Network-sharing agreement boosts 3G services in Mumbai, Delhi; extends roaming across India

A new network-sharing agreement in India between two private operators and state-owned operator MTNL will see extended 3G services in two of the country’s major cities, Delhi and Mumbai.

Tata Teleservices and Aircel have reportedly arranged to offer 3G services over spectrum owned by MTNL, which was auctioned by the state-owned operator in an attempt to increase network-sharing. According to the Economic Times, there were no other bidders in the auction.

An anonymous MTNL executive reportedly stated: "The financial bids of both Tata Teleservices and Aircel will be opened in January—it is possible that the bid amount may be comparatively higher than the base price”, adding that the terms of the deal would likely involve a “revenue-share component.”

India’s 3G auctions last year saw operators bidding for licences to operate in the country’s telecoms ‘circles’; while Aircel and Tata Teleservices won licences for a comparatively large number of circles (13 and 9 respectively), neither were able to win spectrum in Delhi or Mumbai. The two cities are so densely populated that they make up an estimated 20% of India’s total mobile revenue.

The deal offers great benefits to MTNL, as the state-owned operator only holds licences for Delhi and Mumbai. It can now offer roaming services to its customers when they leave these cities via its partners’ networks; a massive boon for MTNL considering that Tata Teleservices and Aircel have 3G licences between them for every telecom circle in India, with the exception of Himachal Pradesh.

The access fee set by MTNL is INR 1400 crore (US$316 million), and executives from the firm have reportedly stated that the funds from the deal will go towards reducing the operator’s debt. The two Indian state-owned operators, MTNL and BSNL, were provided with 3G spectrum almost a year before private operators were able to bid for it. Following the auctions, both operators were obliged to match the winning bids, which led MTNL to take out a loan of INR 7000 crore (US$1.6 billion).

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