Business Standard reports that Indian telcos are experimenting with IPTV rollouts in select cities by the end of Q2-2006. Hats off to Shri. Dayanidhi Maran, union minister of IT & communications without whom we would be still struggling to shape our cell phone industry. Why is this a significant development in India ?
Indians didn’t have another alternative for their Cable TV programmes. The cable industry was mainly controlled by local dons with the support of netas. Efforts to privatize the cable industry had even led to the murder of some corporate executives. Also due to Cable infrastructure bottlenecks, Video on demand would have remained a dream for the Indian consumer.
Rapidly changing telecom technology has made this Convergence of TV and Broadband possible in India. If Google and Verizon are to be believed, then the world will be IP based. Its a good move by Indian telcos to directly adopt IP technology. Also Indian telecom companies like BSNL, Reliance and Bharti have unused fiber laid throughout the country which can be put to use effectively. True convergence in India 🙂
At last the Finance Ministry is listening to Telecom operators woes. It is reliably learnt that Telecom will be treated at par with core infrastucture like Power and Roads in the upcoming budget on Feb-28th. The significance of this will be Telecos will get a 10 year 100% tax exemption which will enable them to upgrade and invest in remote areas. The government is already being compensated for loss of revenuse by means of service taxes from consumers. Zero tax for Telcos/Cellcos means more investments in next generation technologies. Get ready to watch the next cricket match on your cell phone – true convergence atlast.
Bharti Televentures’ business model was applauded by IBM CEO Sam Palmisano during IBM business leadership forum in China where top CEOs from the western world participated. In Feb-2004, Sunil Mittal, CEO of Bharti took a bold step in outsourcing its cellular network operations to its equipment vendors – Nokia, Ericsson and Siemens. Sunil’s views were he could focus more on better customer service. This rocked the IBM forum as this was a bold and unique move by any large telco/cellco in the world.
After 2 years, Hutchinson-Essar a joint venture between Hutchinson Whampoa and Essar group is following similar model by outsourcing their network operations to Nokia. As C.K.Prahlad predicted that their is a lot for the Western CEOs to learn from the East, this proven business model is something which AT&T – Cingular and Sprint can’t afford to miss who are known for their poor customer service.
Warburg Pincus one of the most successfull VCs that backed Bharti Telcom since the beginning was consistently selling its stake and completely exited with it’s last 4.4% stakesale to Vodafone in Q4-2005. Now it is reliably learnt that SingTel has hired a merchant banker to value its whopping 31% stake in Bharti Televentures.
Vodafone doesn’t really invest for financial gains. It holds 45% in American telco, Verizon and has a substantial say in the company. If Vodafone has ambitions in India, then SingTel could unload its 31% stake in favor of Vodafone making it the second largest shareholder after Mittal family who still hold 46% in Bharti. SingTel’s total investment in Bharti is around $650 million which is now valued at $4.5 Billion.
However, it is not very clear on why SingTel wants to exit India. At one point(2003 and 04) it had lobbied in Delhi to raise the FDI cap in telecom.
Earlier I reported that Maxis Telecom promoted by Malaysian billionaire Anand Krishnan had bought a majority stake in Aircel. Maxis having entered India through Tamilnadu now wants to consolidate further in Karnataka and Punjab by buying out B.K.Modis out of Spice Telecom. Modis hold 51% stake in Spice.
Maxis is also the largest Telecom player in Malaysia and with further consolidation in India it might well be leading in the Asian corridor dream of Telcos.
A major TV channel reported that Bharti Televenture had accumulated losses of Rs2200 crores which were hidden by intelligent accounting practices. PTI release says Bharti executives have confirmed that their was nothing wrong in their acounting procedures and have even got Vodafone to back their statement(Vodafone, in October – 2005 bought 10% stake in Bharti Telecom from Mittal’s family at Rs6700 crores).
Their is no smoke without fire. Unfortunately, I can’t read corporate accounts. If any of you can understand Indian accounting procedures and laws, then you might want to enlighten us.