New Delhi: New phone services aspirants such as real estate company Unitech Ltd and consumer electronics maker Videocon Industries Ltd will get radio spectrum to offer phone services in just four licensed areas—Andhra Pradesh, Kerala, Orissa and Tamil Nadu (including Chennai)—as India’s department of telecommunications or DoT has identified these states with sufficient radio spectrum to have nine start-up service firms which have been invited to set up phone networks.
“We do not have enough spectrum in other service areas as of now,” confirmed a senior DoT official, who did not wish to be quoted.
Phone firms in India, the world’s fastest growing mobile market that adds some eight million subscribers every month, have been demanding more spectrum to run their networks. Radio spectrum, an increasingly scarce resource, carries voice signals between mobile handsets and enables wireless communication.
“Since we now know where spectrum is available, we would like to sign the licence agreements with LoI holders who have received necessary approvals at the earliest,” added another DoT official who also did not wish to be identified. LoI refers to the letters of intent DoT has issued to nine firms, inviting them to start phone services.
According to government’s wireless planning and coordination wing, some 45 MHz of radio spectrum can be made available in Andhra Pradesh, Orissa, Tamil Nadu and Kerala. After DoT signs licences with these firms, 4.4MHz will be allocated to each of them, allowing them to compete with incumbent telecom operators such as Bharti Airtel Ltd and Vodafone Essar Ltd.
As reported by Mint on 17 January, India’s most lucrative telecom markets, Mumbai and Delhi, are unlikely to see any new phone services operator, as the country’s defence forces are yet to free up additional radio spectrum in these cities.
As of now, nine aspirants—STel Ltd, Shyam Telelink Ltd, Swan Telecom Ltd, Loop Telecom Pvt. Ltd (a subsidiary of BPL Telecom), Spice Communications Pvt. Ltd, Idea Cellular Ltd and Tata Teleservices Ltd, besides Unitech and Videocon units—have been invited to procure licences with no promise of spectrum. Reliance Communications Ltd, India’s second largest wireless phone firm, has already been given a licence and spectrum rights to start services nationwide.
Barring Kerala, where only five new operators have been given approvals to start phone services, the remaining three areas could see as many as six new operators.
Romal Shetty, who heads consultancy KPMG International’s telecommunication practice in India, said the new entrants could gain more by starting in these four states, “especially since the metros are already saturated, and there will be no time to learn from mistakes in such highly competitive markets”.
Another telecom expert, who did not wish to be identified, said most of the new telecom aspirants are not looking to be serious pan-India service providers.
“All they are seeking is to start small, acquire a certain subscriber base, build valuation and sell it off to companies such as AT&T who are looking to enter the Indian market,” he said. “Areas of Andhra Pradesh, Orissa and Kerala offer an ideal platform to them for doing exactly this.”
To begin with, DoT has decided that spectrum would be allocated on a trial basis for a month, in order to identify any electromagnetic interferences with other spectrum users such as defence and security agencies, after which, a final allocation will be made.