BT forms joint venture to tap into India's burgeoning corporate services market

November 15, 2006

2 Min Read
BT Forms JV in India

BT Group plc (NYSE: BT; London: BTA) is stepping up its presence in the Indian telecom market, announcing that it's found a joint-venture partner and applied for long-distance licenses. (See BT Details India JV.)

The British incumbent set up a subsidiary company, BT Telecom India Pvt. Ltd., at the end of last year but has been looking for a domestic partner to comply with the country’s 74 percent foreign investment limit. (See BT, AT&T Set Sights on India.)

The carrier will team up with Jubilant Enpro Pvt. Ltd., a conglomerate with joint ventures in oil and gas, aerospace, power, and other infrastructure services. BT says it will invest $1.6 million in cash for its 74 per cent stake in BT Telecom India.

BT is after national and international long-distance licenses that will allow it to directly provide corporate VPN services to the outsourcing market and the growing number of multi-nationals setting up shop in India.

Until now, it has maintained a presence in the country through partnerships with Videsh Sanchar Nigam Ltd. (VSNL) (NYSE: VSL) and Bharti Airtel Ltd. (Mumbai: BHARTIARTL) to provide leased circuits and voice services and with Bharti for managed data services.

If all goes to plan, the company will receive its licenses within the next two months and begin providing services by the end of the first quarter of 2007. BT predicts its revenues from India will reach $250 million by 2009.

The move is part of the carrier’s larger push in the Asia/Pacific region, where it employs 15,000 people. (See BT Plans Further Global Push.) BT says it plans to boost its headcount in India by 6,000 within the next two years.

In a statement, BT noted that it is investing $21 million in a global VOIP platform that will see it replace its legacy TDM network with an MPLS-based infrastructure. "BT has plans to invest a significant portion of this in India," it says.

BT’s push in India follows a decision by the Indian government last year to raise the foreign investment limit for telecom companies, and open the long-distance market to encourage competition.

AT&T Inc. (NYSE: T) recently received the first long-distance licenses awarded to a foreign carrier, and has launched its own joint venture -- AT&T Global Network Services India -- with Mahindra Telecommunications Investment Pvt. Ltd. (See AT&T Goes Long Distance in India and AT&T Launches India JV.) The carrier says its revenues in the Indian market have grown 40 percent in the first nine months of this year.

Orange Business Services and Cable and Wireless plc (NYSE: CWP) are among other international carriers that have also expressed interest in the Indian long-distance market.

— Nicole Willing, Reporter, Light Reading

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