Spectrum war in India getting murkier

By Vipin Agnihotri

The spectrum war in India is getting murkier by the day. It is worth mentioning in this regard that the cold war of words, which started with DOT’s recent policy of allowing the telecom service providers to offer services using both CDMA & GSM technologies in the same circle, has transformed into a big conflagration.

In my opinion, the DOT policy is a windfall for CDMA players such as Reliance Infocomm and Tata Tele, while for GSM lobby consisting of Airtel, Vodafone and Essar, the policy brings calamity right into their porch.

No one is going to argue with the fact that the recent brawl has emerged as one of the biggest clash, the sector has observed till date. According to sources, protesting against the move, Cellular Operators Association of India, the body responsible for governing the rights of GSM players, wrote a letter to DOT.

To flare up the whole issue, Arun Sarin, Vice Chairman, Vodafone Essar on November 5, 2007 forwarded a letter to both Prime Minister Manmohan Singh and Telecom Minister A Raja, expressing his concerns over the recently announced policy favoring CDMA players.

It has come into the notice of The India Street that in response to Sarin letter, Anil Ambani retaliated with a letter supporting the government’s decision of allowing CDMA operators to offer GSM services under their existing licenses. If experts are to be believed, Ambani backfired at GSM’s lobby with a series of charges such as cartelisation and trying to restrict fresh competition.

In the midst of all, telecom ministry on November 12, 2007 decided to auction the new world 3G spectrum. Point to be noted here is that apart from the existing players, firms without telecom license and foreign firms will be allowed to participate in the auction. Even worse, A Raja announced introduction of mobile number portability from next year onwards.

In my opinion, this move will certainly flare up poaching leading to a significant increase in cost of retaining customers.

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The Latest: Airtel and Vodafone Essar in trouble, Blue Dart buying Boeing, Ranbaxy Looks at Punjab

By Vipin Agnihotri

This week The India Street brings you exclusive news from telecom giants Airtel and Vodafone Essar, Blue Dart and Ranbaxy.

Telecom giants Airtel and Vodafone Essar seem to be in trouble these days. It is worth mentioning in this regard that the duo is facing charges of adopting unfair trade practices. Few days back, Airtel and Vodafone had resorted to a simultaneous price hike for SMS, local and STD calls.

The move first received objections from Telecom Disputes Settlement and Appellate Tribunal. Now, even Monopolies and Restrictive Trade Commission has directed its investigative arm to brace this matter and investigate the manner in which these companies raised their tariffs.

If experts are to be believed, the commission feels that these companies have formed a cartel and are distorting competition in the market. Point to be noted here is that the tariffs were raised without giving any intimation to the end customers, a move that is an unfair trade practice.

Blue Dart on an expansion mode

Indian courier major Blue Dart has unveiled its exorbitant Rs 10 billion expansion blueprint. According to sources, the investment would be utilized to expand company’s air and ground infrastructure. Indications are that the company plans to add one more Boeing 757s, taking the total number of Boeing 757s to three.

Furthermore, Blue Dart is also interested in buying some Boeing 737s. In general, the proposed investment would be generated through internal accruals. The company is gung ho to have a staggering market share of 20 per cent in the ground express segment.

Ranbaxy eyeing Punjab

After finishing plethora of overseas acquisitions last year, it seems as if Ranbaxy, the leading Indian drug maker is in a mood to focus more on Indian soil as of now. According to company sources, Ranbaxy plans to invest about $500- $600 million in health care services in Punjab in next two years.

Initial signs are that the investment would be in the form of public private relationship in number of areas that include R & D, medical education and hospitals for which Ranbaxy has already submitted its proposal to Punjab government.

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All is not well between Ruia’s and Vodafone

By Vipin Agnihotri

In my opinion, the pursuit of power has irresistible appeal in the Indian telecom sector. For example, everyone is aware of how Kumaramangalam Birla and Ratan Tata made a mess of their ‘idea’ of partnership. Another stalemate is in the making between Ruias (holding 33 per cent in Hutchinson Essar) and Vodafone (with 52 per cent stake).

It is worth mentioning in this regard that the ostensible bone of contention in this case is BPL Mobile, in which the Ruias have a 9 per cent stake. If experts are to be believed, BPL has applied through its subsidiary Shipping Stop Dot Com, for a telecom license in 21 circles.

According to sources, this is a clear sign that the Vodafone-Essar relationship is on the rocks. Point to be noted here is that this rush for circles started when Telecom Regulatory Authority of India (TRAI), in its statement dated September 11, said that there will be no limit to the number of operators and it would enable more new players in even existing circles.

In my opinion, TRAI’s directive would increase competition and benefit customers. Plenty of new operators have applied for fresh licenses including real estate major Parsvanath Group. Every Tom, Dick and Harry is interested in entering the telecom operator business and TRAI’s directive makes it simpler.

Till now, Bharti Airtel is the only pan-Indian operator with a network of 23 circles, followed by BSNL in 20 and Vodafone Essar in 16. The bigger issue, though, is the relationship between Ruias and Vodafone. At the time of partnership, Shashi Ruia, Vice Chairman, Essar said, “It’s terrific that we are joining with the world’s leading international mobile company.”

But at this moment of time, it seems that the Ruias may just be looking for the right opportunity for an exit. Industry sources feel that the Ruias move to apply for licenses through BPL Mobile is disappointing. While Essar occupies less than 10 percent stakes in BPL Mobile, there is no doubt that Vodafone may see this as a clear clash of interests.

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