Companies & Sectors
3G roaming ban may affect Bharti Airtel, Vodafone and Idea Cellular the most

The Indian government now wants to declare 3G roaming pacts as illegal but kept mum in July while Bharti Airtel, Vodafone and Idea were signing agreements to share 3G spectrum

The ministry of telecommunication has said that mobile operators would not be allowed to offer third generation (3G) service while in roaming across circles. Telecom secretary R Chandrashekhar had said that 3G roaming pacts between telecom operators are illegal and it should be annulled. Although the government has not said anything about imposing penalty for the pact, but if they decide to cancel or disqualify the roaming pact, then it would adversely affect Bharti Airtel, Idea Cellular and Vodafone, say analysts.

“We believe this move would hurt mobile operators providing 3G services. With the implementation of this move, these three companies will lose around 2%-3% of roaming voice revenues,” said KR Choksey in a note.

Earlier in July, Bharti Airtel, Vodafone and Idea Cellular entered into agreements with one another to offer 3G mobile services in circles in which they did not succeed in getting spectrum in the auction held last year. Bharti and Vodafone have won licences in 13 circles while idea has won 11 circles.

According to BRICS Securities, the cancellation of 3G pact between the three companies would have a limited impact on their topline. “If the 3G pacts are cancelled, we do not expect any significant impact on revenues in FY12-13 as the revenue share from 3G services is currently less than 2% and we expect it to remain below 4% till FY13-14 at least. Bharti and Idea have 65% and 74% of their existing customers in 3G circles,” the brokerage said.

Under scrutiny for entering into illegal roaming agreement for 3G mobile services, the Cellular Operators Association (COAI)—the lobby of GSM operators—said that any changes in it would deprive users of enjoying seamless high-speed data services.

COAI, in a letter to JS Sarma, chairman, Telecom Regulatory Authority of India (TRAI), said that prior to the 3G and broadband and wireless auction (BWA), the Department of Telecom (DoT) had made it clear that “the auction is for grant of spectrum and not for grant of licence to provide 3G or BWA services”.

Incidentally, the DoT had also raised doubts over 3G roaming pacts between companies, which do not have 3G services on pan-India basis. In an internal note, the DoT had clarified that a unified access service licence (UASL) cannot offer 3G services, declare a tariff plan or acquire customers in a circle where it has not been allocated 3G spectrum. Under the licence conditions, a licencee providing services has to have its own network, the DoT said.

However, COAI has contended that a Unified Access Service (UAS) License is technology neutral access service license which allows the provision of all type of access services.

Peeved over by the move to ban intra-circle 3G roaming, top executives of Bharti Airtel, Vodafone and Idea Cellular had also written a letter to the prime minister asking the government to refund the money with interest they paid for 3G spectrum. The letter, jointly signed by Sunil Mittal of Bharti Airtel, Kumar Manglam Birla of Idea and Vodafone Group CEO Vittorio Colao, says, “ the event that 3G Intra-Circle Roaming (ICR) is now deemed impermissible, then, it would be a clear breach of our contract and the pre-auction confirmation given by the government. In that eventuality, we request that our spectrum auction payments be refunded to us with interest (as) compensation for all the capital investment made by us.”

All private telecom companies, excluding state-owned BSNL and MTNL, had participated in the 3G auction process, which went on for 34 days and ended on 19 May 2010. Due to intense competition, no single player could secure the airwaves throughout the nation. BSNL and MTNL were given spectrum nearly a year ago on the condition that they would be paying the amount equivalent to the final bid.

Nine telecom companies, including Bharti Airtel, Vodafone and Reliance Communications (RCom) and state-run MTNL and BSNL paid Rs67,719 crore to the Indian government as 3G spectrum fees.

Bharti Airtel managed to win 3G licenses in 13 out of the 22 circles, which was much lower than the market expectation and the company management’s aim of a pan-India footprint. RCom also successfully bid for 13 out of the 22 circles, but with a predominantly ‘B’ and ‘C’ circle footprint, in addition to the three metros—Delhi, Mumbai and Kolkata. Idea clearly followed the strategy of bidding for circles which account for maximum revenue for the company. In nine out of the 11 circles that Idea has won, it was one of the top three private operators in terms of revenue share. Vodafone managed to be successful in nine circles out of which six are real big guns such as Mumbai, Delhi, Maharashtra, Gujarat, Tamil Nadu and Kolkata.

In order to reduce operating costs, Bharti Airtel, Vodafone and Idea Cellular had already consolidated infrastructure and resources. Together they own Indus Tower, which has a portfolio of over one lakh towers. While Bharti Airtel and Vodafone hold 42% each in Indus Tower, Aditya Birla Telecom (the owner of Idea Cellular brand) owns a 16% stake in the tower company.

The government expect the telecom companies to buy spectrum at current market price. But even if they have to buy the spectrum at the 3G auction prices, it would be too costly for them. If Bharti Airtel has to buy spectrum in the remaining nine circles, where roaming is active, then it would have to shell out Rs4,460 crore, while Idea Cellular would have to pay Rs10,980 crore for 11 circles where it failed to win spectrum during the auction.

While there still appears to be some infighting going on between the government and telecom operators, there is some hope. The draft New Telecom Policy-11 (NTP) mentions a technology-neutral services delivery and spectrum sharing. “If these provisions (of the NTP-11) are implemented, any operator would be able to share spectrum to offer 3G or 4G services. However, the NTP-11 is still in the consultation phase and is not likely to become a reality before FY13,” said BRICS Securities.


Harry Potter series hold top spot for DVD sales in 2011

The Harry Potter series held the top spot for DVD sales while The Help, The Hunger Games, Water for Elephants and The Girl with the Dragon Tattoo were among the top books of the year: Nielsen

Harry Potter and the Deathly Hallows:
Parts I and II from Warner Home Video held the first and third positions, respectively, in the top 10 DVD titles for the year 2011. Tangled from Disney/Buena Vista Home Video held the second spot for DVD titles with top 10 sales. These rankings are based on sales data from 3 January 2011 to 4 December 2011 as compiled by Nielsen ( Sales data includes aggregate disc unit sales (DVD, Blu-ray, Blu-ray/DVD Combo packs, etc.) at popular retailers with the exception of Wal-Mart.

Film adaptations of books dominated entertainment sales in 2011 to great success, according to Nielsen. All the ten ranks are from DVDs released within the year 2011 and the notable titles among the lower ranks included Transformers: Dark of the Moon, Cars 2, Rio, Bridesmaids and Lion King.

The DVD, Harry Potter and the Deathly Hallows, is based on the Harry Potter novel written by British author, J K Rowling. Released globally in 93 countries, Deathly Hallows broke sales records as the fastest-selling book ever. It sold 15 million copies in the first 24 hours following its release, including more than 11 million in the US and UK alone. The novel has been translated into over 120 languages, including Hindi. Major themes in the novel are death and living in a corrupted society, and critics have compared them to Christian allegories.

In the category of adult fiction printed books, according to Nielsen, the top-selling books were The Help by Kathryn Stockett from Berkly Publishing Group, Water for Elephants by Sara Gruen from Algonquin Books of Chapel Hill (May 2007 publication), Cutting for Stone by Abraham Verghese from Vintage Books, and The Girl with the Dragon Tattoo by Stieg Larsson from Vintage Books (June 2009 publication). Kathryn Stockett’s best seller is a story about African American maids working in white households in Jackson, Mississippi during the early 1960s. An early review in The New York Times notes Stockett’s “affection and intimacy buried beneath even the most seemingly impersonal household connections” and says the book is a “button-pushing, soon to be wildly popular novel”.

According to Nielsen, children and young adults were fascinated with the printed books The Hunger Games by Suzanne Collins from Scholastic Press (July 2010 publication), Cabin Fever by Jeff Kinney from Abrams, and Catching Fire by Suzanne Collins from Scholastic Press (September 2009 publication). Collins’ The Hunger Games has been written in first person and introduces sixteen-year-old Katniss Everdeen, who lives in a post-apocalyptic world in the country of Panem where the countries of North America once existed. This is where a government working in a central city called the Capitol holds power. Collins said that the idea for The Hunger Games came from channel surfing on television. On one channel she observed people competing on a reality show and on another she saw footage of the Iraq War. The two blended together and the idea for the book was formed.

In the category of adult non-fiction, according to the Nielsen website, the best selling printed books include Heaven Is For Real by Todd Burpo from Thomas Nelson Publishers (November 2010 publication), Steve Jobs by Walter Isaacson from Simon & Schuster, and Unbroken by Laura Hillenbrand from Random House (November 2010 publication). In October 2011, Isaacson’s authorized biography of Apple Computer co-founder Steve Jobs was published by Simon & Schuster. Steve Jobs became an instant international best-seller, breaking all records for sales of a biography. The book was based on over forty interviews with Jobs over a two year period right up until shortly before his death. Isaacson also drew on conversations with friends, family members, and even business rivals of the entrepreneur whose vision revolutionized computing, music, phones, animated films, and even publishing.

For complete list of best sellers, please look up the Nielsen link


Bond auction overload eased by $9.5 billion fund program: India Credit

A government plan to borrow Rs500 billion ($9.5 billion) from state banks will reduce the need to increase record sales of new bonds and help the market extend the best rally among the biggest emerging nations.

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