The Hindu Business Line : BPL Mobile joins rush for telecom licences

All lines busy
Existing mobile operators want to expand network
Parsvnath has floated SPV for telecom foray
DoT looking into auction of radio frequency

Our Bureaus

Mumbai/Delhi, Sept. 7 BPL Mobile Communications Ltd, the GSM mobile telephony company with operations only in Mumbai, has now applied to the Department of Telecommunications (DoT) seeking mobile licences in 21 circles.

Although it has a sizeable presence in Mumbai, the company needs “a larger footprint to derive scale economics and cost synergies in this highly competitive market,” according to Mr S. Subramaniam, CEO and Director.

“Expansion into new circles would meet both these objectives,” he added.

When there are large pan-India operators, a single-circle operation is an unviable proposition.

All it can do is to nurse the circle until it finds a buyer, or expand itself, a telecom sector analyst said.

“It will involve capital expenditure, but we are confident that we can raise funds through both equity and debt,” said Mr Subramaniam.

BPL Mobile, one of the pioneering mobile operators in the country, has 1.1 million subscribers in the prime telecom circle of Mumbai, but this is only half of what its leading competitors, Vodafone-Essar and Airtel, each have in the circle.

The company went through a state of stagnation as it became the subject of a dispute between Hutchison-Essar (now Vodafone-Essar) and the shareholders of BPL Mobile itself.

The Essar group, which owned a stake in BPL Mobile, had terminated the sale of BPL Mobile to Hutch-Essar citing non-receipt of DoT clearance.Both have operations in the Mumbai circle.

(Regulations do not permit an entity to have more than 10 per cent stake in more than one licensee company in the same circle.)

Following this, Hutch-Essar invoked the arbitration clause in their share purchase agreement; the matter is still sub judice.

The Essar group holds 9.9 per cent stake in BPL Mobile, while BPL Communications Ltd holds 67 per cent stake; the rest is held by private equity investors.

New licences

The past few months have seen a host of companies applying for new licences.

BPL Mobile is the eleventh in this line.

The earlier applicants are HFCL, Parsvnath, Spice, Datacom, Swan, ByCell, Cheetah, Idea Cellular, STel and Tata Teleservices.

The DoT now has 145 applications from these 11 companies.

While HFCL, Idea Cellular, Spice and Tata Teleservices are existing mobile operators wanting to expand their network to all the 23 circles in the country, Parsvnath is a real estate company that has floated a special purpose vehicle in partnership with a foreign player for the telecom foray.

The promoters behind STel, Cheetah and ByCell could not be ascertained.

Swan is a Reliance Communications subsidiary.

Some of these applications were made early last year.

However, with the DoT finding it difficult to make available adequate spectrum to accommodate all these operators, no fresh licences have been issued.

DoT officials said that the Government has set up an internal committee to figure out how spectrum could be allocated fairly.

One of the options suggested by the telecom regulator is allocation of spectrum on a first-come, first-serve basis, in which case BPL would be the last to get the licence.

However, the DoT is also looking into the possibility of auctioning radio frequency, which would enable all the applicants in line to bid for spectrum.

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