Disappointed that your telecom operator failed to win 3G spectrum in your circle? You may still be able to use high-speed 3G data services with the same operator, thanks to intra-circle roaming agreements being put together by telcos. With no single operator winning a pan-India 3G licence, such agreements will enable operators to offer 3G even in circles where they lost out and create new revenue streams for some other operators, while customers will get to enjoy 3G without having to switch their operator.
This is how it would work: Bharti, which has won spectrum for 13 circles, has lost Gujarat. If its subscribers there want 3G, they would therefore need to migrate to, say, Vodafone which has won that circle.
However, to retain its subscribers, Bharti would have to negotiate an intra-circle roaming pact with Vodafone, whereby using the latter?s network, it would be able to offer 3G services to its customers.
This way, while Bharti would be able to retain its subscribers, the pact would open a new revenue stream for Vodafone. The competitive market would ensure that all operators enter into such pacts. It would be the first time that intra-circle roaming ? the technical term for the pact ? would gain currency in the country. The pact would also make sense for some operators who have won spectrum in a circle but currently do not have much subscribers there. They could utilise their idle capacity by entering into such pacts.
?Since the government has allowed intra-circle roaming in the 2G spectrum space, from the regulatory perspective, this is the only possible way that companies may enter into commercial agreements to reach out in areas where they have not been able to get 3G spectrum,? said Prashant Singhal of E&Y.
Agrees Romal Shetty of KPMG: ?From the perspective of retaining their customers, this is extremely vital.? The existing roaming pacts in India are inter-circle in nature, meaning users roam on another network while travelling into another region.
After the end of 3G auctions, Morgan Stanley raised its view on India ?s telecom sector to ?in-line? from ?cautious?, stating it did not expect any more cuts in tariffs. However, some analysts said that the near-term earnings of the companies could be hit due to high capital spending for 3G networks. The high 3G spend would also accelerate the process of operators trying to monetise their tower businesses by going for a market listing. Almost all incumbents have hived off their tower business into separate entities and signalled their intentions to list them. In fact, Reliance Communications has already received the Security and Exchange Board of India?s (Sebi) nod for the proposed IPO of its tower arm Reliance Infratel. Similarly, Bharti Airtel, which has raised a debt of $8.3 billion for the acquisition of Zain Africa, has already said that it would list its tower arm Indus Towers , which is a JV with Vodafone, Idea and Bharti Infratel.
Rally in Bharti Air Tel, Rcomm and Idea stocks short lived
Leading mobile firms Bharti Airtel, Reliance Communications and Idea Cellular initially rallied following the end of a frenzied auction for 3G mobile licences, but the cheer was short-lived and the stocks closed mixed. Bharti, which is paying $2.6 billion for a 3G licence, gave up most of its 2.4% early rally and ended up 0.2%. Reliance Communications erased early gains of 5.8% and closed 0.7% lower. Auction proceeds touched $14.6 billion, or nearly double the government target.