Wednesday, February 25, 2009

Tata Tele, NTT Docomo and 3G

NTT Docomo got the go ahead from Cabinet Committee on Economic Affairs (CCEA)to acquire 27.31 stake in Tata Tele Services Ltd at 12,924 crore making it the largest FDI flow in the telecom sector. This could be a very strategic deal since NTT Docomo was the first to test 3G services in 1996 with the help of Qualcomm, which gives them an experience of 3G and the problems associated with it.

The Department of telecom also recently announced the entry fee for a Mobile Virtual Network Operator (MVNO)at Rs 85 crore for a pan India license.
A Mobile Virtual Network Operator uses the services and infrastructure of another existing operator and uses its brand name to target a specific segment. Virgin Mobile is a similar example, which uses the services of Tata Teleservices Ltd.

Lets hope 3G services, high data rate internet and other media applications are implemented soon, with reasonable prices. The prices till now have been reasonable and India, with the second largest number of subscribers in the world has one of the lowest ARPU (Average Revenue Per User)at around $7, with an ARPU of $2 in rural areas. The penetration is less and at around 32%, so this gives our telecom operators good opportunities to earn huge bucks ahead, keeping the quality of service maintained.