The Indian Techonomist: bulletin

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10 MARCH 1996:

India grants cellular, basic telephony licences

Finally, after the clearance of the Supreme Court, the Indian government has started issuing licences to winners of the first round of bids for nationwide basic telephony. HFCL, the controversial winner of four "circles" - Delhi, UP (West), Haryana and Orissa, has already signed letters of intent with the Department of Telecommunications (DoT). The fifth clear first-round winner, Hughes-Ispat in Maharashtra (which includes Bombay, now called Mumbai), is expected to get its licence soon; this has been delayed due to a legal challenge by another bidder, Tata-Bell Canada.

The second round of bids for basic telephony, which received a poor response as it was held just before the Supreme Court's verdict, should be resolved this week. The Tender Evaluation Committee cleared all six bids (for a total of five circles) and recommended that licences be awarded to the five high bidders. A final decision, which has to be approved by the DoT Secretary and Communications Minister, is expected by March 15th.

The DoT is also expected to announce a third round of bidding for basic telephony, for the remaining nine (mainly poor, "C" category) circles, later this week. It will reduce the reserve prices that were announced late last year, by between 25% and 50%. This round, like the previous one, will be limited to consortia who bid in the original round; if despite the lower reserve prices some circles go wanting, yet another round of bids is expected, but open to anyone. Basic telephony licences, first- and second-round bids, and reserve prices can be found here.

Meanwhile, licences for operating cellular services have been granted to two competing bidders in most of the 18 circles. A list of licensees is available here.

One of the cellular licensees, Koshika Telecom, a venture between India's Usha Group and Philippines Telecom, has sold a 3% equity stake to Alcatel, the French telecom giant. Alcatel has also signed a US$ 100 million contract for GSM cellular equipment in the entire region covered by Koshika's licence - four circles in eastern India.

Another cellular licensee, JT Mobile, is in a bit of legal trouble. The Indian partner, the Parasrampuria group (foreign partners are Sweden's Telia, along with ToT and Jasmine from Thailand) has been accused by a Non-Resident Indian (NRI) of reneging on an unwritten agreement whereby the Group was to be a "front" organisation for him. NRIs are Indian citizens residing abroad, and receive numerous investment incentives and tax benefits not available to foreign citizens or Indian residents. Nevertheless, NRI equity is considered foreign equity for the purposes of the telecom bids; foreign equity is limited to 49%. As Telia, ToT and Jasmine together own 49% of JT Mobile, it is possible that Parasrampuria did, as alleged, promise to act as a "front" for the NRI, who could not invest himself. Possible (and, if true, illegal) but unlikely - the Group is rich enough anyway, claims any agreement with the NRI was "pre-contractual" and is not likely to lose any court case.

India's NIIT opens software exports complex

New Delhi's largest software development complex, owned by NIIT Ltd (a part of the HCL Group, which has links with Hewlett-Packard and is the country's largest information technology firm) was inaugurated by the Commerce Minister last week. Built at a cost of $2 million, the complex, which holds 600 networked computers, is intended for exports.

What NIIT calls an extended local area network has extensive links to the Internet and direct satellite links to overseas sites, allowing over 1,000 employees multimedia communication between more than 50 locations in 12 cities spread across five countries where NIIT operates.

The $35 million company is among the largest information-technology training firms in the world, in terms of students; it trained well over 100,000 last year. It has migrated successfully to software development for exports; this now generates close to half its revenue.