Malaysia’s largest telecom company Maxis Communications, in partnership with Apollo Hospitals promoter Reddys, will buy Aircel for $1.08 billion. Maxis plans to list Aircel.

Maxis will take a direct 65% stake in Aircel by spending $702m. It will hold the remaining stake indirectly through a joint venture, owned 74% by Apollo and 26% by Maxis.

This implies an enterprise valuation of $800m for Aircel. With Aircel’s mobile subscriber base of over 2.2m, the payment per subscriber will be around $364. Vodafone paid $1,000 per subscriber for Bharti while $570 a subscriber was paid by Hutchison Essar for BPL.

Mr Sivasankaran’s Sterling Infotech has been lucky in its fourth attempt to sell Aircel. It had earlier held discussions with Idea Cellular, AFK Sistema of Russia and Hutch.

Two proposals which if implemented can change the dynamics of the market and are a boon to the consumers are being opposed by government controlled entities.

BSNL opposes IndiaOne:

Government-owned BSNL has opposed Union communications minister Dayanidhi Maran’s proposal for OneIndia tariff. It has said that the company would lose over Rs 4,500 crore per annum and it will have to make additional investments of over Rs 10,000 crore in its network to upgrade its network to meet the growing demand of the tariff.

The cost of setting up a rural telephone is more than 50per cent of the total investment required to install a phone in urban area. Moreover, the revenues in rural area is only 33per cent of the revenue generated in urban area. With reduction in surplus with BSNL, the expansion of network in rural area will stop, said BSNL.

DoT against number portability:

With a tele-density of just 11 per cent, number portability is not advsiable at this moment. Moreover, this has the possible impact of adding to the overall cost of the network of operators and fuel high call charges, official sources said, adding no action is expected on this front.

Telcom companies expect their additional spend on infrastructure to go up by about 10 per cent if number portability is implemented.

ET predicts: “The next year is set to spell good news for all — manufacturers, operators and most importantly, consumers. ”

And what are the things to watch out for:

• 3G and Spectrum: Spectrum policy likely in the first quarter of ‘06
• M&As on telecom St: Foreign telcos are expected to pay top dollars
• The year of IPOs: Reliance Infocomm, Idea and Hutch in queue
• Tap the hinterland: Telcos heading to semi-urban and rural markets
• Tariffs and VoIP: OneIndia and VoIP will put pressure on tariffs
• Manufacturing Mecca: Nokia, LG, Samsung, Motorola, Ericsson, Siemens, Elcoteq
• New milestones in mobiles subscriber base additions: 100m subscribers by the end of next year
• Wireles replacing wireline: 36 lakh fixed-line surrenders last year
• Cellphone users “mange more”: Entertainment device with music and video
• Sex and the cellphones: MMS racket is here to stay, with some help from 3G too

As part of its “Indianization” initiative, Mauj Telecom has launched mobile games in Hindi and 7 regional languages including Marathi, Gujarati, Bengali, Tamil, Malayalam, Telugu and Urdu.

The 3 games developed by Mauj - “Mastibhari Udaan,” “Saahas Ka Yudh,” and “Jaanbaaz” are aimed at making mobile game play easier for mobile users in B and C towns.

B and C towns are found to drive a large portion of the growth in value-added services for the mobile industry. In such towns, mobile entertainment cost is almost considered as mainstream entertainment, because of the lack of an alternative.

Speaking about the initiative, Arun Gupta, chief operating officer, Mauj Telecom, said, “Only 3 to 5 percent of the Indian population is conversant in English, but all mobile gaming currently is still only in this language. By offering our games in eight different languages, we have now taken a giant leap to connect to the real India.”

For Mauj the key criterion in developing the games has been ease-of-use while playing, right from the introductory menu - through the help section - to the technical detailing. Approximately, Mauj employed 30 translators and 20 technicians towards this goal.

Mauj is pushing the envelope in mobile content by trying out new things like Videotones and now Indian language support for mobile games. I think the mobile content companies ought to look beyond ringtones and games in order to be really innovative.

Brightstar Corporation, a $2 billion supply chain management company for the mobile industry has launched its operations in India. It provides partners with product distribution, inventory management and logistics services.

Brightstar’s presence will provide increased availability of products and value-added services to wireless network operators, agents, dealers and retailers who serve the wireless telephony market in India. Also, with newer international brands entering India, there is a need to streamline logistics involved in the distribution of mobile devices and wireless services.

Brightstar operates 29 facilities in 23 countries worldwide, works with 160 network operators, reaching over 15,000 points-of–sale and is expected to exceed revenues of $2.5 billion in 2005. In 2004, Brightstar marketed, sold and distributed over 18 million devices globally from the industries leading manufacturers, this represents almost 3% of the worldwide wireless devices sales.

Seeking to put a lid over the controversy involving its accounting practice, Bharti Tele-Ventures has asserted that it had done no wrong in adopting international accounting system GAAP. Media reports stated that post corrections Bharti’s losses for the three years (ending 2004) were Rs 2002 crore as against Rs 221 crore profit stated by it earlier.

As a part of preparation for its sponsored ADR last year, Bharti had adopted US GAAP, which is the preferred accounting standard internationally. However, the ADR plan was subsequently dropped due to lack of sponsorship.

Bharti has said the additional losses of Rs 2,200 crore for the three years ending FY04, reported by a TV news channel, were non-cash and only technical in nature. The losses arose as the firm shifted from International Financial Reporting Standards (IFRS) (practised in India) to US GAAP in ’04. Bharti’s stock on Wednesday dipped 2.25% to close at Rs 342.25 following the reports.

“The differences (in accounting system in India and GAAP) were purely non-cash and technical in nature and have no bearing on operational performance or cash flow of the company,”

In a boost to Bharti, Vodafone came out in support saying they had prior knowledge of Bharti’s account. Stung by the criticism that virtually tantamounts to accusing the company of fudging accounts, the company came out with a detailed explanation on the accounting methods adopted by it to assuage any fears.

“The overall effect on the shareholders equity up to March 31, 2004 on account of all the adjustments is approximately Rs 915 crore. Of this, approximately Rs 800 crore pertains to business combination, goodwill and deferred tax adjustments and the balance pertains to various items under the other category of adjustments mentioned above,” it said.

ET story on potential of m-commerce in India.

Reliance Infocomm and Bharti Tele-Ventures are the early movers in the market, which offer m-commerce services such as bill payment and ticket purchases. Reliance’s mobile payment facility offers services such as paying monthly bills, book railway and airline tickets and book movie tickets.

Airtel, ICICI Bank and VISA have tied up to introduce mChq so that Airtel customers and ICICI Bank Visa cardholders can clear their purchases through their mobile phones. Airtel also provides a facility through which a prepaid customer can recharge his prepaid card electronically to any denomination. Out of their pre-paid users, 70% of total, about 60% recharge through the electronic process.

“While CDMA networks are more suited for m-commerce type of transactions compared to GSM operators, in India, it is the GSM subscribers who have a higher usage of the various mobile phone services compared to the CDMA subscribers who largely belong to the lower ARPU spending category,” according to Alok Shende, director ICT practices, Frost & Sullivan.

Related: mChq

After Airtel’s lifetime validity offer, four more telecom operators - MTNL, Idea, Reliance and Hutch have also jumped on the bandwagon.

Idea and MTNL announced the launch of ‘Idea life-long pre-paid’ and ‘MTNL Trump Jeevan Sathi’ schemes, priced at Rs 995 and Rs 900, respectively. Pitching into the battle, Reliance Infocomm too, launched a lifetime validity prepaid voucher of Rs 995. While Hutch also launched a life-time validity scheme - ‘Chalta Rahe’.

Idea is offering Rs 25 talktime, MTNL is offering Rs 100, Reliance is offering Rs 50 and Airtel is offering Rs 50 talktime on the schemes.

The scheme targets an older population, which is dependent on their children and receive more incoming calls. According Hemant Sachdev, group chief marketing officer and director-mobility, Bharti Tele-Ventures Ltd, “The new lifetime prepaid facility open up new segments of the market from the very young to the old, from small towns to rural clusters.”

According to TRAI guidelines, an operator won’t be able to count the customer as a subscriber if he fails to recharge within six months.

Also Read: Stay mobile for Rs 999

Spectrum is turning out to be the biggest bottleneck for Indian mobile operators as they grapple with network problems, poor voice quality and dropped calls.

GSM operators initially get 4.4 MHz of spectrum while CDMA operators get 2.5 MHz of spectrum. In case of GSM, operators with 10 lakh or more subscribers are eligible for a total of 10 MHz while CDMA operators get 5 MHz for 10 lakh subscribers. Since CDMA technology carries the voice in small packets, it can carry about five times more traffic and hence has a lower spectrum allocation.

However, as the number of mobile users is growing (average addition is close to 3m per month), spectrum is falling short of requirements and is not adequate to accommodate the increasing subscriber base.

For instance, cell sites (locations where base station equipment and their antennas are put up) should be at least 600-800 metres apart from each other to ensure there is no interference in calls.

“But due to inadequate spectrum, we have sites within 100 metres of each other, resulting in poor call quality,” said an official with a leading telcom company.

Bharti Tele-Ventures, has a cell site count of over 14,500 at the quarter ended September ’05. Hutch has over 11,000 cell sites across the country. Idea Cellular has 640 cell sites in Delhi and has a total of 3,600.

Bharti had invested Rs 18,875 crore as on 30 September ’05 on telecom infrastructure. For the year ending March ’06 alone, the company is looking at spending $ 1.2-1.3bn. Idea has invested Rs 6,500 crore since its inception.

According to industry estimates, Reliance had put in Rs 14,000 crore till March ’05 while Tata Teleservices had pumped in Rs 11,800 crore by the same period.

Source: Economic Times

Bangalore based Openera Technologies, a developer of IMS mobile client applications for fixed and mobile operators, announced the commercial availability of its peer-to-peer video sharing application with integrated presence, enabling mobile phone users to talk with and view fellow callers simultaneously. It has partnered with Lucent Technologies, which is delivering the product to market as part of its IMS offering.

The peer-to-peer Video Sharing application is a SIP-based multimedia service that allows IMS and 3G subscribers to launch a synchronous real-time audio and video session with fellow callers.

This dynamic video sharing is powered by Openera’s Active Phone Book, which, integrated with rich presence, provides users a new level of connectivity by informing them how and when they can reach and communicate with particular contacts.

Openera’s IMS Mobile Client with APB enables the delivery of a growing number of multimedia IP communication services on mobile devices deployed in pre-IMS 2.5G GPRS/EDGE and EV-DO networks as well as true IMS networks built on 3G and/or WiFi standards.

Close on the heels of Airtel launching a life-time prepaid card, Hutch today announced a similar lifetime validity scheme for its prepaid subscribers at Rs 999.

It will also offer full talktime on all future recharges and customers can subsequently top-up with any amount and get full talktime.

But as Vinu pointed, you still need to recharge at least once in 6 months with the minimum available recharge (currently Rs 10) to stay mobile.

Parliamentary Committee has recommended that the government allot the crucial 1,900 Mhz spectrum to CDMA operators.

“All efforts should be made to allot as much spectrum as the government can in 800/1,900 Mhz for the CDMA operators and the 900/1,800 Mhz for the GSM players for the expansion of telecom services”, Standing Committee on IT (2005-06) said in its report on Spectrum Management.

It said that until the time 2.1 Ghz band (as suggested by TRAI) is coordinated and spectrum, equipment are available in this band, the nation should not be deprived of access to 3G and other emerging service.

“In view of the fact that 3G and emerging services can be provided in the 800 Mhz and 900/1,800 Mhz bands, the committee desires that the government should create simultaneous opportunities to both GSM and CDMA players for roll out of 3G services”, it said.

The panel feels 3G services would be available only in the next three years.

Tata Tele’s “insaan phone leta hai tarakki karne ke liye” campaign, a brainchild of McCann Erickson’s Regional Creative Director Prasoon Joshi, appears to have worked.

With 1 million subscriptions from its “Non-Stop Mobile” scheme in just 45 days, Tata Teleservices has increased its market share in the mobile wireless space to 4.5% in November from a minuscule 1.5% per a year ago.

The company is targetting 10 million subscribers by March 2006 (mobile plus fixed wireless) and by 20 million users by FY07.

“That is more than three times the current base of 6.5 million.” That means Tata Teleservices must garner 13.5 million customers in 16 months, a run rate of 840,000 subscribers a month. Net additions of cellular subscribers in November were 729,000, nearly 21 per cent of net additions.

“Assuming the current run rate of 3 million a month, Tata Teleservices must get a 20-25 per cent share incrementally of the cellular space. That’s a tall order,” a telecom analyst pointed out. By March 2006, the company will roll out its network in 2,500 cities from 1,700 now.

The company says it’s making money. This is the most interesting part of the story. It explains why other operators including Airtel are introducing prepaid cards with years of validity.

Explains Green, ‘It’s wrong to believe that low ARPUs (Average Revenue Per User) are not profitable. There are users who are willing to pay a higher tariff for the convenience of buying smaller recharge vouchers.’

Besides, pre-paid tariffs are in any case higher than post-paids — for instance, the tariff for the Rs 50 voucher is Rs 3 per minute. Also, there is money to be made from incoming terminating revenues. Says Green, ‘low callers are not necessarily low receivers and so we’re seeing reasonably good ARPUs.’

A profitability comparison done by a foreign brokerage shows that the EBITDA (Earnings before Interest Depreciation and Tax) margins for a micro-prepaid scheme are actually much higher that those for a pre-paid scheme.

The margins for a voucher of say, Rs 330 would be 36 per cent compared with 54 per cent for a voucher of say Rs 200. That’s thanks to a higher net realisation per minute (both in and out) of Rs 2.05 for the Rs 200 voucher and Rs 1.53 for the Rs 300 voucher.

In fact, the net realisation per outgoing minute for the lower denomination voucher is Rs 8.13 versus Rs 3.35 for the higher denomination voucher. While Green will not share numbers, he believes there is a case for business at even small ARPUs, especially for TTSL,since the company still has some spare capacity and additional capex is negligible.

A subscription level of 30 million (of which 25 million wireless) is expected to make the company positive on the profit before tax front.

The combined losses for Tata Teleservices and Tata Tele Maharashtra Limited are estimated at Rs 2,000 crore.

Tata Teleservices (East) is expecting to break even by August 2006. It overtook Reliance Infocom in the fixed wireless phone (FWP) category, accounting for 53% of the total subscriber base of 4,20,488 in the east.

The London Court of International Arbitration has ordered Sasken Communication to pay close to $1.15 million to one of its customers 3G.com. The Tribunal has ordered that Sasken shall pay 3G.com, damages in the sum of $1.15 million in addition to the legal and other costs in the sum of $173,760. Sasken shall also bear the total cost of Arbitration amounting to GBP 168,150.

Sasken during 2001 had engaged 3G.com as one of its customer for a technology solution (Single Mode UMTS Stack) and while implementing this, Sasken took a decision to change the roadmap for this product, which 3G.com did not accept.

3G.com subsequently took the legal process through which it demanded $8.75 million as damages. After the legal process, the court decided on $1.15 million as damages to be paid by Sasken.

Sasken said that the further course of action in the matter including filing of appeal in the appropriate courts will be decided in consultation with the lawyer upon receipt of certified copy of the Award from the Tribunal.

The government is reconsidering the issue of merger between BSNL and MTNL on the basis of suggestions made by a financial consultant appointed by the Centre.

Since BSNL and MTNL had been owned by the government, a need was felt that merger between the two would give more operational synergy. While BSNL is fully owned by the government, MTNL is a listed company. Capital structure of both the companies are different.

Facts and figures on BSNL from its Chairman and MD, AK Sinha:

BSNL has a mobile subscriber base of 14 million nationally and the target is to increase it to 25 million by March 2006.

It is aiming to achieve a turnover of Rs 38,000 crore in the current financial year, higher by Rs 2,000 crore over the last fiscal.

In the year of 2004-05, BSNL invested Rs 2,269 crore in rural telephony, of which Rs 1,415 crore were invested in the Northeast states, Jammu and Kashmir, and Uttaranchal.

The rate of surrender of fixed line connections was higher than the number of new lines given. However, there is demand for fixed line phones in the rural areas. The revenue per fixed line for the company was falling, but is compensated by the growth in mobile and broadband services. BSNL was also earning revenue from inter-connect charges and selling enterprise solutions.

The company has slammed the finance ministry’s recommendations that all government departments, ministries and officials be permitted to use the services of all private telecom operators.

Sinha said, “While on one hand BSNL has been used as a tool for implementing socially desirable but commercially non-feasible initiatives by the government, on the other, it has been denied the status of preferred service provider for the government sector.”

While highlighting that BSNL was a 100 per cent government-owned company, Sinha also pointed out that “all private telecom operators followed a policy of using their own telecom services for all communication across their various units”.

Meanwhile, the staff of BSNL is planning to go on a nationwide strike on January 5, 2006 in protest against the government’s decision to allow 74% FDI in the telecom sector and against divestment of BSNL and state-level Mahanagar Telephone Nigam Ltd (MTNL). The employees of the public sector giant are demand ing a Navaratna status for BSNL.

“We are the biggest PSU with an authorised capital of Rs 10,000 crore and with a paid up capital of Rs 5,000 crore. The organisation has been consistently making profits for the last five years and also paid a dividend of Rs 975 crore last year,” he said.

Airtel has come out with a life-time validity plan for prepaid users, which could be availed by paying a one-time fee of Rs 999. So a pre-paid user can continue to receive incoming calls for life after a single recharge, as against the current system of restricted validity, based on the recharge package.

As per the scheme, local calls would be charged Rs 1.99 a minute and STD calls Rs 2.99 a minute. The company also offered full talktime on future recharge.

I think one of the biggest users of this could be business travellers who take a prepaid connection in the foreign city in order to make cheaper local calls. They can now take an Airtel card for Rs 999 and use it whenever they visit their oft travelled city. And now their foreign city number doesn’t even change everytime.

Companies can now actually give it to all their field staff who need to be reachable but don’t often need to make a call - drivers, courier boys, collection agents etc.

I can think of a husband making use of a spare handset by giving it to his wife for just-in-case times. There are lot of people who have a spare handset or don’t mind shelling out the one-time handset cost but are wary of the monthly recharge in order to keep the number active.

Monthly rentals are tending towards zero. When it started, minimum recharge on prepaid was Rs 500, which then settled at Rs 325 for a while and then reducing to Rs 200 around mid-2005. What it means for the users is that they can stay mobile (at least to receive calls) by paying Rs 999 once. With a Motorola C115 costing Rs 1700 - all it would cost one to become mobile for life is Rs 2699.

A month after Vodafone stepped into India through a stake in Bharti, its arch rival Orascom Telecom has got a foothold in the country.

The Cairo-based telecom major Orascom Telecom has picked up a 19.3% stake in the Hong Kong-based Hutchison Telecom, which holds a 42% stake in Hutchison Essar.

Orascom Telecom Chief Executive Officer Naguib Swiris, who announced that his aim was to emulate Vodafone by building a mobile empire, said the acquisition would help it to enter India.

“We have often expressed our keen interest to enter some of the largest and highest growth mobile markets in the world like India, Indonesia and Vietnam. The tieup with Hutchison Telecom presents Orascom Telecom with exposure to these markets,” a joint statement issued by the two companies on Wednesday quoted him as saying.

In addition to sending two representatives to the Hutchison Telecom board, Orascom is expected to have members on the board of Hutchison Essar, Hutchison Telecom’s joint venture in India with the Essar group. The Essar group holds 35% stake in the company.

Analysts said the Orasom-Hutchison would be a formidable force in the emerging markets including India. On a combined basis, Orascom and Hutchison Telecom control mobile operators in 15 countries representing an area covering 2 billion people. They together serve 40 million mobile subscribers as on September 30, 2005.

Orascom Telecom operates GSM networks in Algeria (under the brand name Djezzy), Pakistan (Mobilink), Egypt (MobiNil), Tunisia (Tunisiana), Iraq (IraQna), Bangladesh (Banglalink) and Zimbabwe (Telecel Zimbabwe). India Calling

Source: Business Standard

SloganMurugan, a copywriter by profession, has a blogpost on the erstwhile Orange brand.

Like vada pav and Midday, dance bars and bhai-log, it’s a Mumbai thing. And last month it made a quiet exit. Orange, a cell phone service provider brand from Europe that became an integral part of the organism called Mumbai, changed its name to Hutch and now dons a shade of pink, only women can name. Hutch being the name used by the Orange’s parent company in India when it laid out its mobile network across India. But Mumbai had Orange, until now.

It is not often that a mobile phone company can attain a status that Orange enjoyed. Especially since its service cannot be termed any different from the many cell phone operators in India today. The difference with Orange was its brand value. Value created by its advertising and communication.

Who are the people behind this brand? In India, Orange’s distinct identity was visualised in the minds of Rajiv Rao and Mahesh V, who work with Piyush Pandey at O&M India.

World’s second largest maker of mobile phones, Motorola, on Thursday launched its first ‘Made in India’ handset, the C115, for Rs 1,700.

C115 is a mass market phone with high battery life and Hindi messaging capability. The company has bagged a bulk deal from Hutch for the C115.

Commenting on the `Made-in-India’ tag, he said, “The designing and software is done in India, and some components have been imported. An integrated manufacturing should happen shortly.”

While welcoming the Rs 1,700-mobile, telecom minister Dayanidhi Maran said the company should now try to launch a a phone priced at less than Rs 1,000. “That will be the right phone for the mass market in India,” he said.

“I am delighted to see it happening. As much as 98 per cent of the demand in India is voice, and only two per cent is data and value-added services. I am really happy that by December we will be touching the 125-million subscriber mark, a 25-per cent growth in the last nine months. And I am confident that we will achieve the target of 250 million subscribers by 2007,” he said.

Also Read: Motorola C115 review

Business Standard reports that Malaysian telco Maxis Communications Berhad may pay $280 million (Rs 1,265.32 crore) for a 26% stake in the C Sivasankaran-controlled Aircel Ltd.

At an enterprise value of $1.07 billion (Rs 4835.3 crore), the Malaysian company will be paying about $496 (around Rs 22,414) per subscriber for the deal. The valuation is much lower than the $1,000 (Rs 45,190) per subscriber that Vodafone paid for a 10 per cent stake in Bharti Televentures and the $570 (Rs 25,758) a subscriber paid by Essar for buying out BPL Telecom.

Sivasankaran refused to comment on the deal. This is the fourth time he has struck a deal to sell Aircel. His earlier moves were stalled because the department of telecommunications (DoT) refused to issue the necessary clearances.

In June last year, Sivasankaran had struck a deal with Hutchison Essar to sell the entire equity of the company for $362 million (Rs 1,635.9 crore). With a subscriber base of 850,000 at that time, Hutch was willing to pay around Rs 18,000 per subscriber. But the deal fell through because the DoT did not clear the acquisition.

In February this year, Sivasankaran signed an agreement with AFK Sistema of Russia to sell a 49 per cent stake for $450 million (Rs 2,033.5 crore).

This deal expired in March. However, the company was offering $546 per (Rs 24,674) subscriber – higher than the Maxis offer.

In June 2005, a group of US investors lead by Pequot Ventures had offered to buy 30 per cent in Aircel for $350 million (Rs 1,581.6 crore). The talks fell though.

The deal is expected to be signed on December 30.

Related: Aircel in talks with Malaysian telcos