| |
BUSINESS,
TELECOM
No
Room For The Frivolous
Though
the entry into the market is open to all, it is evident from the eligibility
criteria in the "guidelines" issued by DOT that, unlike in the
opening up of the cellular mobile service in 1994, there will not be too
many frivolous players. To be eligible, the applicant company must have
a minimum paid up equity capital of Rs 250 crore while the promoters of
the applicant company should have a combined net worth of at least Rs
2,500 crore. The company must deposit a one-time non-refundable entry
fee of Rs 100 crore, and give four bank guarantees of Rs 100 crore each.
These Rs 400-crore worth of guarantees are to be released on fulfilling
the network roll-out obligations in four phases. Any shortfall below the
percentage of network coverage will result in encashment and forfeiture
of the particular bank guarantee related to the concerned phase. In phase
1, for example, 15 per cent of the country's 321 Long Distance Charging
Areas (LDCA) are required to be covered by the network. An LDCA roughly
corresponds to the area of a district (other than in the sparsely populated
areas like the North-east, the Rajasthan deserts and the mountainous areas).
So, if the NLD operator fails to connect 49 LDCAs in the first two years,
he'll lose Rs 100 crore in bank guarantee.
Nor can
he, under the conditions of entry, claim it back by working overtime in
the next phase. The 20-year licence involves a 15 per cent revenue sharing,
10 per cent going to DOT and the remaining 5 per cent being used to meet
the Universal Service Obligation of reaching connections everywhere on
demand, including remote villages and inaccessible areas.
With such
formidable conditions, it is unlikely that the total number of operators
will exceed 10, the leading players being Bharti Televentures, BPL, the
Birla-AT&T-Tata combine, Reliance Telecom, Modicorp of the B.K. Modi
Group which offers cellular service under the Spice brand name and C.
Sivasankaran, the Singapore-based ex-owner of the Sterling Group that
now operates Dishnet, the Internet service provider, and is reputed to
have a war-chest of $600 million (Rs 2,730 crore) for telecom start-ups
and acquisition in India.
The NLD
guideline does not allow more than 49 per cent foreign equity. Yet the
NLD opportunity is too lucrative to be passed up by foreign telecom companies.
Singapore Telecom has already bought 20 per cent equity in Bharti Telecom
for Rs 450 crore, the Indian long-distance market being the obvious target.
Hong Kong-based Hutchison Whampoa, which markets the Orange brand cellular
service in a number of telecom circles in India, has reportedly tied up
with the investment arm of Kotak Mahindra for a legitimate entry into
the NLD business.
Besides,
Enron, the US gas-and-power major which is refocusing its business worldwide
on optical fibre network, has long been looking for a foothold in the
Indian NLD market by using the Indian Railways' 64,000-km-long Right of
Way. Also waiting in the wings are the potential users of the optical-fibre
networks to be laid by the large gas or electricity corporations like
GAIL, Power Grid Corporation of India, and even the National Highway Authority
of India (NHAI) under the Ministry of Surface Transport.
more...The
Death of Distance
Top
|
|
The
Government should target inflation and leave the exchange rate to the
market, says P. Chidambaram in 
Not
just Nayla, all villages can be easily e-connected, says INDIA TODAY Associate
Editor V. Shankar Aiyar in 
