Well, this certainly is a surprise: IOL Netcom has entered into a franchise agreement with MTNL to provide CDMA mobile services in Delhi and Mumbai. The company will introduce a mobile brand “IOL Mobile” within 90 days. IOL is targeting a user base of 1 million subscribers, and expects a rather high ARPU of over Rs. 450.

It is key to note that IOL will be offering CDMA based services – MTNL already has CDMA spectrum for offering its Wireless Local Loop (WLL) service – Garuda. Also, IOL Netcom has worked with MTNL before, on IPTV, and they intend to provide Data Card, a Desktop CDMA phone, IPTV, Broadband, VoIP and other services in the two cities.

Franchise Deal
This “Franchise” deal might just give IOL a head start over companies seeking an MVNO license in India, the guidelines for which were announced recently. A Franchise deal is essentially a workaround, given that MVNOs are still not allowed in India. This was pioneered by Virgin Mobile in India, when they tied up with Tata Teleservices to offer mobile services in India in April this year.

MTNL is limited to Delhi and Mumbai, so IOL will consequently be limited to these high-density, high ARPU (Average Revenue Per User) and high-teledensity cities, unless they also enter into a similar agreement with an operator like BSNL for other circles. Times of India Group (BCCL) also owns a 1.83 percent stake in IOL Netcom

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