& cplSiteName &

Birla's Big IDEA for India

Light Reading
News Analysis
Light Reading
7/31/2006

Indian regional operator Idea Cellular Ltd. has a new ownership structure and grand designs to become a national player, but in doing so is likely to become a thorn in the side of Reliance Communications Ltd. (RCom)

IDEA operates in eight telecom “circles,” or regions, in Western India, and has received additional GSM licenses to expand its network into three circles in Eastern India -- the first phase of a major expansion plan that it intends to fund through an IPO, according to parent company Aditya Birla Group .

Birla recently closed the acquisition of Tata Teleservices Ltd. 's 48.14 percent holding in IDEA, and now holds 98.3 percent of the operator through direct and indirect stakes diversified among its various subsidiary companies. (See Birla Closes Idea Cellular Buy.) Birla also owns TransWorks Information Services Ltd. , an outsourcing services provider listed in Light Reading's new report Who Does What: Outsourcing to India.

In reporting its first-quarter financials over the weekend, Birla said that IDEA, which holds an 8.1 percent market share, expects the first phase of the rollout to be completed by the end of this quarter. (See Aditya Birla Reports Q1.)

IDEA's subscriber base grew by 53.7 percent versus last year, to 8.54 million, last quarter and it plans to invest 25 billion Indian Rupees (US$536.3 million) in its network this year.

It's also put in an application for 12 more GSM licenses to extend its coverage to all 23 of India's telecom circles, and that's where it could come into conflict with Reliance, the country's dominant CDMA operator, which is planning its own national GSM network. (See Reliance Dabbling With Dual Networks.)

Both Reliance and IDEA are awaiting the outcome of their license applications, but in India's larger cities, including Mumbai and New Delhi, there's already limited spectrum for GSM services. IDEA doesn't have operations in any of India's metros except New Delhi, and has long been after a license for Mumbai, so the two carriers will be treading on each others' toes in the most sought after areas.

Analysts at Lehman Brothers have noted that the spectrum shortage is likely to be a major obstacle to Reliance's expansion plans, and IDEA could face similar problems.

Although the Indian government has said it will offer up 20 MHz more spectrum by the end of the year, it has already committed 5 MHz each to the largest GSM players -- Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Bharat Sanchar Nigam Ltd. (BSNL) , and Hutchison Essar -- leaving only 5 MHz for everyone else to fight over. (See Reliance Squeezed by Spectrum Crunch.)

In the meantime IDEA's new management board is thinking big -- alongside the network licenses the carrier has also issued a letter of intent to enter the national long-distance market, with the goal of becoming one of India's top three national operators.

— Nicole Willing, Reporter, Light Reading

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
materialgirl
materialgirl
12/5/2012 | 3:46:34 AM
re: Birla's Big IDEA for India
With no more cellular spectrum, is there a chance for a national WiFi player, albeit with a modified service? What are the politics?
Featured Video
Upcoming Live Events
November 5, 2019, London, England
November 7, 2019, London, UK
November 14, 2019, Maritim Hotel, Berlin
December 3-5, 2019, Vienna, Austria
December 3, 2019, New York, New York
March 16-18, 2020, Embassy Suites, Denver, Colorado
May 18-20, 2020, Irving Convention Center, Dallas, TX
All Upcoming Live Events