Virgin-TTSL tie-up under DoT scanner

Written by Corporate Bureau | New Delhi, Mar 4 | Updated: Mar 5 2008, 06:25am hrs
Barely two days after flamboyant British businessman Richard Branson announced with much fanfare the entry of Virgin Mobile Services in India through a tie-up with CDMA operator Tata Teleservices Ltd (TTSL), it appears that the department of telecommunications (DoT) may yet stall the venture pending clarifications.

According to official sources, the department has drafted an internal note asking TTSL and Virgin to furnish details of the partnership. The onus is on both companies to show that the partnership in not planning to run a mobile virtual network operator (MVNO) service, which is currently not permitted in India. Sources said DoT wants to study the partnership to ascertain if any loopholes have been exploited to bypass existing regulations.

Under a mobile virtual network service, an operatorwho does not have an authorised telecom licence, spectrum or networkbuys airtime in bulk from a licensed service provider to offer services to consumers.

For their part, both TTSL and Virgin have maintained that the partnership is not an MVNO, but a franchise agreement. However, GSM operators lobby group Cellular Operators Association of India had earlier written to DoT expressing concern at the nature of the partnership and requesting a clarification whether it constituted an MVNO service or not.

When contacted, TTSL officials said that they have not received any communication on the matter from DoT.

Sources said that Telecom Regulatory Authority of India is also interested in studying the nature of the partnership between the two firms to understand how they would operate in the country under existing guidelines.

Industry officials said that if TTSL and Virgin receive a clean chit from DoT, then its only a matter of time before the companies are able to launch services in the country. However, if the matter is embroiled in complexities, the project could be delayed indefinitelyor until regulations are changed.