Telecom capex to fall from next year

The capital expenditure by telecom service providers is slated to peak in 2007-08,

operators are expected to invest around Rs 64,530 crore.

This will begin to taper off from 2008-09 due to an increase in sharing of passive infrastru

hiving off tower businesses.

According to a report by global research and analysis major Morgan Stanley, the

investments stood at Rs 36,685 crore in 2005-06 and is estimated at Rs 47,561 crore in

This would further rise to around Rs 64,530 crore in 2007-08, before tapering off to Rs 61

in 2008-09.

The leading telephony major Bharti Airtel is expected to invest around Rs 13,768 crore in

while the second largest operator Vodafone Essar would invest around Rs 9,001 crore

same period.

CDMA major Reliance Communications is expected to pump in Rs 16,282 crore and Ide

Rs 3,976 crore, while the remaining is expected to come from state-owned players such

Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL), with T

companies contributing the rest.

Post 2008-09, the investments will decline by 30-40 per cent, due to an increase in s

passive infrastructure and hiving off tower divisions into separate entities. But this wou

higher returns on capital employed (ROCE) as capex go into tower companies.

The total capex is expected to decline to Rs 61,660 crore by 2008-09 and Rs 41,184 cror

10.

With over 1,20,000 lakh towers in the country, and another 2 lakh expected to be adde

two-year period, companies are increasingly looking at the sharing of infrastructure.

Most of the companies - including Reliance Communications, Bharti Airtel, Tata Tele

Cellular – have also announced hiving off their tower businesses into separate companies

Business Standard

1900 Mhz field trial: GSM players cry foul

CDMA and GSM operators are now involved in a new war. The latest battle revolves a

Department of Telecom (DoT) allowing CDMA-based players to conduct field trials in the

band to establish that mobile services offered in this radio frequency would not imp

operations in the 2100 MHz band.

GSM-based operators, which have constantly warned that any move to allocate spectr

1900 MHz band to CDMA players would adversely impact their services in the 2100 M

have now complained to the DoT that “they have been completely excluded from the p

the trial”. In a communication to DoT, dated September 26, the Cellular Operators Asso

India (COAI), the body representing GSM players said: “Our involvement in this late sta

the test network is set up, test methodology and test objective have already been

tantamount to being a mere formality/fait accompli.”

The COAI claim has, however, been hotly contested by CDMA industry body Association

Service Providers of India, which has said that the GSM-based operators were always k

loop. “The Wireless Planning and Coordination (WPC) wing of the DoT had sent a detaile

the COAI enclosing full details of the mixed band field trials and also seeking nominees

GSM body to see the trials,” said AUSPI general secretary S C Khanna.

While ET had earlier reported that the mixed band field trials had commenced, Mr

however, clarified that the trials were set to begin shortly while adding that the equipme

same was currently under installation as per the instructions of the WPC. Further, he a

that WPC has received the names of the COAI nominees, who would witness the trials

had also been communicated to AUSPI in a letter dated September 25. “These

representative from COAI and one nominee from the each of the operators. Besides, tw

from the WPC, one from telecom regulator Trai and one from Telecom Engineering Ce

been nominated to oversee the filed trials,” he added.

At the same time, COAI after studying the methodology to be adopted during the trials

raised a host of technical issues with the DoT. COAI has pointed out that the me

proposes that during the trials, filters would not be required if a guard band of 3.8 MHz is

“It may be noted that earlier studies have put this guard band requirement at 10-15 MHz.

appreciated that wastage of spectrum in the guard band, would at Trai recommended res

for IMT-2000 spectrum mean a financial implication of Rs 2,000 to Rs 3,000 crore,” COAI

Further, the COAI communication to the DoT also added the results that would ensure fro

trial would not lead to any meaningful conclusion and thus would not be acceptable. “An

has to pass the test of no-interference must be carried out in a practical environment o

loaded system involving the networks of all the service providers. We would like to subm

planning of the trial as also its implementation must be done transparently and wit

involvement of all stakeholders,” the communication added.

The Economic Times

New mobile licences may come with lock-in clause

With the queue for telecom licences getting longer by the day, the department of

telecommunications (DoT) is planning to introduce a lock-in period to weed out no

applicants. Such a lock-in is likely to apply on two counts — exit lock-in and ownership lock

If implemented, a new applicant who is allocated spectrum to launch cellular services will

sell out only after operating for a certain number of years. At the same time, its promote

be able to sell their stake beyond a certain percentage during this period, despite the fore

investment (FDI) limit being at 74%. A final call on this will be taken by the DoT committee

formulate pre-qualification norms for applicants and screening guidelines for those that qu

When contacted, a government official close to the developments told ET: "There’s no

since the matter is yet to be taken up by the Telecom Commission. Talks are at a concept

wherein an exit lock-in will prevent a new universal access service licence (UASL) application

exiting the business for a specified period. An ownership lock-in will be more complex

entail a defined set of norms that prevents the promoter group in a new licensee company

offloading its stake."

The official said the ownership lock-in will ensure a minimum equity investment in a com

has applied for a mobile licence for a specific period. "There is no decision yet on such a

ownership threshold. The matter will be discussed by the Telecom Commission shortly," h

Besides the possible introduction of exit/ownership lock-in periods, the DoT committee se

in place new norms to screen applicants is also looking at tightening roll-out obligations,

the net worth of companies eligible to apply, and reducing the 90-day deadline for com

convert their letters of intent (LoI) into licences.

Sources said the options being explored involve raising the net worth to around Rs 2,000

from the current Rs 1,300 crore and companies being asked to convert their LoIs into

within 10 days. Telecom minister A Raja had said recently: "All licences will be scrutinized and

limited applications selected."

A global investment banker said "determining a workable ownership lock-in period will be

call, since all associated legal and commercial complexities will have to be weighed a

present financing requirements".

With companies making a beeline for cellular licences, DoT has constituted an agency co

members from different government departments to establish the actual identities of the

and shareholders behind the new applications. "DoT will do its bit to ensure offshore de

nature of ‘benami’ transactions do not transpire and there is genuine transparency," said

government official.

The Economic Times