Call Alert: Telcos brace for Idea's entry into Mumbai

MUMBAI: The good news first. The long-delayed entry of Idea Cellular in Mumbai is set to invigorate the market by increasing competition. But the bad news is that the entry is at least six to eight months away due to unavoidable delays in getting the much-needed spectrum. What’s more, the consumers cannot look forward to the tariff wars that have in the past accompanied the entry of new players in the market.

Sources said that Idea is unlikely to start a price war since it could face a backlash from its rivals in existing markets. “The existing players know that they would have to vacate some market share when Idea comes in,” they added. However, mobile users can still look for some benefits arising from the entry of Idea, as other mobile operators may use the price card to guard their market share.

Industry observers also point out that the entry of the seventh player in the crowded market may lead to a further round of consolidation. Currently, Mumbai has six players offering a host of fixed line, mobile and limited mobile telephony services. Four GSM-based service providers are Hutchison Essar, BPL Mobile (not yet merged into Hutch and is run as a separate operation by Essar Teleholdings), Bharti Airtel and MTNL’s cellular service. Reliance Communications (RCL) and Tata Tele (TTSL) are offering CDMA-based services.

MTNL also offers the limited mobility service on the CDMA network. Then again, consumers can also choose from fixed wireline and fixed wireless services from MTNL, Reliance, Tata, Bharti and Hutch. The total wireless subscriber base in Mumbai is 9m plus, including the fixed wireless phone users. The DoT on Tuesday issued letters of intent (LoIs) to Idea Cellular and Hutchison Essar. While Idea received the LoI for the Mumbai circle, Hutch received LoIs for North-East, Himachal Pradesh, Bihar, Orissa, Assam and Jammu & Kashmir.

Bharat Banka, joint president, group finance, Aditya Birla Group, confirmed the receipt of the LoI, but refused to share any details. Sources said it was too early to talk about the entry of Idea in Mumbai. “Where is the spectrum? Until the defence vacates the spectrum, it cannot be allotted to telcos,” they pointed out. Defence forces are expected to vacate it only by March ’07. Meanwhile, Idea also received an LoI from the DoT for offering services in Bihar. Sources said, the operator is likely to be allocated the spectrum in Bihar ahead of Mumbai.