The Hindu Business Line : Tata Tele jumps on the GSM bandwagon

Mixed advantage
The higher average revenue per minute that GSM operators earn is attracting CDMA players in this segment.
Entry will enable CDMA operators to tap into nearly 10 million subscribers who change their operator every month.

Our Bureau

New Delhi, Oct. 22 Tata Teleservices has become the latest CDMA operator which has approached the Department of Telecom seeking permission for offering GSM-based cellular services. The move follows DoT’s decision to permit companies with unified access service licence to deploy mixed technologies.

“We look forward to a level playing field in the industry and await clarity on all aspects of this new announcement from the authorities,” a Tata Teleservices spokesperson said. The company has nearly 20 million subscribers at present on its pan-India CDMA network.

Reliance Communication had also taken advantage of the DoT’s policy and paid Rs 1,651 crore to the Government as the entry fee to offer a pan-India GSM service. Shyam Telecom and HFCL, the regional CDMA operators, have also got the nod from DoT to offer GSM services in Rajasthan and Punjab respectively. All the four companies who have applied to offer mixed technologies are CDMA operators.

Though GSM operators can also now start offering CDMA-based services, none of the existing players has so far taken a plunge in that direction. One of the reasons for the increasing interest in the GSM technology is the higher average revenue per minute that operators such as Bharti Airtel and Vodafone earn. While CDMA operators earn about 80 paise a minute per user, GSM operators get over Re 1.

The other reason is the higher number of churn in GSM segment. An entry into GSM segment will enable the CDMA operators to tap into nearly 10 million subscribers who change their operator every month. With DoT also looking into allowing number portability (where users can change operator without having to change their number) the prospects of getting access to 160 million GSM users is tempting. The third reason is that the Government is close to allocating additional GSM spectrum and all these companies want a piece of the air waves to increase their valuations.

Spectrum allocation

It is estimated that the DoT will have about 25 Mhz of spectrum by November and there are nearly 40 claimants to it. While the DoT has categorically told the operators who have applied for mixed technology that the allocation of spectrum will be based on availability, by paying the fee they have placed themselves at the top of the queue. Once Tata Teleservices pays the fee, it will get the number 5 spot when spectrum is allocated. “Only those companies which are serious enough to sink in Rs 1,600 crore and take the risk of getting spectrum one or two years later can afford to take the licence right now. The advantage, however, is that once you have a licence then the company could even apply for 3G, WiMax or any other new technologies that are coming up,” said a market analyst.