The re-appointed minister of IT and Communications, Andimuthu Raja is in the news again, for making some revolutionary promises (or so we hope):
3G Auction By The End Of The Year
Raja may as well have commented on the medias unhealthy obsession with all things 3G; the Hindu reports that he chose to suggest that the 3G auctions will take place before the end of the year, within two months of a clearance from the Group of Ministers (GoM) or the Cabinet Committee on Economic Affairs (CCEA).
That’s rather vague, and going by what happened last year, any deadline can (and probably will) change, given the machinations of lobbying. Public sector telecom operators MTNL and BSNL already have 3G services operational, but the response has been muted. That said, 3G could well serve as an entry point for new telecom operators, and more money for the telecom sector. Infrastructure service providers will benefit most.
BSNL Listing & No Merger with MTNL
Raja has said that the government wants to list BSNL, and he has told the BSNL management to speak to the trade unions, reports Business Standard.
BSNL had considered listing last year – at that time, rumored to be a $100 Billion listing – but was met with significant opposition from trade unions, who wouldn’t even accept being given shares of the entity. Now that the communist parties are no longer in government, and the fact that listing of profitable PSUs was a part of the Congress Party manifesto, there is hope for listing BSNL. Interestingly, Raja has ruled out a BSNL-MTNL merger. In our opinion, a merger between BSNL and MTNL can only take place if BSNL lists and its valuation is determined by the open market. The listing is a precursor to the merger.
Tariff: Down, Down, Down, Down…
Much to the chagrin of Telecom Operators, Raja wants lower tariffs. So does everyone, but how low can we go (with tariffs)? New telecom operators are spending on rollouts, and lower tariffs will only put their viability into question. However, the Telecom Minister expects these very operators to drive down tariffs; PTI reports that Raja is eying tariffs as low as Rs. 0.10 for a local call, Rs. 0.25 for an STD call. If that happens, also expect declining ARPUs and Revenue Per Minute (RPM).
The minister also suggested that within five years, one will have paper-less governance at the “taluk” (block) level, as part of national e-governance plan. He apparently forgot to mention his plan for 50 million broadband connections.