Swan Telecom
Swan Telecom grabbed the maximum attention in the telecom circles because Anil Ambani-controlled Reliance Communications lists Swan Telecom as one of its long-term investments in its annual report 2006-07.

Swan telecom has got license in thirteen circles. If Swan were really backed by Reliance Communications, industry experts doubt if Swan would launch its services as Reliance Communications has got permission to go the GSM way and also recently got spectrum in fourteen circles and it is already doing GSM business in other eight circles, thus making it a pan-India player.

Reliance Communications has GSM services in eight circles through its subsidiary Reliance Telecom. When Reliance Communications applied for crossover technology, which allows a CDMA player doing GSM business and a GSM player doing CDMA business, it was not very sure whether a dual technology would be approved by DoT.

As the GSM lobby, COAI, went ahead to approach first TDSAT and then Delhi High Court against the crossover technology, Anil Ambani perhaps wanted to keep the other options open to get GSM license through a different company. And if Swan Telecom is really a Reliance Communications-backed company, Reliance Communications becomes a pan-India GSM player. Reliance Communications has invested more than Rs 1,000 crore mostly through quasi-debt. So Reliance Communications might not want to invest in Swan anymore. May be they can utilize the spectrum if Swan gets any.

Loop Telecom
One more company that has got license to operate in twenty-one circles is Loop Telecom, a BPL Mobile Communications group company.

Identity and ownership of this company is however not very clear–or at least, that is the impression one gets after speaking to some key officials there. While the official spokesperson of BPL Mobile accepts that Loop is a BPL outfit, Loop Telecom advisor DB Sehgal, refuses to discuss this issue. Other sources outside as well as inside BPL Mobile say that Loop Telecom is a BPL Mobile group company. Though Essar Group has acquired BPL Mobile, which has operations in Kerala, Maharashtra and Tamil Nadu in 2006, the head of corporate communication of Essar group denied that they have anything to do with Loop Telecom.

In September 2007, BPL Mobile's CEO and director S Subramaniam expressed desire to expand, saying: "We need a larger footprint to derive scale economics and cost synergies in this highly competitive market. Expansion into new circles would meet both these objectives."

BPL mobile has recently added 570 towers to its kitty totaling to more than 1,700 in Mumbai circle and like others, waiting for the spectrum allocation to happen. And, if Loop Telecom is indeed a BPL Mobile group company, why BPL is re-entering the business after quitting it in 2006. Though it is not clear who is going to fund the company, industry sources say its former chief Rajeev Chandrasekhar could be the one.

Spice Communication
Spice Communications, a BK Modi company, has also got license to operate in four more circles though it has applied for twenty circles which could have been helped the company to become a pan-India operator. The denial of LoI in the rest of sixteen circles due to 'net worth' issue, Umang Das, MD, Spice Communications terms it as an issue of 'technicality'. Telekom Malaysia (TM), which has 39.2% stake in Spice Communications, has demanded the DoT to take into account its net worth while considering Spice's applications for licenses. As per DoT, Spice failed in the 'net worth' criterion that stipulates the net worth of the company should be a minimum of Rs 1,300 crore at the time of application in order to get a pan-India license. Even as TM has demanded an explanation from the DoT over this issue, Spice has already approached TDSAT in this matter.

Umang Das was quite confident of getting license and spectrum for the rest of the circles. Spice has received LoIs in four circles viz. Andhra Pradesh, Delhi, Haryana, and Maharashtra.

"I'm expecting these LoIs within next couple of weeks," he said. He is also equally confident of getting start-up spectrum. "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," adds Das. The company is operational in two circles–Karnataka and Punjab.

As they have got four new circles to operate, rolling out services in these circles wouldn't be that difficult as these circles are geographically neighbors to its already operating circles. Also, it wouldn't take much time for the company to roll out service as it enjoys relationship with vendors.

On the distribution front, the company has around 300 exclusive distributors and over 30,000 independent retailers. As Spice Mobile phones and Spice Communications are part of the BK Modi's, Das expects an aggressive approach from both of these companies to compliment each other, something like selling bundling Spice handsets with a Spice subscription. While Spice Communications eyes to expand into other circles, Spice Mobile Phones also have plans to launch twenty new handset models very soon.

Shyam Telelink
Indian telecom operator Shyam Telelink, co-owned by Russian services conglomerate JSFC Sistema, has also received license for twenty-one circles. As this company is already operating in Rajasthan on CDMA technology, now it is all set to become a pan-India operator. For the Russian investor, it was quite surprising news as Shyam was well below in the priority list of applicants.

Sistema has recently said to have guaranteed $520 mn of the total $630 mn to be paid for obtaining the licenses.

The licenses will allow the company to build both mobile and fixed-line networks, but Sistema has yet to obtain frequencies to operate them. Sistema said the timing of frequency allocation has yet to be determined.

Though Shyam Telelink offers cellular service in its circle currently, it has so far been focusing more on fixed service. With this expansion, it might rethink its business strategy, as subscribers have been going away from fixed lines for last couple of years.

Sistema, who bought 10% stake in Shyam Telelink in last September, plans to buy 41% more. Sistema's president Alexander Goncharuk is reported to have said that the company could invest between $4-7 bn in its Indian telecom venture.

Idea
Idea Cellular from the $24 bn Aditya Birla group has also got license in nine circles becoming a pan-India player. The new circles that it has added to its kitty are Assam, J&K, Karnataka, Kolkata, North East, Orissa, Punjab, Tamil Nadu, and West Bengal.

In 2006-07, it grew by 45% in terms of revenue and the growth in terms of subscriber additions was 90%. When we analyze its growth from previous years in the thirteen circles, it was not at all a bad 'Idea' to move into the rest of the circles. As metro and 'A' circles are getting saturated, the licenses for the newly received circles could be a boon for service providers, as these circles are showing maximum growth and offers huge revenue potential.

RCom and Tata Teleservices
In the license race, Tata Teleservices also bagged three more licenses, thus becoming omnipresent in all twenty-two circles. Thanks to dual technology, both the CDMA players Reliance Communication and Tata Teleservices now become GSM players.

So far, GSM has been a major contributor in India's mobile success story, perhaps the biggest. In terms of break-up, GSM contributes about 77% whereas CDMA operators contribute the rest 23%. In that context, and seeing the global trends and success of GSM business, it seems dual technology operation is not a bad proposal. Now, with this new players coming to the market, not only the services market would grow, but also the equipments market. Almost all big infrastructure and equipment providers are in talks with the new licensees for their infrastructure business. Reliance Communication seems to be ahead of others, as it has awarded a nationwide GSM contract rollout to Huawei, the Chinese telecom major. The contract is valued at around $600 mn.

As of now everything looks rosy. But the players, mainly the new entrants, are keeping their fingers crossed. Everything is there–the potential, the market, and the customer–but what about spectrum? Let's wait and watch!

Gyana Ranjan Swain
gyanas@cybermedia.co.in