China’s new telecom rules won’t affect interest

China’s new telecom rules won’t affect interest

New Delhi: China’s decision to ease norms on foreign investment in telecom firms is unlikely to decrease India’s attraction for global telcos waiting for the auction of licences for third generation services, analysts say.

The proposed auction of 3G licences later this year by the Indian government is being awaited by global telecom firms such as AT&T Inc., NTT DoCoMo Inc. and Deutsche Telekom AG. Third generation, or 3G, networks enable phone firms to offer multimedia services including video calls, the Internet and high-speed data transfer.

China’s state council this month relaxed restrictions on the establishment of foreign-funded telecom companies. The minimum registered capital requirement for a foreign-funded telecom company managing basic services nationwide was halved to 1 billion yuan (Rs665 crore). The mandated capital was halved to 100 million yuan for provincial phone service firms.

“Any operator will be interested to invest in China, but not at the cost of India. The regulatory aspects in India are more liberal as compared to China," said Madhusudan Gupta, an analyst at research firm Gartner Inc.’s Singapore office. “In percentile growth, India (presents) a mammoth opportunity for these firms."

A Beijing-based telecom analyst said that despite China joining the World Trade Organization in 2001, little had changed on the ground in the telecom industry, with majority control in three major phone firms remaining with the Chinese government.

The analyst, Duncan Clark, chairman of consultant BDA (China) Ltd, contrasted Vodafone Group Plc.’s 3% stake in China Mobile Ltd and two-thirds ownership of India’s Vodafone Essar Ltd. “The situation in India is very different, as Vodafone’s majority stake in Hutch has shown—real ownership/control is on offer there," Clark said in an email.