The government of India has proposed a penalty of Rs 135.60 crore on private telecom operators, including Tatas, Airtel and Reliance Communication, for delays in rolling out networks. Though, the department of telecom (DoT) has lowered the total quantum of penalty from Rs 477 crore decided earlier to Rs 135.60 crore after repeated representations by the operators, giving a major benefit to all big private telecom players. Almost all private players except Vodafone-Essar face penalties.
As reported in Economic times, the penalty comes to over Rs 41 crore on Tatas, Rs 31 crore on Airtel and Rs 19.65 crore on RCOM. Among others, Aircel faces a penalty of Rs 28.85 crore, HFCL has a liquidated damages of Rs 7 crore and the two PSUs — BSNL and MTNL, along with Vodafone-Essar face no penalty.
The cases for imposition of liquidated damages were processed since 2005 and show-cause notices for imposition of liquidated damages (amounting to Rs 477.15 crore) were issued in 96 cases to 10 operators. There were representations from industry pointing out delays in statutory clearances, grant of spectrum for access, among other factors, for delayed rollouts. Thus, it was decided to revisit the subject and DoT has arrived at revised lower penalty for these operators.
As suggested in one of my earlier posts its also time to adopt Swedish model for penalizing operators for not meeting roll out obligations and are in turn hoarding spectrum. (For reading the full post click here)
Showing posts with label Tata Teleservices. Show all posts
Showing posts with label Tata Teleservices. Show all posts
Indian telecom tower industry heading for capacity surplus?
The telecom tower industry in India seems to be heading for a capacity glut. The sector will close this fiscal with over 2,50,000 towers owned by operators and stand-alone firms. With companies having aggressive tower rollout targets for years ahead, India could end up with more number of towers than required. The telecom regulator Trai has said the industry requires 3,00,000 towers by FY11.
The over-capacity situation will not only lead to longer pay-back periods for tower companies, but will also trigger consolidation in the sector. Also, tower companies will have to lower the rentals amid fierce competition, feel analysts. The announcement of merger of Quippo Telecom Infrastructure with Tata Teleservices’ tower arm alludes to significantly falling valuations in the sector. Capacity creation has risen much ahead of the aggregate minutes of usage (MoU), putting pressures on incremental margins. We are likely to see two parallel but mutually contradicting trends. With the advent of 3G services and increasing MoU in the urban markets, we are likely to see good growth in utilisation, fresh investments and rentals. But rentals and utilisation in the low population density rural markets are likely to remainunder pressure for the next 2-3 years.
Indus Towers, the joint venture between Bharti Airtel, Vodafone Essar and Idea Cellular is expected to have 95,000 towers by March this year while the figures for Bharti’s tower arm Bharti Infratel is 27,000 and for Reliance Infratel is 48,000. Besides this, Vodafone has 5,000 towers (ex-Indus), BSNL 39,000, Tata-Quippo joint venture 18,000 and GTL Infrastructure is targeting 10,000 towers by fiscal-end. This takes the total count to 2,43,000 and excludes those owned by MTNL, Idea, Aircel and tower firms like Excel and Essar Telecom Infrastructure.
As far as capacity is concerned, the sector will have more than it may require. There is going to be consolidation. Only those companies that have tenancy ratios of two and above will be profitable. In the meantime, rentals will have to take a hit.
Companies, however, have big expansion plans going forward. While Tata-Quippo is looking at a portfolio of 50,000 towers by 2012, GTL is eyeing 25,000 towers by 2011. Indus is learnt to be adding 3,000-4,0000 towers every month. By March 2010, RCOM wants to expand tower infrastructure to over 70,000 multi-tenancy towers, each capable of supporting four or more operators.
But the big question is where is the demand going to come from. While new operators like Unitech and Swan Telecom are readying to roll out operations, they will not be able to make a big difference to the demand-supply situation in the sector. Also viability of these new players remains questionable.
The over-capacity situation will not only lead to longer pay-back periods for tower companies, but will also trigger consolidation in the sector. Also, tower companies will have to lower the rentals amid fierce competition, feel analysts. The announcement of merger of Quippo Telecom Infrastructure with Tata Teleservices’ tower arm alludes to significantly falling valuations in the sector. Capacity creation has risen much ahead of the aggregate minutes of usage (MoU), putting pressures on incremental margins. We are likely to see two parallel but mutually contradicting trends. With the advent of 3G services and increasing MoU in the urban markets, we are likely to see good growth in utilisation, fresh investments and rentals. But rentals and utilisation in the low population density rural markets are likely to remainunder pressure for the next 2-3 years.
Indus Towers, the joint venture between Bharti Airtel, Vodafone Essar and Idea Cellular is expected to have 95,000 towers by March this year while the figures for Bharti’s tower arm Bharti Infratel is 27,000 and for Reliance Infratel is 48,000. Besides this, Vodafone has 5,000 towers (ex-Indus), BSNL 39,000, Tata-Quippo joint venture 18,000 and GTL Infrastructure is targeting 10,000 towers by fiscal-end. This takes the total count to 2,43,000 and excludes those owned by MTNL, Idea, Aircel and tower firms like Excel and Essar Telecom Infrastructure.
As far as capacity is concerned, the sector will have more than it may require. There is going to be consolidation. Only those companies that have tenancy ratios of two and above will be profitable. In the meantime, rentals will have to take a hit.
Companies, however, have big expansion plans going forward. While Tata-Quippo is looking at a portfolio of 50,000 towers by 2012, GTL is eyeing 25,000 towers by 2011. Indus is learnt to be adding 3,000-4,0000 towers every month. By March 2010, RCOM wants to expand tower infrastructure to over 70,000 multi-tenancy towers, each capable of supporting four or more operators.
But the big question is where is the demand going to come from. While new operators like Unitech and Swan Telecom are readying to roll out operations, they will not be able to make a big difference to the demand-supply situation in the sector. Also viability of these new players remains questionable.
What should be the limit on market share after M & A in Telecom space ?
TRAI's consultation paper on licensing norms review has attracted following views from major Indian Telcos :
State-owned BSNL has suggested lowering of the market share limit to 40 per cent from the current 67 per cent following the merger and acquisitions of two entities in the telecom sector to avoid monopolistic situation. "It is felt that the existing provision of 67 per cent market share will create non-competitive or monopolistic situation. It is, therefore, suggested that this limit should be brought down to about 40 per cent"
Vodafone Essar, which has recently acquired number two slot in terms of subscriber base, said "We are of the opinion that the 67 per cent limit is appropriate when applied to a narrow mobile market definition. "But regime of the current M&A Guidelines, not a single intra-circle merger between licensees has taken place to date and it cannot be said that the current guidelines have produced an environment of undue consolidation. The guidelines, therefore, remain appropriate."
CDMA player Tata Teleservices wants this cap to be at 45 per cent. "We recommend a maximum market share of 45 per cent for the merged entity," the company said. The PSU also wants fixing a maximum spectrum limit that would be held by a merged entity be. It also does not want any merger to be allowed between a CDMA and a GSM company. Vodafone Essar said the merged entity should have a spectrum limit.
State-owned BSNL has suggested lowering of the market share limit to 40 per cent from the current 67 per cent following the merger and acquisitions of two entities in the telecom sector to avoid monopolistic situation. "It is felt that the existing provision of 67 per cent market share will create non-competitive or monopolistic situation. It is, therefore, suggested that this limit should be brought down to about 40 per cent"
Vodafone Essar, which has recently acquired number two slot in terms of subscriber base, said "We are of the opinion that the 67 per cent limit is appropriate when applied to a narrow mobile market definition. "But regime of the current M&A Guidelines, not a single intra-circle merger between licensees has taken place to date and it cannot be said that the current guidelines have produced an environment of undue consolidation. The guidelines, therefore, remain appropriate."
CDMA player Tata Teleservices wants this cap to be at 45 per cent. "We recommend a maximum market share of 45 per cent for the merged entity," the company said. The PSU also wants fixing a maximum spectrum limit that would be held by a merged entity be. It also does not want any merger to be allowed between a CDMA and a GSM company. Vodafone Essar said the merged entity should have a spectrum limit.
Virgin mobile planning to enter Indian Telecom Market
Virgin Mobile is reported to be planning a joint venture with India's second largest CDMA network operator, Tata Teleservices. The report in the local Economic Times newspaper said that Virgin will exclusively license the Virgin Mobile brand and technology expertise in the area of value-added services (VAS) and handsets to Tata.
The two parties are understood to have started recruitment for the joint venture, expected to be functional this quarter. The UK-based global executive search firm CHR Global is recruiting staff for the new entity, sources told the ET newspaper. The search for a CEO for the joint venture is on.
While Virgin typically operates as an MVNO, these are not currently permitted in India. It is thought that the joint venture will operate on the Tata network as a branding alliance.
Spokepersons from both company declined to comment, the paper said.
Tata Teleservices ended the first quarter of this year with a little under 11.5 million subscribers . The company market share in the Indian market is around 7.24%.
The two parties are understood to have started recruitment for the joint venture, expected to be functional this quarter. The UK-based global executive search firm CHR Global is recruiting staff for the new entity, sources told the ET newspaper. The search for a CEO for the joint venture is on.
While Virgin typically operates as an MVNO, these are not currently permitted in India. It is thought that the joint venture will operate on the Tata network as a branding alliance.
Spokepersons from both company declined to comment, the paper said.
Tata Teleservices ended the first quarter of this year with a little under 11.5 million subscribers . The company market share in the Indian market is around 7.24%.
Tata Teleservices opposes DoT's plan to auction 3G spectrum to foriegn players
As per Economic times - "Tata Teleservices has opposed communication and IT minister Dayanidhi Maran’s plans of allowing foreign players to bid for 3G spectrum and said that this would lead to further scarcity of radio resources and hamper the growth of existing operators. The company which offers CDMA-based telecom services, has also alleged that the Department of Telecom (DoT) was ‘completely disregarding the recommendations of telecom regulator Trai for facilitating the progress of existing GSM and CDMA operators from 2G to 3G services’. The interests of existing telecom licence holders who have done so much to make India the fastest telecom market in the world must be protected and a level-playing field provided to them,” the company said. The company has pointed out that at present, there was shortage of 2G spectrum, and therefore the spectrum-efficient 3G network would primarily be used to provide voice services in the beginning. “The logical policy, therefore, has to be allow the entry of 2G companies into 3G to further develop their markets and to grow by getting more spectrum and by using their existing infrastructure, instead there is a move to cap the growth of the existing players completely disregarding the recommendations made by Trai...,” the company said."
Additionally, Tata Teleservices has also objected the proposals of the internal committee formed by DoT to study the 3G spectrum pricing and allocation recommendations of Trai. This committee has suggested that four telecom companies be given 3G spectrum in the 2.1 Mhz frequency, through a bidding process, while adding that if state-owned BSNL and MTNL did not figure among the top four in the auction, then the PSUs must be given 3G spectrum provided they match the price of the second highest bidder. Tata Teleservices has pointed out that Trai had recommended that only existing players be allowed to bid for spectrum in 2.1 Ghz, and that too for a quantum of 5 Mhz each. “Inviting external entities with blocks of 10 Mhz of spectrum, will not only drive the costs up, but will also limit the number of operators. Then existing licensees will be forced to conduct their operations in sub-optimal fashion with sporadic and minute allocations of as little as 1.25 Mhz at a time. The reasons for such unfair treatment must be divulged and such unfairness is clearly not going to be accepted by the industry,” the company added. On the proposal for a quota for BSNL and MTNL, Tata Teleservices said that such treatment, in addition to being against the recommendations of Trai, would also not offer a level-playing field between private and state-owned players. It has also added that BSNL and MTNL were no longer the sole custodians of public interest as the government itself had allowed civil servants and PSUs to embrace the services of private telecom service providers.
Additionally, Tata Teleservices has also objected the proposals of the internal committee formed by DoT to study the 3G spectrum pricing and allocation recommendations of Trai. This committee has suggested that four telecom companies be given 3G spectrum in the 2.1 Mhz frequency, through a bidding process, while adding that if state-owned BSNL and MTNL did not figure among the top four in the auction, then the PSUs must be given 3G spectrum provided they match the price of the second highest bidder. Tata Teleservices has pointed out that Trai had recommended that only existing players be allowed to bid for spectrum in 2.1 Ghz, and that too for a quantum of 5 Mhz each. “Inviting external entities with blocks of 10 Mhz of spectrum, will not only drive the costs up, but will also limit the number of operators. Then existing licensees will be forced to conduct their operations in sub-optimal fashion with sporadic and minute allocations of as little as 1.25 Mhz at a time. The reasons for such unfair treatment must be divulged and such unfairness is clearly not going to be accepted by the industry,” the company added. On the proposal for a quota for BSNL and MTNL, Tata Teleservices said that such treatment, in addition to being against the recommendations of Trai, would also not offer a level-playing field between private and state-owned players. It has also added that BSNL and MTNL were no longer the sole custodians of public interest as the government itself had allowed civil servants and PSUs to embrace the services of private telecom service providers.
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