stake in HEL (pending regulatory approval) has two joint ventures (one each in Zambia and Kenya) and one subsidiary (Vodafone Egypt) in Africa.
In West Asia, the company, the world’s largest telco by revenues, has a joint venture with Mobile Telecommunications Company (MTC Group) that operates in Bahrain and Kuwait.
In India, Essar, which owns BPL Mobile Communications Ltd, the company that offers mobile telephony services in Mumbai—it competes with HEL in the city—plans to invest around Rs200 crore in the company, in infrastructure and marketing.
Essar had initially agreed to sell this business to HEL, but the deal has since run into complications that are being heard and resolved by an arbitration panel. “The company had been starved of investments for almost a year between July 2005 to August 2006 due to the planned sale to HEL,” said S. Subramaniam, chief executive officer, BPL Mobile Communications.
And another Essar-group firm, Essar Telecom Infrastructure Pvt Ltd, is spending Rs1200-1300 crore to build a network of 5,000-6,000 cell towers, which will be leased out to companies wishing to roll out or expand their cellular footprint without worrying about infrastructure.