India’s mobile market may soon be opened up to MVNOs as the country’s government considers ways of bailing out the eight operators which won bids for mobile licences two years ago. Among these operators are S-Tel, Etisalat DB, Loop, Uninor, Videocon and Sistema-Shyam.
Several of these operators have failed to launch commercial services since gaining their spectrum, citing India’s ultra-competitive mobile prices as the cause of this failure. The Department of Telecommunications outlining a bailout package that it hopes will negate the need for it to buy the spectrum back from these operators.
Each operator purchased a pan-Indian GSM licence in January 2008 for INR650 crore (US$140 million). If the DoT allows these companies to become wholesale operators, it would escape having to refund this money. MVNOs are currently illegal in India, although industry groups are pressing for them to be legalised.
Three of the operators have reportedly requested that their licence fees be returned in exchange for the spectrum; due to a three-year ‘lock-in’ period stipulated by current regulations, the operators are unable to sell their spectrum until this time has elapsed.
Other options available to the DoT include altering the current network rollout obligations to bring the operators in line with requirements, as well as encouraging the operators to buy each other out by relaxing the country’s M&A regulations.
According to a leading Indian business paper, the average ARPU of the operators is less than half the national average – the figures come to around INR60 (US$1.3) per month and INR130 (US$2.8) per month respectively.