3G services of pvt players to go on stream only by FY11

The must-awaited launch of 3G services of private players would happen only by the financial year 2010-11, say industry experts. 3G auctions are expected to happen by the end of calendar year 2009 and spectrum allocation to take place within the next five months of auctions, followed by the launch of services.

?The bids are uncertain this year. After the bids, the next hurdle would be the spectrum allocation. Private operators would take another six to eight months to place order for the equipments and launch the services. 3G is expected to be on ground only by FY11,? explained Usha Rajeev, leader telecom practice, PricewaterhouseCoopers India. New entrants are expected to exit the market after a few years of unsuccessful operations which will come after the expiry of their lock-in period. Moreover, unavailability of 3G spectrum to other players would limit their future growth. Amongst all the new players securing licenses last year, Tata Teleservices would stand strong due to its partnership with NTT DoCoMo.

With the forthcoming general elections scheduled in April and May, 3G auctions will be held only when a new government comes to power. While MTNL and BSNL have already launched 3G services, its the private players who are facing delay. Initially, the 3G services would be launched in the top 40 cities to target high value postpaid subscribers. Where BSNL in its first phase of 3G roll-out is set to cover 750 cities, MTNL is to introduce 3G in Mumbai later this month.

According to a report by Ambit Capital, the 3G subscriber base is to reach 148 million by FY16, indicating a 19% penetration in total subscriber base. During the same time, the 3G penetration is expected to touch 95% and 15% in postpaid and prepaid subscribers respectively. Capex for the players would be negligible as 2G network has the capacity to support most of the services. ?70-80% infrastructure for 3G is in place and within three to four years of 3G launch, 30% of the handsets sold would be 3G enabled,? said P. Balaji, VP, marketing & strategy, Ericsson India.

Access to 3G spectrum will free up huge amounts of capacity on GSM networks and allow operators to offer data services. This means they will be able to provide more bandwidth on their 3G platforms, in turn improving service to higher ARPU subscribers. After the launch of 3G, value added services (VAS) which now constitute 6-10% of the total telecom revenue, would rise to about 20-25% of the total earnings.

•Unavailability of 3G spectrum to other players will limit future growth for the new entrants

• Initially, 3G services will be launched in the top 40 cities to target high value postpaid subscribers

• Where BSNL, in its first phase of 3G roll-out, is set to cover 750 cities, MTNL will introduce 3G in Mumbai later this month

• 3G subscriber base is set to reach 148 million by FY16,indicating a 19% penetration in total subscriber base