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Panel discussion on “Evolution of Mobile Communications in India” - organised by The Economic Times in association with Global Group at chancery pavilion on November 14, 2014, Bengaluru

News Coverage

Ever since the introduction of 2G telecom network in India, the country's telecom infrastructure has undergone major technological advancements. While 3G services are gradually expanding its wings in India and the latest 4G/LTE technology anticipated to further drive broadband penetration in the country. Mobile operators are developing new collaborative models both within & outside the telecom ecosystem to deliver innovative products and services to its customer. Through advancements in wireless technologies, operators have achieved continuous improvements, greater capacity, lower cost of deployment, high mobility, spectrum flexibility and cost savings in their mobile networks. Simultaneously, OEMs and telecom infrastructure players are driving innovation & efficiencies to differentiate themselves from their rivals and content providers are trying to develop their own innovative services and products to stay competitive in the market. This brings an exciting opportunity for India Telecom players, not only for the mobile operators but also the original equipment manufacturers (OEMs), telecom tower companies, application developers and engineering system designers and integrators.

The panel of experts from the telecom sector focused on issues such as greater tenancy capacity, lower cost of deployment, high mobility, spectrum flexibility and cost savings for players in the telecom ecosystem while providing high value, sustained and customized products and services to users. They also discussed the critical role of innovation across the board and the crucial role played by the government with the introduction of different policies impacting the different players operating in this ecosystem.

Global Foundation for “Swachh Wadi, Sundar Gaon” mission Kudal

Global Foundation has initiated “Swachh Wadi, Sundar Gaon” movement under its Education for Peace Program between 14th November to 25th December. The drive started with cleaning of Kudal Railway Station, Bus depot and Local Health Center. 30 High schools has been roped in for participation.

INDUSTRY NEWS

American Tower Corp set to pick up 51% in tower company Viom for $1 billion
By Arijit Barman & Anandita Singh Mankotia | 01 December 2014, 8:10 AM IST

NEW DELHI/MUMBAI: American Tower Corp (ATC) is close to sealing a deal worth $900 million-$1 billion to acquire a 51% stake in Viom Networks, which will be followed by a merger of the Indian unit of ATC with Viom, bringing the curtains down on year-long talks.

Viom is majority-owned by the Tatas (54%), who hold the stake through unlisted telecom arm Tata Teleservices.

Srei, promoted by the Kolkata-based Kanoria family, owns around 18.5% while the rest is held by a clutch of PE funds including IDFC Private Equity, SBI Macquarie, Oman Investment Fund, GIC of Singapore and AMP Capital. According to multiple sources involved in the transaction, the first leg of the deal will see Srei sell its stake and exit Viom, while the Tatas will significantly pare their shareholding to 26-30%. "While Macquarie, SBI and IDFC Private Equity will continue for certain, the decision of the other equity firms is not yet clear," said one of the people cited, referring to the first stage of the transaction. The second phase of this two pronged process will see ATC merging its India portfolio of around 12,000 towers with Viom, which owns 42,000 towers, marking a substantial consolidation in the local telecom towers industry. ATC will be the controlling shareholder of the merged entity, though the exact shareholding depends on the outcome of lastmile negotiations. Viom's enterprise valuation is around Rs 18,000-19,000 crore, which includes over a billion dollars (Rs 6,500 crore) of debt.

ATC and Macquarie declined comment while the rest didn't respond to queries. One of the people quoted earlier told ET the agreement is almost final though some changes were possible. Post merger, Tatas and remaining PE holders will get a stake in the combined entity, though their holdings will be diluted. "In future, ATC would like to raise capital through an IPO of the combined ATC-Viom and that is when Tata Teleservices will look at a complete exit," said one the persons privy to the details of the deal, explaining why the Tatas have chosen to dilute their stake and not exit completely. "The Tatas expect the valuations of their tower portfolio to rise under ATC's management." Credit Suisse and Citi are the bankers to the deal. Once signed, the deal will bring to an end over a year of protracted negotiations during which Viom's founders were also simultaneously looking at alternative means of raising funds, such as through local or an overseas listing, given the buoyancy in the stock markets. With other suitors which at one time included PE firms Carlyle, Providence and Malaysian telecom company Axiata, which has a significant stake in Idea Cellular dropping out, ATC's bid remained the largest and the only formal offer. Founded in 2009, Viom posted a profit of Rs 100 crore on revenues of Rs 4,900 crore for the year ended March 31, 2014. It recorded an operating margin of 56%. The company claims a tenancy ratio of 2.2 times and over 92,000 tenancies. The firm trails Indus Towers, a venture promoted by the Bharti Group, Vodafone India and Aditya Birla Telecom, in India's telecom tower market, which is seeing a revival in tandem with the overall telecom sector. Indus operates some 1.1 lakh towers. Viom gets more than 40% of its revenue from Tata Teleservices, 20% from Uninor and remaining from other operators. It has a master-level agreement to lease towers to Reliance Jio Infocomm at a market-determined price.

The ATC deal would help the Tata Group pare some of the Rs28,000-crore debt of its telecom business. The funds can also be partly used to pay NTT DoCoMo for the Japanese company's stake in Tata Teleservices. The Tata Group is reportedly looking to exit the telecom sector. Srei will use the cash for its other businesses, which include infrastructure development, and finance. Nasdaq-listed ATC, on the other hand, has a comparatively smaller presence in the country, operating about 12,000 towers. Last year, the company was looking to reduce its tower count as the telecom industry was going through a tough phase post the 2012 licence cancellations and the lack of investment by debt-ridden telcos. But the US company has renewed its focus on India, with pricing power now returning to operators and the industry seeing massive growth of wireless data traffic. The successful spectrum auctions in February this year and another upcoming sale next February have also raised expectations of a spurt in tower demand as telecom operators are likely to aggressively roll out data services, which will require a large number of tower sites.

Service providers bet big on free Wi-Fi hotspots. The Wi-Fi service in Connaught Place is the largest in India; at any point, the service can be availed of by 5,000 people, with a speed of 512 Kbps
Surabhi Agarwal | New Delhi December 1, 2014 Last Updated at 00:19 IST

Anu Bakshi, manager of Chinese restaurant Fa Yian, spends Rs 2,500-5,000 every month on the private Wi-Fi installed at the restaurant, in the heart of Connaught Place (CP) here. Last week, a free public Wi-Fi zone was inaugurated in CP, one of the busiest markets here, in partnership with Tata Docomo. But as of now, the Wi-Fi signal at Fa Yian isn't strong enough to ensure uninterrupted access for Bakshi's customers. Asked whether she would stick to the Wi-Fi network provided by Tata Docomo if the issue relating to signal strength was addressed, Bakshi says, "Why not?" It will help her cut costs substantially and save the hassle of running her own equipment. It is outlets such as Fa Yian that officials at Tata Docomo are in search of. As of now, the service is free for the first 20 minutes. Avinash Gabriel, chief operating officer (Wi-Fi business), Tata Docomo, told Business Standard that against popular belief, customers were willing to pay for usage. Tata plans to triple the number of outlets selling recharge coupons for the service, says Gabriel, adding some customers are seeking cards that last them a month instead of only a day. "The other option for us to earn revenue on the investment is through monetisation options such as advertising." On the cards are tie-ups with shopkeepers and restaurant owners whom the services can be extended to. Tata already has a customer in Starbucks, the popular coffee joint that offers free Wi-Fi. While customers use Starbuck's Wi-Fi for free, the coffee shop pays Tata for the usage.

Before CP, a similar network was set up at Khan Market, another popular hang-out in New Delhi, by Vodafone. The company has also agreed to offer similar services at Dilli Haat, an arts-and-craft shopping arcade in the national capital. Despite the value proposition, it might take Tata Docomo, Vodafone and others three to five years to break-even. The concept, nevertheless, is worth a try, says an official of a large telecom service provider. "The idea is to decongest the network of service providers at busy spots such as malls and airports, where usage is very high. The official adds since no operator has a pan-India 3G licence and everyone is constrained on the spectrum issue, such large-scale Wi-Fi hotspots are a good idea. All it takes is some Wi-Fi antennae and boosters in places such as malls." It might, however, not be economically viable to put up such networks in all places, as it requires laying network fibre and involves significant digging and trenching of cables. The New Delhi Municipal Corporation (NDMC) has invited service providers to set up such networks in the entire area under its jurisdiction, including residential areas, says O P Mishra, director of information technology at NDMC. "We have opened it up to everybody and our target is to cover the entire area by March next year," he says. Mishra's plan is to build applications on the network. A mobile application is being designed through which residents can get information about vacant parking spots and cultural activities in the area, among others, Mishra says. An official in the telecom sector said though setting up large Wi-Fi hotspots might not be possible, doing so in specific locations within a city was feasible. There is no business case for free public Wi-Fi networks unless the government ensures a few conditions set by telecom companies are met, says another official from the sector. "City or state administrative bodies have to exempt right-of-way charges, which involves paying the local municipal authorities for laying the cable." Usually, operators have to pay rent the municipal authorities for using the property while setting up towers and switches. Even if the rent is exempted, service tax is charged on the actual cost. "This, too, should be exempted," the official adds.

Another demand of telecom companies is infrastructure be shared, as the cost to put up these networks is huge and unless sharing of infrastructure is allowed, the business model might not be viable. "Last, the government has to remove the licence fee on internet and broadband, a long-standing demand of the industry," the official said It is difficult to ascertain whether service providers will be keen on residential areas, too. "Right now, it is only a pilot for us. We have to see how the business viability works out. We are first targeting high-footfall areas," said the official quoted earlier.