Datacom In Talks With Four Foreign Telecom Cos For Investment; Spectrum For New Telcos

With a license to offer mobile telephony services across India, new telco Datacom is a prime target for foreign investment. Despite the issues between Datacom owners - Videocon and the Nahata family - over management of the company, and how much each partner will invest, four telecom companies are looking to acquire a 51 percent stake in the company, reports the Times of India. The four: Etisalat, Turkcell, America Movil and a unamed European co. Earlier reports had mentioned AT&T as well. Mexican Telecom billionaire Carlos Slim owns America Movil.

ET reports that the foreign telcos want Datacom, but without Videocon and Jumbo Techno Services (Mahendra Nahata’s company), and instead bring in an Indian JV partner, who will own 26 percent stake, while the foreign entity will own the allowed 74 percent stake. Details on how Videocon got involved with Datacom here.

Frankly, while the Nahata’s might exit, it would be surprising to see majority shareholder (64 percent) Videocon sell out so soon. The real question is - will Datacom roll out services without a foreign partner? As per this report in Rediff, Datacom would require “$3 billion for a rollout over the next 3 years, to cover 50 million subscribers”, as per CEO Ravi Sharma. They’ve already hired a top management - details here - and expect to hire 800 by the end of the year.

Meanwhile, the new telecom operators can expect spectrum to be allocated in four more circles - Maharashtra, Mumbai, Kolkata and Madhya Pradesh. They’ve already received spectrum for Tamil Nadu, Chennai, Karnataka, Kerala, Andhra Pradesh and Orissa.

Related
– New Telco Roundup: Selling Stake, Internal Battles, Poaching

New Telco Roundup: Selling Stake, Internal Battles, Poaching

The Indian telecom sector appears to be buzzing with activity over the past few weeks:

Selling Stake
Unitech has announced that the battle for partnering for its telecom venture - Unitech Wireless, and has been narrowed down to just two global candidates. The deal will be finalized within the next 2 months. Interestingly, McKinsey has been appointed for planning Unitech’s rollout. Some readers will remember that McKinsey has been involved with telecom business planning before, but…they have had issues with collecting their dues. Unitech will roll out telecom services early next year, and plans to hire 500 execs. The company has already received spectrum for 5 circles.
Swan Telecom is also in talks for selling percent stake - Business Standard puts the amount being quoted for 26 percent at $470 million, at a valuation of $2.2 billion (including debt). Business Standard quotes Swan Telecom MD Shahid U Balwa, saying that they’ll have decided by the end of August, and are in talks with one European, and two West Asian telecom companies. Swan has licences for 13 circles, and is reportedly looking to use BSNLs infrastructure for a rollout.
Internal Battles
Datacom appears to be having internal issues - Business Standard reports that the Dhoots have offered to buy out Mahendra Nahata’s 36 percent stake (held via Jumbo Techno Services) in the new telecom operator, which has a license to operate in all 22 circles. Now Datacom’s story is an interesting one - when it got the license, Nahata’s Jumbo Techno Services reportedly owned 90 percent, while Oswal Fertilizers and Chemicals (OFC) owned 10 percent. OFC has apparently exited, and now Videocon owns 64 percent, while Jumbo owns 36 percent. Videocon came in after Nahata got licenses for 22 circles. The all India GSM license is apparently valued at $1-2 Billion, and now there are disagreements over how much each partner will invest in the company. Datacom is expected to start operations on August 15th. Videocon plans to invest Rs. 1000 crore in the company.
Poaching
Remember how Virgin Mobile went on a hiring spree of sorts, prior to its launch? Now the new telecom operators are on the prowl. The key question is - even though the licenses have been given, where are the people to run these operations? There appears to be a great big telecom job boom in the offing, as the new telcos have been looking to hire, according to the Times of India, at least 3,000 employees. Interestingly, there appears to be a great demand for lobbyists - those who can manage the regulatory environment, to help get site permissions, secure spectrum, and get clearances. Much more on telecom jobs, here.

Note: If you know who Unitech, Swan and Loop are in talks with, do tell (anonymously).