New Delhi: Software major Microsoft Corp. has signed an eight-year contract with Reliance Communications Ltd, India’s second-ranked wireless phone services firm, to deploy Internet-delivered television services in the country. The world’s biggest software maker is expected to earn $500 million, or Rs1,965 crore, based on a revenue-sharing formula in the contract as part of licence fees for its software.
The contract, announced by the two companies in the presence of visiting Microsoft chief executive officer Steve Ballmer, is the first such deal that Redmond, Seattle-based software behemoth has concluded in India and is an exclusive tie-up with the Anil Ambani-led mobile telecom services firm.
Indian telecom companies are getting into the so-called IPTV (short for Internet protocol television) to bootstrap average per-user billings as revenues from voice offerings on fixed-line and cellular phone networks fall.
State-owned Mahanagar Telephone Nigam Ltd, which provides telecom services in Delhi and Mumbai, launched its IPTV service in November last year in limited areas of the two metros. Technology research firm Gartner expects India’s largest mobile service provider Bharti Airtel Ltd and the long-distance telephony company Videsh Sanchar Nigam Ltd to start offering IPTV service by March.
“If the offering is right, it will help them (IPTV service providers) in better revenue,” said Neha Gupta, senior research analyst at Gartner, but added per user billing will not be very different from the pricing packages for alternative TV platforms such as cable and direct-to-home, or DTH.
The “scale and time frame that Reliance has targeted is unique,” said Microsoft’s Ballmer, who was in India on a day’s visit. “Cost parameters are (also) unique.”
Reliance Communications is planning to launch the service by March. “We are targeting the top 30 cities; launching with metros in 2008,” said Ambani, the company’s chairman. The firm is also planning to launch DTH service for television users in a few months.
“India is a vast country and there is a market for both kind of services,” said Ambani.
Reliance Communications “is investing $3.5 billion to build infrastructure to roll out the (IPTV) services,” said Prakash Bajpai, the firm’s president of enterprise solutions. The money will be invested over three years, according to a company spokesperson.