COMPANIES TO WATCH: Dishnet: Preparing for Kunchenjunga

After selling off its ISP division for 270 crore, C Sivasankaran—promoted
Sterling group's Dishnet Wireless' next venture is aimed at expanding its
cellular business. Wireless is not new to Dishnet. The Dishnet group operates
cellular services in Chennai and Tamil Nadu under the Aircel brand. In a bold
move, Dishnet Wireless decided to start mobile services in 10 circles in the
northern and eastern parts of India and plans to invest Rs 2,000 crore. The
project is aptly nicknamed as "Project Kanchenjunga." At a time when
smaller and regional GSM players are selling their stakes to larger players,
Dishnet decided to go ahead and obtained licenses under Unified Access Service
License (UASL) in the B and C category circles, which were for long considered
as non-lucrative circles. Dishnet Wireless has already placed order with
Ericsson for infrastructure equipment and services for GSM/GPRS/EDGE, unified
messaging system, MMS, and intelligent network (IN).

According to media reports, it is all set to launch its services in Jammu and
Kashmir soon. In all the circles in which it will start services, it is pitted
against both CDMA and GSM operators who have a national footprint. For some
time, Aircel was up for grabs with companies including Hutch showing interest in
it. However, regulatory hurdles stopped Hutch from going ahead with the
acquisition. In February this year, Russian company AFK Sistema agreed to buy 49
percent of Aircel for $450 million. This offer was bigger than Hutchison's
offer to buy 49 percent in Aircel for $362 million. The agreement failed to
materialize. It is

reportedly negotiating the sale of 30 percent stake in Aircel to private equity
investors to raise money for financing cellular rollout in the 10 circles.
Considering Sivasankaran's excellent deal-making capabilities, it is hoped
that this time he succeeds.

Dishnet Wireless also embarked on its ambitious plan of offering broadband
Internet services under the brand name Red, by creating Wi-Fi zones across
luxury hotels, restaurants, coffee chains, airports, resorts, commercial
complexes, banks, and hospitals. It has invested around Rs 250 crore on this
project. In the first phase, the company plans to start its services in eight
cities: Chennai, Mumbai, Kolkata, Delhi, Bangalore, Hyderabad, Pune, and
Ahmedabad. In the second phase, the company plans to cover 38 cities by March
2006 with 6,000 hotspots. Dishnet also plans to start WiMax services.

Dishnet Wireless's other divisions include: broadband wireless Internet,
telecom services group (TSG), and software division (ETH). The TSGgroup provides
turnkey solutions to telecom companies.TSG has managed to bag order from Tata
Teleservices for CDMA network in 17 circles. Its software division, ETH Research
Lab, does in-house software development. Only time will tell whether Dishnet
Wireless' gamble of becoming a pan India player succeeds or not.

Sudesh Prasad