It all started with the Telecom Regulatory Authority of India's (TRAI) announcement that it will not support any cap on the number of service providers in a circle. Once it was announced, DoT was flooded with applications from real estate players to cable operators, from steel companies to electronic and home appliances companies, from aviation industry to financial institutions, and a whole lot. Within few weeks, there were more than 500 applications and DoT has to finalize their status, scrutinizing them based on the criteria proposed. Also, apart from these new applications, some twenty-two applications were biting the dust at the Sanchar Bhawan for years.

Finally the D-day came on January 10, 2008 when a total of 121 LoI (Letter of Intents) were issued to some nine companies. DoT issued the universal access service license (UASL) to five new companies and four existing players, under which licensees are allowed to roll out telecom service in any of the technologies available. It can also provide Internet telephony, Internet services, and broadband services. Also, DoT has given Reliance Communications and Tata Teleservices crossover technology permission, meaning they can also roll out services under GSM technology.

The companies who got license are Unitech, Videocon, BPL, Shyam Telecom, Swan Telecom, STel, Spice, Idea Cellular, and Tata Teleservices. Real estate major Unitech Group through its eight subsidiaries and Videocon through its subsidiary, Datacom Solutions, have got LoI for a pan-India license-for all twenty-two service areas. Also existing players like Shyam Telelink who is already operational in one circle, Rajasthan, has got LoI for twenty-one circles, Spice has got four, Idea has got nine, and Tata Teleservices has got three. Also, Loop Telecom has got LoIs for twenty-one circles. Besides, hitherto unknown entities like Swan Telecom and Stel have got LoI for thirteen and six circles respectively!

But, why everyone is heading toward telecom? It is because of the sheer size of the Indian telecom market. According to VOICE&DATA annual survey V&D100, the cellular services industry for FY 06-07 was estimated at Rs 56,183 crore and the industry is growing at the rate of more than 60%. With a current population of more than 1 bn and a teledensity of nearly 20%, it is not a surprise for the new entrants to visualize the huge potential.

Not to forget, India is the fastest growing mobile market in the world, adding over 8 mn new subscribers a month. This is the same market where valuations of both Reliance Communications and Bharti Airtel have touched nearly Rs 200,000 crore. Vodafone, with its Rs 3,52,000 crore market cap (its India business is valued at Rs 72,000 crore), is the third largest player. Then there is the big house of the Tatas, who are a big player in the CDMA domain with revenues expected to touch nearly Rs 100,000 crore and growing at 20% yearly. It is certainly a market worth the big fight.

The new and existing licensees have long-term business plans in their mind.

Unitech
Real estate major Unitech, which was awarded a pan-India telecom license through eight subsidiaries, entered the telecom space because it has money and real estate players. They entered real estate business leaving their past business seeing the potential in real estate market. Now they see the same picture in telecom. Also, the margin in the real estate business is coming down–it's now somewhere between 25-35% whereas in telecom the profit margin is between 50-60%, according to Gartner. In case of Unitech, apart from the capacity of raising money in the market, what gives it the confidence of getting a sizeable pie of the Indian telecom services market perhaps, is its experience in getting the job done simply by outsourcing every single segment to a qualified and expert contractor. Unitech also wants to follow the same model in mobile services business. "Outsourcing is perhaps the safest and quickest way to roll out service. There is also vendor financing available in the market," says Sanjay Chandra, Unitech MD.

"We are #3 and #4 in some circles where I'm expecting to get spectrum which will enable us to roll out services in next couple of months"	"Outsourcing is perhaps the safest and quickest way to roll out service. There is also vendor financing available in the market"
Umang Das, MD, Spice Communications	Sanjay Chandra, Unitech MD

The company is looking at providing GSM services in twenty-two circles, and its main focus area could be the rural market as every operator is looking at this untapped market as a goldmine. It is in talks with national and international companies with expertise in telecom domain for a partnership and ready to offer up to 49% stake to its international partner. The company is expected to start the process of structuring its telecom business as soon as its ongoing fund-raising exercise for its real estate business is complete.

STel
STel, a 51:49% joint venture between Skycity Foundations and Telecom Investments (Mauritius), has got DoT's nod to operate in six circles–Assam, Bihar, Himachal Pradesh, J&K, North East, and Orissa. And, the company was much in the news recently for many reasons, mostly for slamming DoT for not approving it to operate in all twenty-two circles and making a generous gesture of offering a hefty amount of Rs 13,752 crore as spectrum charges for a period of 10 years. Telecom Investments (Mauritius) has invested in the Indian telecom market in the past. Industry sources say NRI entrepreneur C Sivashankaran, who sold Aircel to Telecom Malaysia for $1 bn in 2006 and Barista Coffee chain to Italy's Lavazza for $125 mn, may be behind this company.

The company has some big promises for consumers. In a letter to DoT, it expressed its ability to offer local call at 30 p/min for up to ten years, without ever changing its tariff plans. "We will roll out services within six months of getting spectrum. We'll offer services through latest Femtocell, Picocell, and frequency-hopping technology," says Santhosh Robert, director, STel.

Femtocells and Picocells are small home base stations being used for providing cellular coverage where conventional coverage is low. According to ABI research they will attract more than 10 crore users in the next 5 years globally. This Femtocell base stations once installed in homes or buildings will hook up to a broadband connection to improve network coverage indoors. Many operators globally have already started trials. The business proposition is that these technologies would help operators in saving huge amount of money from having upgrade to wired connections to homes and buildings getting low signal coverage. Also, this will help operators push rich media services onto mobile users. Indian operators are saying that they are waiting this to happen and if this becomes successful, they will definitely follow.

Though STel is set to cater to all categories of customers, it will mainly focus on rural India. "Our main focus areas would be the rural market and empowering the developing community, particularly women," says Robert. This company has earmarked an initial investment of Rs 10,000 crore for its telecom service rollout.

Datacom
A $5 bn company and Indian consumer electronics major Videocon group has also got pan-India license through its affiliate Datacom. A recent company release says that it would launch its mobile service by the end of this year. What gives the company this much of confidence is perhaps its association with US telecom major Verizon. Verizon Business holds a 74% stake in the joint venture, called Verizon Communications India. Verizon Business already holds an NLD/ILD license in India.

If Videocon selects Verizon for the mobile venture, then Datacom's search for a telecom domain expert is over. The company also says that a number of local and global banks and financial institutions have expressed interest in providing fund, non-fund, and service based support to the project. But from a recent release by the company where it said that they are looking at 10 mn subscribers in 3-4 years time, the Videocon subsidiary Datacom looks quite pessimistic. Taking into account that India adds nearly 8 mn subscribers per month and the biggies like Bharti Airtel and Reliance Communications adding nearly 2 mn per month, an expectation of about 2.5 mn for twelve months doesn't sound very appealing.

For the new entrants, the biggest challenge is perhaps branding and marketing of their products. But that doesn't look like a problem for Videocon. It can push Datacom through its already existing dealer network of over 10,000 to reach out customers and it is already a well-accepted name in Indian household. What they need to do is to become more aggressive in pushing the services into the niche markets and rural India.