India: Licensed to Thrill
The sector has already been rocked this week by Bharat Sanchar Nigam Ltd. (BSNL) 's IPO plan, which is fueled partly by the need for more expansion capital, and there are plenty of others now figuring out how to capitalize on their new assets and India's massive growth potential. (See BSNL Considers $10B IPO and India Racks Up Mobile Subs.)
Reliance preps GSM blowout
Reliance Communications Ltd. (RCom) , a major player in India's fixed sector and its CDMA mobile sector, is preparing to put its nationwide GSM expansion plans into action now that it has been handed some new spectrum. (See Reliance Gets GSM Spectrum, Reliance Gets GSM Nod, and Microsoft Seals $500M IPTV Deal.)
The carrier issued a request for proposals for GSM network equipment in late 2006, and now, according to reports, is set to place orders with a number of vendors for the rollout of between 80 million and 100 million GSM connections nationwide. (See Reliance Plans $7B GSM Build-Out.)
Alcatel-Lucent (NYSE: ALU), Ericsson AB (Nasdaq: ERIC), Huawei Technologies Co. Ltd. , Motorola Inc. (NYSE: MOT), and Nokia Networks are all believed to be in contention to win some Reliance rollout business, though the carrier says it's "not in a position to comment" on such suggestions at present, or say whether contract awards are even imminent.
Reliance already has about 5.5 million GSM customers, but that's just a fraction of India's total GSM base of 172 million (at end of December 2007). Its strength is in CDMA, where it had nearly 34 million customers, a majority of the country's total 55 million CDMA subscribers, at the end of November.
Shyam shifts into national gear
CDMA minnow Sistema Shyam TeleServices Ltd. , which offers its Shyam Internet fixed ISP and mobile services in just one of India's 23 telecom regions (or circles), now has the ability to become a national player following the award of licenses for the provision of fixed and mobile services in 21 additional circles. (See Shyam Gets New Licenses.)
Shyam has 260,000 CDMA customers in the Rajasthan circle, but now has the chance to compete on a much broader scale with the new licenses and the backing of its new majority owner Sistema JSFC (London: SSA), which now holds a 51 percent stake. (See Russia's Sistema Buys Into India.)
Sistema says it has guaranteed $520 million of the total $630 million Shyam has to pay for obtaining the new licenses. Further, Sistema tells Light Reading that a business plan to support Shyam's network and service rollout plans is set to be discussed and possibly finalized at a board meeting next week.
HFCL ponders future
"HEELLLPPPPPP!!!!" says HFCL Infotel Ltd.
The one-circle CDMA operator is considering its options after its application for nationwide licenses was refused on the grounds that it failed to meet the government's requirements for minimum net worth.
According to reports, the operator is working on a merger with Videocon Group subsidiary Datacom Solutions, which did receive licenses to become a national player. Videocon is also serving as the joint venture partner for Verizon Enterprise Solutions 's long-distance licenses.
A merger would allow HFCL Infotel to remain competitive, rather than get left behind as the only regional operator that didn't receive the go-ahead to expand. The carrier's share price has fallen almost 15 percent this week, from a close of 46.60 Indian Rupees ($1.19) at last week's close to INR40 ($1.02) today. At the end of December, HFCL Infotel had 375,000 CDMA subscribers and 156,000 fixed-line customers in the Punjab region.
Unitech goes fund-raising
One of India's largest real estate firms, Unitech, is said to be planning a bumper INR50 billion ($1.27 billion) private placement of 80 million to 90 million shares, in part to finance its foray into telecom. The company has received approval for licenses in 22 circles, which it applied for through eight different subsidiaries. Once it receives spectrum to start up mobile services, Unitech intends to consolidate the units into one holding company.
The company is reportedly conducting a road show abroad for institutional investors and expects to complete the placement by next week. Its board last week approved a proposal to issue up to 200 million shares.
Bharti in rearguard action
Bharti Airtel Ltd. (Mumbai: BHARTIARTL), which provides wholesale, fixed access and GSM mobile services countrywide, has seen its stock slide since investors realized the mobile operator had failed to secure any new spectrum and now faces a welter of new competitors.
A week ago the operator's share price stood at INR972.55 ($24.75) on the Bombay Stock Exchange. Now it stands at INR864.85 ($22.01), a fall of more than 11 percent.
Reports in the Indian media say Bharti Airtel, which has more than 50 million GSM subscribers, is trying to settle investors' nerves by suggesting that the Indian government's Department of Telecommunications is likely to follow the recommendations of the Telecom Regulatory Authority of India (TRAI) and award additional spectrum to the country's established operators.
— Ray Le Maistre, International News Editor, and Nicole Willing, Reporter, Light Reading