Bangalore-based VAS provider OnMobile is planning to enter the capital market this financial year with an IPO of Rs 500-600 crore!

Onmobile is a network-level VAS provider and powers voice portals of most Indian operators. The company is gearing up to become an end-to-end VAS solution provider, intending to invest the IPO proceeds for its foray into the GPRS segment.

According to this ET article, Onmobile’s annual revenues are approx. $50 million (around Rs 210 crore) and the estimated value of the company is approx. $300 million (around Rs 1,250 crore).

Infosys has a 14% stake in the company. Onmobile had secured a strategic financing of $27.8 million (around Rs 115 crore) from Deutsche Bank, Goldman Sachs and Polygon Investment Partners late last year. This was the second round of funding for the company following its $18 million (around Rs 73 crore) first round in 2000 secured from Argo Global and HNQ Asia-Pacific.

The company’s competitors include IMI Mobile, Cellebrum and Mauj.

Urpo Karjalainen, head of Nokia’s Asia-Pacific business, tells Reuters that barriers to entry for rivals are high in India.

“In India there are today about 93,000 retail outlets. It’s a huge amount, and our phones are being sold in every single one,” Karjalainen said on the sidelines of an industry event, adding that rivals don’t sell phones in even half those outlets…

Karjalainen said building a presence in India on a similar scale would demand significant spending by competitors.

Nokia is watchful of the organised retail boom in India.

The rise of chains in a country dominated by small retailers would make it easier for rivals to build their presence.

A big retail presence is crucial in Asia, where more than 70 percent of consumers decide which phone to buy at the point of sale, he said. In Europe and the United States, customers often get their cellphone from their carrier.

According to this article, Nokia has a market share of about 50%. I think Reuters is being conservative in estimating Nokia’s Indian market share. Nokia may have a market share upwards of 70% in India. India is Nokia’s third largest market by volume.

Also, Nokia expects 300 million new cellphone users in India by 2010. Thats again a conservative projection. But coming from Nokia it needs to be taken seriously, in spite of government target of 500 million by 2010.

Total telecom subscriber base (GSM, CDMA, FWP, Landlines) as of May 2007 stood at 21.8 crores (218 million).

• Net addition in May = 63 lakh subscribers
• Tele-density = 19.25%
• GSM additions = 50 lakh
• CDMA additions = 15 lakh
• Fixed line base declined by 2 lakh

COAI is usually prompt in releasing subscriber growth figures. The GSM numbers for the past month are usually in by the end of first week of every month. It is the CDMA and landline numbers which take longer to arrive.

ET reports that merger talks between Idea Cellular and Spice Telecom have broken down due to differences in price.

Spice, which offers cellular services in Punjab and Karnataka, had revenues of around Rs 553 crore in 2006. It was looking at a valuation of about $1.3 billion (over Rs 4,300 crore). Idea found it excessive, as Spice does not have a nation-wide presence and continues to make losses.

Analysts say that if Bharti Airtel’s valuation is taken as the benchmark, Spice would command a price of about $1 billion. But Spice is only present in two circles and is a pure-play mobile company compared with Bharti, an all-India integrated operator. Therefore, Spice’s valuation would be at a discount of 30%-35% to Airtel, or about $650 million-$700 million.

Firdose Vandrevala, Chairman of Motorola India is quiting the company. Mr Vandrevala had joined Motorola in October 2005.

The Hindu Business Line says that Vandrevala’s exit is being seen as the direct fallout of Motorola losing the 45.5 million line contract from BSNL.

Motorola officials denied any link between Mr Vandrevala’s exit and the way the BSNL contract was handled. Industry sources close to the development, however, said that while Motorola’s top bosses were not in favour of going to court against BSNL, Mr Vandrevala had pushed the move. Motorola, which is eyeing future contracts from the State owned company, finally decided to withdraw the case as it was straining the relationship with senior BSNL and Government officials. The case delayed BSNL’s expansion plans by six months causing huge losses to the PSU.

This is the second time a Motorola India chief is quitting the company under mysterious circumstances. The company’s earlier India head, Mr Pramod Saxena, had also suddenly announced his exit following allegations of influencing BSNL tendering process.

Vandrevala’s stint at Motorola saw the company’s market share growing to nearly 14% from less than 5% two-year ago. The period also saw the company setting up a manufacturing facility in India and partnerships with Bharti Teletec and ITC’s e-choupal.

GSM operators added 50 lakh (5 million) subscribers in May, taking the all-India GSM subscriber base to 13.06 crore (130 million).

• Bharti Airtel = 18.51 lakh new, 4.07 crore total
• BSNL = 2.38 lakh new, 2.79 crore total
• Hutch-Essar = 15.06 lakh new, 2.92 crore total
• Idea = 7.03 lakh new, 1.52 crore total
• Aircel = 64.08 lakh total
• Spice = 1.92 lakh new, 30 lakh total
• MTNL = 64,098 new, 25.47 lakh total

Hutch-Essar (Vodafone) has become the second largest GSM player in the country, displacing BSNL.

Hutchison Essar MD, Asim Ghosh sounds like a Bollywood actress denying she is in the race to be No. 1.

“We don’t watch subscribers — we just watch revenues. We have been No. 2 in revenues for a long time now”.

Sunil Jain makes compelling arguments against TRAI’s recommendation of not allowing entry of new operators to provide 3G services in the country. Recommend that you read the full article.

This was the import of a recommendation made by the Telecom Regulatory Authority of India on 3G spectrum last September but, thankfully, the then Telecom Minister Dayanidhi Maran chose to ignore it and said he’d invite new players into the field. Now that Maran’s been asked to go, the industry’s making one valiant attempt to win over his successor into accepting Trai’s recommendations in toto.

Trai’s recommendations, of course, were amazing and, presumably, Maran saw through the inconsistencies in them. While the mobile phone firms argued that 3G services (which allow vastly superior services to be offered wirelessly, including internet data speeds of at least 144 kbps) should be given to them without a one-time entry fee as they were just an extension of their existing 2G licences, Trai rejected this.

It said 3G was a new service and so it should be auctioned. But if it was a new service, how did Trai arrive at the conclusion that the auction should be limited to just the existing mobile phone players- that’s both the GSM-cellular lot as well as the CDMA-lot (also called the Unified Access Service Licence, or UASL holders) like Reliance Communications and the Tatas?

According to data compiled by UK-based Bango, 9% of all accesses to mobile websites now come from India, up from 4% a year ago.

Bango said it expects the mobile phone usage in India to exceed European levels within the next few years.

“We see that wherever flat-rate mobile data charges are pervasive in a country, then there’s much more web browsing,” Anderson added.

UK is the largest country in terms of the number of people accessing websites on mobiles, followed by the US and South Africa.

Source: The Hindu

TRAI has decided to levy a fine of Rs 500 for every unsolicited call or SMS sent by a telemarketer. Further, the telemarketer could face disconnection of services.

The regulator has exempted messages relating to financial transactions under specific contracts (between the caller and a party), charities, national campaigns, natural calamities transmitted under government directions, among others.

TRAI, through this regulation, has also called for setting up a national database that contains a telephone numbers of subscribers who do not want to receive the telemarketing calls. TRAI has mandated National Informatics Centre (NIC) to set up a National Do Not Call (NDNC) registry in three months’ time.

Telecom service providers are required to set up the call centres with toll free telephone lines to which a subscriber can call to register his name and number.

Sources: Business Standard and TRAI

Tata Teleservices CEO Darryl Green has quit the company after a two-year stint.

Darryl was heading Vodafone’s Japan operations prior to joining Tata Tele. Mr Green was the only foreigner holding the CEO’s post in any of the telecom companies.

Darryl has joined staffing services giant Manpower Inc. as its Executive Vice President and President of the company’s Asia and Pacific operations in Japan.

Hindu Business Line’s stock analyst K. Venkatasubramanian puts a “Hold” call on the Idea Cellular stock.

Some interesting tidbits for the rest of us non-investors.

• In the 11 circles it operates in, eight are profitable, while in three where it started operations recently — Himachal Pradesh, Rajasthan and Uttar Pradesh (East) — the company has reported operating losses.
• Idea Cellular has managed its subscriber base well through such innovative schemes such as two-minute outgoing free and reduced tariff rates for loyal pre-paid subscribers.
• Idea recently signed two managed outsourcing deals - $700-million agreement with IBM for all its IT infrastructure requirements and $500-million deal with Nokia and Siemens for supply of network equipment.
• Idea’s churn rate (customers lost) is lower than the national average of 7%.
• ARPU = Rs 332
• Minutes of Usage per user = 364
• Average Realised rate per minute = Rs .091
• VAS revenue as percentage of ARPU = 9.2%

ET reports that talks of merger or acquisition between Idea Cellular and Spice Telecom will continue only after Spice’s IPO.

A possible reason for this is that the listing will ensure a robust price discovery process for the company, which is currently believed to be valued at about $1 billion. Besides, any merger post-IPO will also ensure a cashless swap of equity.

Also, a group of investors led by Lehman Brothers and Spinnaker Investments have picked up a small stake in Spice Telecom for about $30 million, as part of the pre-IPO placements by the cellular service provider.

Spice is targeting an issue date of June 18 for its 600 crore IPO.

Spice will be offloading nearly 138 million shares, equivalent to 20% of its enlarged capital base. Following the IPO, the stakes of the Modis and Telekom Malaysia, which is currently at 51% and 49%, will fall by 10% each. This implies, post-IPO, the Modis will have about 41% while Telekom Malaysia 39%.

Spice currently has 2.8 million subscribers and has operations in two telecom circles - Karnataka and Punjab.