Operators speak out against TRAI recommendations (India)
Indian telecoms regulator Trai had recommended that refarming of airwaves in the 900 MHz band, largely held by incumbents and BSNL, be undertaken next year, and industry experts estimate that leading mobile phone companies will have to pay about $17.1 billion to retain the airwaves they hold, according to a report by ET. Trai had said that the spectrum available with incumbents in the 900 MHz band should be replaced by spectrum in the 1800 MHz band, which should be charged at the price prevalent at the time of refarming.
In response to this, the chief executives of five mobile phone companies – Bharti Airtel, Vodafone, Idea, Uninor and Videcon – had told telecom minister Kapil Sibal that accepting the regulator’s ‘flawed, retrograde, regressive and uncertain recommendations would irretrievably harm consumer interests, ring the death knell for the sector and lead to prolonged disputes and litigation.
As per the report, Bharti Airtel CEO for India and South Asia, Sanjay Kapoor, Vodafone India MD and CEO Marten Pieters, Idea Cellular managing director Himanshu Kapania, Uninor chief executive Sigve Brekke and Videcon Telecommunications’ director and CEO Arvind Ball had also alleged that the regulator had not carried out any study to examine the socio-techno-economic aspects and had ignored contractual and other rights of the affected operators.
The report claims that Vodafone’s latest communication further adds that substitution of 900 MHz with 1800 MHz will lead to disruption of services for hundreds of thousands of mobile customers severely disrupting the quality of services for years to come while also pointing out the huge costs for setting up additional towers for the 1800 MHz network was likely to translate to higher tariffs for customers.
Vodafone said that extension of licenses with a different type and quantum of spectrum was legally flawed added that mobile permits were already technology neutral.
Income tax department seizes Unitech’s shares in Unitech Wireless (India)
Unitech wireless ltd. revealed that the Indian Income Tax department had taken control of Unitech’s shares, but said that such a decision will not impact its operations.
As per reports, Acorus Unitech Wireless Pvt. Ltd., Cestos Unitech Wireless Pvt. Ltd. and Simpson Unitech Wireless Pvt. Ltd, all three Unitech units owe taxes amounting to US$ 137 million.
Regarding its Indian telecom venture, Uninor, the operatot has clarified that that this has nothing to do with the running operations of Uninor, and neither has any effect on them.
Uninor subscriber base crosses 38 million (India)
Telecom operator Uninor has reported subscriber additions amounting to 2.49 million in January this year, reaching a total customer base of 38.79 million.
This brings great news to telecom operator Uninor, a joint venture between Telenor Norway and Unitech, whose 22 licenses were cancelled by the Indian Supreme Court earlier this month, claiming that the licences were obtained by illegal means.
As per a company statement, Uninor has claimed that in their 13 commercial circles in 2011, the highest number of subscribers chose Uninor. Further, they are satisfied to see that this strong preference continues into 2012 as well.
The operator added that it is their intention to continue competing as a mass market mobile service and ensure that the Indian mobile users continue to benefit from this competition.
Telenor had recently announced that it plans to form a new joint venture with another Indian entity in an attempt to continue its operations in the country.
Idea Cellular asks Supreme Court for clarification on licence cancellation (India)
Indian telecom operator Idea Cellular has asked for clarification regarding the Supreme Court’s order for cancellation of 122 licences auctioned in 2008, which impacts 13 licences held by Idea. According to reports, the operator has claimed that it had applied for the licence in June 2006, which should have been processed within 30 days but were delayed until 2008. Idea says that if the applications were processed on time, it would not be affected by the Supreme Court’s judgement.
As per sources, Idea has said that the clarificatory application has been filed, seeking further direction from the Hon’ble Supreme Court. Other telecom operators such as Telenor (operating in India through Uninor) and Bahrain Telecom (partnering with STel in India), have also been affected by the apex court’s decision.
Bahrain Telecom closed its operations in the country following this decision, while Telenor approached the Norwegian government to come to its aid and protect its investment.
The decision was taken in an attempt to root out corruption in the Indian telecom industry as the Supreme Court felt that the licences had not been obtained by legal means. However, this decision has not been received well by the affected operators who have been considering a legal retaliation in order to protect their investment.
Telenor to start new venture in India (Norway,India)
Norwegian telecom company, Telenor Group has issued a notice to Indian partner, Unitech Ltd., seeking compensation and indemnity, following the Indian Supreme Court’s order to cancel 22 licences held by the firm in India.
As per a report by the company, the Telenor Group holds Unitech Ltd. liable for the breach of warranties related to the cancellation of the licenses – seeking compensation for all investment, guarantees and damages caused by the Supreme Court Order. Telenor Group also makes an indemnity claim against Unitech for the failure to obtain spectrum in the strategically critical Delhi circle.
Pal Wien Espen, Group General Counsel, Telenor Group has said that the legality and validity of the licenses was a fundamental term of the share subscription agreement between Telenor Group and Unitech Limited. Further, they believe that the Supreme Court’s cancellation of the Unified Access Service Licenses (UASL) conclusively demonstrates a clear breach of Unitech’s warranties.
Espen added that the fact is that Uninor as a consequence of the judgment will no longer hold any UASLs. Telenor will therefore exercise its entitled right under the share subscription agreement to hold Unitech Ltd. liable to indemnify and compensate Telenor Group for its investment in India.
However, the company claims that they intend to continue their operations in the country through another venture, and are on the lookout for a new Indian partner. As per a company statement, this new entity will serve as the platform to approach the upcoming auctions for fresh licences as mandated by the Supreme Court. As a part of this process, the new entity will also seek requisite approvals from the Foreign Investment Promotion Board (FIPB) to allow Telenor Group to take up 74 per cent ownership. The telecom firm added that till such time that Uninor’s business is transferred to the new Indian company, Uninor operations will continue as before.
According to reports, Unitech has retaliated saying that it is shocking that Telenor intends to transfer the entire business to a new affiliated entity owned by itself. This not only shows complete disregard and oppression of the minority shareholder by Telenor, but is also against all principles of related party transactions. Telenor cannot transfer any assets of Uninor without the consent of Unitech because they have veto right in the shareholders’ agreement as well as in the articles of association for such matters.
Innovative Tariff Plans for Telecom Sector Revival (India)
Post-cancellation of 122 telecom licences by the Indian Supreme Court, new operators are trying to make a comeback in the telecom market with lucrative tariff plans. A drop in prices is seen as an effective way of winning back subscribers and their retention as well, according to BS.
The telecom sector witnessed a major drop in tariff plans amongst the new operators like, Sistema Shyam, Uninor, etc. Sistema Shyam introduced Super Zero tariff plan, in which the call rates were cut to US$ 0.000008 per second within the network, only if the consumption met the call duration conditions. Dropping the tariff by 96 per cent is seen as a groundbreaking move by the company. It stated that lower tariff rates would help in full utilization of the network arena and would help in developing customer loyalty towards the brand.
Uninor too is trying hard to keep pace with the telecom industry. Being hit by the 2G scam, Uninor plans to regain customers in every possible way. As per telecom experts, if the 2G scam affected operators secures legitimate spectrum via innovative pricing then the competition in the telecom market will turn stiff for other operators. However, the industry experts don’t predict a tariff war amongst the big players of the industry in the near future.
Battered partnership of Telenor – Unitech (India, Norway)
The Telenor Group has issued a notice to its Indian strategic partner Unitech Ltd., soliciting compensation for damages to their mobile venture. Issuance of notice was an outcome of the Indian Supreme Court’s verdict, where it has ordered the cancellation of 22 Uninor licences. The licences were cancelled in light of a telecom scandal in 2008. As per the partnership, 67.25 per cent of the company was owned by Telenor, and the company has alleged that Uninor has breached the confidentiality obligation.
According to sources, the partnership hit a bitter note in 2011 when Unitech stayed out of Uninor’s US$ 1.7 billion rights issue and as a continuation to the split saga, the involvement of Unitech boss Sanjay Chandra in the 2G scam case compelled Telenor to ask for his resignation as the chairman. Further on, in October last year, Telenor was accused of complete mismanagement by Unitech and the case was cited to the Company Law Board.
Telenor has estimated the total worth of the mobile company to be around US$ 2.22 billion -2.42 billion, but inspite of disapproving the calculated figure by Telenor, Unitech has offered to purchase Telenor’s 67.25 per cent share as per the aforesaid calculation. Every allegation raised by Telenor has been rubbished by Unitech and affirmed that the company has not committed any breach of confidentiality.
Batelco sells 42.7 per cent stake in Indian venture STel (Bahrain, India)
Telecom operator Bahrain Telecommunications Co, commonly known as Batelco, is the first operator to sell its stake in an Indian venture following the Indian Supreme Court’s verdict for cancellation of 122 2G licences. According to reports, Batelco has sold its 42.7 per cent stake in STel, to Sky City Foundation for US$175 million.
As per a statement made by Batelco, this is a part of an earlier understanding with its Indian partner to exit, given the circumstances surrounding the 2G probe in India over the past 12 months. Reports reveal that Shaikh Mohamed bin Isa Al Khalifa, CEO, Batelco Group has said that as Batelco continues to grow and diversify its operations, they remain interested in other investment opportunities that will enable them to participate in the Indian telecom market. He said that they are actively exploring all options in this respect.
Sources claim that the verdict will result in a cancellation of six licences for telecom operator STel. As reported earlier, Telenor Norway, which offers services in India under the brand Uninor, had also hinted at a possibility of exiting the Indian mobile market owing to the cancellation of the licences acquired in 2008.
