Telecom Powerhouses

The National Telecom Policy 1994 (NTP ’94) initiated the

entry of private operators in the telecom sector. As a result, there has been a

near stampede situation out there among the bidders–most of them coming from

big business houses of India.

Most of them came from non-telecom backgrounds. There were

some like Bharti, HFCL, and United Telecom who had been supplying products to

DoT regularly and understood the business of communication services.

Whatever be the background, most of them not only got an

opportunity (either in the cellular or basic or in both), but also found

partners, both as investor or strategic. International giants were more than

willing to enter the opportunity called India.

The past six years saw the predictable shakeout and things

are beginning to sediment now. It is certain that the Tatas, Reliance, BPL, and

Bharti are here to stay and go all out. On the other hand, the Birlas and the

Ruias have literally walked out. Modis, Goenkas, and Jhawars are the fence

sitters. The transformation and M&As, especially in the cellular industry

last year, clearly point to the emerging trends: Five to six players will

address all the four segments–wireless, wireline, Internet, and carriers’

carrier–of communications.

The Opportunities and the Moves

In December 1999, TRAI announced Domestic Long Distance (DLD)

guidelines. The criteria put was that the hopefuls should have a net worth of Rs

2,500 crore, pay a one-time entry fee of Rs 500 crore, and submit 5 percent of

the gross annual revenues as licence fee for first 20 years of operation. It is

believed that the total investment in this sector in the next five years would

be around Rs 75,000 crore.

Cellular is another area where growth is assured. The

exponential growth in Internet, along with its convergence with cellular

networks, will be a very good bet for cellular and mobile services. The game has

already begun. Network expansion and upgardation has started. BPL, Bharti,

Reliance, and Tatas have concretized some of their strategies to tap the

opportunity.

BPL

The Nambiars have a separate group, BPL Innovision, headed by

Rajeev Chandrasekhar to spearhead its telecom activities. It has BPL Mobile, BPL

Cellular, and BPL Wireless for wireless operations in cellular and paging; BPL

Telecom for manufacturing, networking and turnkey projects, software solutions

and services, and R&D activities; BPL Net for Internet services; and BPL

Broadband for bandwidth services.

With cellular operations in Mumbai, Maharashtra, Tamil Nadu,

Goa, and Kerala, it is the largest cellular outfit in the country. As a

strategic decision, it tied up with Bharti. It has major plans to enter into the

broadband market and is planning to invest Rs 3,000 crore to create OFC

backbone. In the first phase, it would be investing Rs 500 crore to link up

Pune, Chennai, and Bangalore. It is keenly interested in others plans like those

of RITES and Power Grid and is negotiating with the state governments of

Karnataka and AP for building statewide OFC networks.

BPL Telecom, under the aegis of Advanced Network Systems, is

focussed on the business of wireless solutions and systems integration of

telecom networks. It could be its future money-spinner. BPL Net will address the

Internet and portal businesses. The key for BPL will be in offering broadband

services.

The Bharti Group

The Group is focussed on different areas of business through

independent JV companies: Bharti Cellular for cellular operations, Bharti

Telenet for basic services, Bharti-BT Internet for Internet services, and Bharti

BT for VSAT and WAN consultancy. Others include Bharti Telesoft for telecom

software development, Bharti International for JVs in global markets, Bharti

Televentures for projects, and Bharti Telecom for telecom equipment development.

This completes the entire portfolio of telecom coverage. It has over Rs 700

crore of turnover. It is the second largest player in terms of total number of

subscribers from cellular and basic services.

In the cellular business, it started with Delhi operations

and followed up in Himachal. Last year, it invested about Rs 650 crore in

acquisitions and bought JT Mobile (JTM) in Andhra Pradesh (AP) and Karnataka,

and SkyCell in Chennai. It is contemplating to take over Usha Martin in

Calcutta. It entered into alliance with BPL and together they can ensure a

seamless connectivity in Delhi, Chennai, Mumbai, Maharashtra, Karnataka, Kerala,

Tamil Nadu, and AP.

Its basic telephony services are already operational in

Madhya Pradesh. As a strategic step, it has laid 2,500 km of fibre throughout

the state extending to the borders to have interconnection with other operators.

Its overall game plan is to expand services to cover most circles in the north

and be an important player in the DLD segment. It will offer VSAT services and

network consultancy through Bharti BT, while its Internet arm, Bharti BT

Internet, is offering Internet services in the country. It has over 20,000

subscribers already.

Reliance

This $15 billion Group has the financial muscle to sustain

any investment. In telecom, Reliance Telecom provides cellular and basic

telephony services. It has cellular licences for seven circles covering 13

states. It also has the basic telephony licence for the state of Gujarat.

It has covered 36 cities in the first phase of cellular

operations and its subscriber base reached 70,000 this year. It plans to expand

its cellular coverage to over 90 cities and double its subscriber base by the

year-end. In March 2000, it commenced its basic services in Gujarat.

This year it announced its new infocom initiatives. Under

these, Reliance will focus on broadband networks and Internet infrastructure in

India to offer integrated broadband services. It expects to complete these

investments in the next 24 months. A state-of-the-art, broadband network for

Gujarat is under implementation. Expecting the pending DLD boom, it is planning

to invest Rs 2,500 crore along with WorldTel over the next 10 years. It is

understood to have signed with eight states for providing 8,000 km of data

connectivity over OFC. Going by its initiatives, it is evident that it is

serious in all the four domains of fixed and wireless telephony, Internet

services, and bandwidth services.

The Tatas

The Tata Group always had interests in infotech and telecom.

Little wonder that it has several companies like Tata Elxsi, TCS, Tata Telecom,

Tata Infotech, Tata Cellular, Tata Teleservices, etc., under its fold. It has

also announced its plans to address the e-economy. It is already into cellular

and basic services in AP. And its intentions to expand was clear when it entered

into a deal with the Birlas to form a $1 billion outfit for the cellular

business whereby it will get the footprints of AP, Gujarat, and Maharashtra.

It recently announced its Internet plan. Its Internet arm,

Tata Internet, will offer Internet connectivity, set-up three international

gateways, build and manage portals, and set-up B2B exchanges.

Tatas have ambitious plans to create a broadband network and

provide services. Tata Electric will drive the plans in association with Tata

Cellular and Tata Teleservices. The trio will make a bid in more circles to

build, own, and manage backbone infrastructure. In the next six months, it would

be investing Rs 300 crore in setting up its 400 km optic fibre network across

Mumbai. With these plans likely to get off from this year onwards, Tatas intend

to grow their revenues–IT and communications–from the present Rs 3,600 crore

to over Rs 8,000 crore.

Not a Cakewalk All the Way

All these top groups–Bharti, BPL, Reliance, and Tatas–have the financial

strength and the vision to lead the telecom revolution in the country. But it

would not be that easy. On the infrastructure (broadband services) front, they

will have competition from Punj Lloyd, L&T, Enron, besides the good old

guards MTNL and DTS. Then some public sector undertakings like Power Grid,

Railways, SEBs, etc., who have the Right of Way (RoW) might be worthy rivals as

well. But more than competition, it may be the case of collaborations and

consortiums. Whatever it may be, things will be interesting to observe.