Undeterred, Hutch set to float $2 bn expansion tender

MUMBAI: The controversy around its shareholding structure hasn't quite dented Hutchison Essar (HEL) plans to expand its operations. HEL, India's fourth largest operator, is set to float a tender for around 35-40m GSM lines to expand footprint.

The tender, for which Ericsson, Nokia and Motorola are expected to bid, is likely to be for nearly $2billion, sources told ET. The number of lines represents the number of customers that can be supported on networks.

Sources said the company would roll out new lines in the existing 16 circles and was also factoring in the proposed launch of operations in six Spacetel circles acquired from the Essar group last year. Spacetel has received letter of intent (LoI) from the department of telecom (DoT) to operate in North East, Himachal Pradesh, Bihar, Orissa, Assam, and Jammu and Kashmir where HEL is not present.

Vodafone, which is buying a controlling stake in HEL, has announced an investment of around $2bn in HEL. Target is to achieve a market share of 20-25% by CY12. At the end of March 07, HEL had 26.5 m subscribers and nearly 16% market share while leader Bharti Airtel had over 37m users on its network.

Vodafone CEO Arun Sarin has said that Vodafone's plans include accelerating capital investment in the network as it will enable the company to expand into new regions and offer mobile services to a much greater percentage of the Indian population.

Sources said HEL is expected to issue request for proposal (RFP) for the new GSM lines this week. It has already sounded out equipment vendors about the order. It takes between two to three months for vendors to deliver equipment after the order is placed. This implies that orders have to be placed well in advance to meet rollout requirements.

The speed with which new users are signing up for mobile services (over 6m per month) has made it imperative for telecom operators to roll out networks fast to meet the demand. Idea Cellular recently awarded a networks contract to Ericsson. However, the size of that order was not disclosed.