MTNL Considering MVNO Tie-Up For Garuda; Mittal Skeptical - Low ARPUs
According to an HSBC Global Research Report, public sector telco MTNL may also do a branding deal, similar to that between Virgin Mobile (NYSE: VM) and Tata Teleservices. However, this offering is for its CDMA based service - Garuda. The report voices scepticism over whether a foreign player would like to align itself with a PSU style of working. The source of the HSBC report is not known, though MTNL CMD RSP Sinha has told ToI that they’re exploring a franchise relationship with a foreign operator.
I thought Garuda was operational only as a Wireless Local Loop (WLL) service, and restricted to Delhi and Mumbai - so yes, they’re likely to have CDMA spectrum to spare. Intrestingly, DNA reports that MTNL has also applied for a pan-India license, which isn’t likely since an MTNL-BSNL merger is on the cards.
Meanwhile, Sunil Mittal, CMD of Bharti Airtel has said that he doesn’t think MVNOs will succeed in India, due to the situation of the tariffs. He’s essentially hinting at the low ARPUs in the market. I don’t quite agree: low ARPUs are a result of operator practices, and not a cause. The operators dropped prices and introduced “lifetime unlimited” plans in order to garner more subscribers (and consequently increase allocation of spectrum), and ARPUs have dropped as a result. There are services like the exam results mentioned in the last post, temple donation services, reverse auctions etc that people are willing to pay for. There’s a market for services and content, and it’s time that someone came in and pushed up ARPUs. I think Virgin’s also playing the subscriber gathering game right now.
Posted In: Entertainment, Movies, Companies, Airtel, MTNL
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Comments (4)
Apr 11, 2008 6:35 AM
Sunil is right, we need to push up ARPU’s but obviously, current operators arent designed to deliver this stuff. Specially not Airtel which along with Reliance is known to pay out lowest revenue shares thus completely stiffling the Mobile content business. Thats why the only things they can talk about is stuff that was done a couple of years ago and nothing new.
Someone like STAR or ZEE should launch an MVNO where you get 200 minutes of conversation and all content for free for just 350 rupees a month. That would change the game…Minutes at 1 rupee and unlimited content at 150. Interestingly, they make all the money, own the subscriber and truly extend their brands and content into the mobile space.
I still dont understand why MVNO’s wont work. They wont if we follow west examples…Hindustani business hindustani solution & business model!
Apr 14, 2008 4:50 PM
MVNO is suitable to India. . In place of a number of physical operators having own cellular network, one or two firms only allowed to have the cellular infrastructure in India, who will not directly market the services, but facilitate to MVNOs on revenue sharing basis, even it is better to allow manufactures them selves as cellular infrastructure providers. The direct benefits are: 1)No need to distribute the spectrum to many operators, so optimum utilization which delives best QOS. 2) Reduce E-wastage in India. 3) Infrastructure is same, there will be no problem for Number portability, i.e if customer is not satisfies with the preset MVNO can change over to another MVNO with same number. 4) No need of inter connecting platform and hence no inter-operator traffic conjunction. 5) Since, spectrum is not required to distribute to many operators, hence, Defence can continue with its wireless operations 6) Since, the front end is MVNOs, since, there will not be big capital investment to arrange own infrastructure and maintain it, MVNOs can concentrate on better quality of customer service, and hence increased quality of service.7) No technical HR problem to each MVNO 8)At present, in India, to resolve the 3G spectrum issue, this is the right time, to start up the MVNO policy with out any delay by selecting suitable aspirant as Physical infrastructural creation on revenue sharing basis, as back end with no direct marketing the 3G Services and only facilitate the 3G infrastructure to different 3G MVNOs 9) Forbetter IT connectivity in the bandwidth business segment also, a similar concept is to be introduced in the name of BVNO (Bandwidth Virtutal Network Operator), so that, the strategy of laying/maintenance of Optical cloud in India can be streamlined with a suitable platform, as well the infrastracture provide will concentrate on netwrok maintenance and upgradation, where as BVNOs will concentrate on marketing the bandwidth solutions. A lot can be think and express on this subject of MVNOs in India, it is better to start a open discussion with open mind for the betterment of growth of India.
Aug 11, 2008 4:28 AM
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Nov 13, 2008 9:46 AM
Topaz telecom a UK based Telecom network is also planning to start its MVNO Operations in India.
Topaz telecom, is looking for a business partner in India to start its MVNO Operations throughout the INDIA. They have been approached by multiple parties but they are looking for some proposal and good partner. As per TRAI Proposes Separate MVNO License, 74% FDI And Freedom Of Biz Model Choice; CS On Content Firms.As per TRAI recommendations give a good enough framework for players such as RCom, MTNL and Kishore Biyani’s Future Group to get started planning services. In the case of the latter, Future Group had recently appointed McKinsey and Value Partners to advise on how to spend its Rs 100 crore to invest in an MVNO.
Well, the costs do seem to be fairly magnificent for such a venture. However, someone with mighty content throughput like Star and Zee will also benefit with fatter margins. CS has gleaned key points for an short executive summary below:
a: Any company (not limited to telco or allied industries) that fulfils licensing conditions (FDI, substantial equity) are eligible for a license.
b: While an MNO can have any number of MVNO’s attached to it, one MVNO cannot get attached to more than one MNO is a service area. As for the entry fee, it is proposed to be 10% of MNO’s entry fee as prevailing on date in that service area subject to a maximum of Rs. 5 crores for Metros and Category ‘A’, Rs. 3 crores for Category ‘B’ and Rs. 1 crore for Category ‘C’.
c: MNO should pay spectrum charges also on the revenue of MVNO(s) or all the payments made by MVNO(s) to MNO, whichever is higher.
d: The subscribers of MVNO(s) should be counted towards parent MNO for the purpose of spectrum allotment in bands where subscriber based criterion is applicable for spectrum allotment.
e: An equity holder, having 10% or more equity in a MVNO cannot hold 10% or more equity in another MVNO. Also, an equity holder having 10% or more equity in an MNO cannot hold 10% or more equity in a MVNO
f: Definitions of circles, validity of licenses (20 years) as well as the FDI limit (74%) are the same as those currently in use by MNO.