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Tata Teleservices To Shut Down Operations In Three Circles By Jan 2013

Tata Teleservices (TTSL) will be winding up its operations in Jammu and Kashmir, North-East and the Assam regions from January 18, 2013, reports PTI (via Moneycontrol.com).

The report states that Tata Teleservices no longer has the spectrum to operate in these three circles, due to which it is shutting down its operations in these regions. It also added that the company has started taking necessary measures for affected employees, customers and business partners in these circles and will elaborate on these measures in the forthcoming future.

A similar Economic Times report however suggests that the company is laying off around 120 employees in Jammu & Kashmir after three months and providing relocation option to some of its employees. The report also suggested that the company is currently in talks with its business partners and employees, and plans to elaborate on the company’s roadmap in these circles in the next 10 days.

CDMA Spectrum Bid Withdrawal: This development was expected after Tata Teleservices had withdrew its bid for CDMA spectrum prior to the recently concluded 2G auction. The company had previously submitted its bid to seek CDMA licenses in three circles (Assam, Jammu & Kashmir and North East) and deposited Rs 22.5 crore with Department of Telecommunication (DoT), after the Supreme Court had revoked its licenses as part of the 122 telecom licenses revoked in February 2012.

However, the company had pulled out a few days before the auction, citing expensive 2G auction pricing for the CDMA spectrum which could affect its profitability.

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Revenue & Subscriber Base: As per the recent data released by TRAI, TTSL had one of the least number of subscribers in these three circles among all its circles and was generating the least revenue across all the circles it currently has operations.

TTSL had generated only Rs 14.08 crore (pdf) revenues from 1.28 lakh (pdf) subscribers in Assam circle; Rs 10.68 crore from 1.13 lakh subscribers in Jammu & Kashmir and Rs 7.33 crore from 80,105 subscribers in the North east regions. In comparison, TTSL had generated Rs 313.82 crore revenue from 78.9 lakh subscribers in Andhra Pradesh circle and Rs 338.4 crore from 73.8 lakh subscribers in Karnataka circle. We believe the low revenues and low subscriber count could’ve also been one of the reasons for the telco to pull out of these circles.

Similar Developments: In July 2012, Uninor had announced that it plans to scale down its operations in Tamil Nadu, Kerala, Karnataka and Orissa and prioritise its focus on nine best performing circles including Mumbai, Maharashtra & Goa, UP East, UP West, Bihar and Jharkhand,  Kolkata, West Bengal, Andhra Pradesh and Gujarat. The company has stated that it intends to expand its distribution and retail touch points selling Uninor products in these nine circles, and strengthen its network coverage across the region through additional sites.

Prior to this, Loop Telecom had shut down its operations in India and had asked subscribers (through text messages and newspaper ads) in its 13 circles to port out to other available operators using Mobile Number Portability initiative.

Earlier this year, Etisalat had also started winding up the operations of Swan Telecom (Etisalat DB Telecom Pvt Ltd), citing a complete breakdown in the relationship between Etisalat and its Indian partners, Shahid Balwa and Vinod Goenka, who face criminal charges of corruption associated with Swan’s acquisition of UAS licences. S Tel, the joint venture between Siva Group and Bahrain Telecommunications Company (Batelco) had also shut down its services in India and was helping its users switch to other operators, after the cancellation of its licenses in 6 circles by the Supreme Court.

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