Unitech plans telecom foray

NEW DELHI: In a move that could lead to a churn in the telecom sector, real estate major Unitech has decided to enter mobile telephone service in all 22 circles of the country. The Unitech board cleared a decision to this effect on Friday and the company plans to leverage its telecom tower manufacturing capabilities for the diversification.

Unitech may go in for technical and financial collaborations and announce a all-India launch after finalising its roadmap for the telecom sector. Unitech managing director Sanjay Chandra said the company’s experience in constructing telecom towers would help the company in executing a quick rollout.

The move comes close on the heels of various other companies –– including another real estate player Parsvnath –– applying for telecom licences. S Tel, ShippingStop.com, Data Communications Solutions, ByCell, Swan and Cheetah are among the licences pending with the department of telecommunications. Mobile service providers like HFLC, Spice and Idea have applied for extending their services to more circles.

Mr Chandra said Unitech started building electric transmission towers 13 years ago and diversified into telecom towers recently. "Our telecom tower manufacturing facility is located in Nagpur. We feel that our experience in handling construction and erection of telecom towers would provide strong support to our telecom plans," he noted. Run through a subsidiary called Unitech Power Transmission Ltd, this business was initially run in tie up with Hyundai and Unitech bought over its foreign partner’s stake to make it a 100% subsidiary.

The details of the telecom plans would be firmed up soon, Mr Chandra said. It is understood that Unitech –– country’s second largest real estate company in terms of market cap –– would apply for the licences through eight fully-owned subsidiaries. A listed company, Unitech is currrently building commercial and residential complexes, amusement parks, hotels and special economic zones (SEZs). The real estate major’s SEZ business envisages two projects covering 22,500 acres of land in West Bengal and a 10,000-acres project in Haryana.

The increasing interest in telecom follows the recent discussions involving the Telecom Regulatory Authority of India (TRAI) and the Department of Telecommunication (DoT) on increasing competition in the sector benefiting consumers. As of now, half-a-dozen service providers operate in most parts of the country and the list includes Airtel, Reliance (ADAG), Vodafone, MTNL/BSNL, Tata Telecom and Idea. In addition, some players like Shyam Telecom, HFCL, Aircell and Spice operate in some circles.

Investment in the sector is seen to be attractive since the number of subscribers is increasing by nearly 8 million every month –– what was achieved in a full year during the 1990s. The total subscriber base is estimated to be over 200 million and strong growth is expected to persist till 2010.

"We see the potential in the telecom business and believe that investment in this sector would provide immense potential for value addition to the group. We are in talks with leading telecom players and also financial investors for partnership," Mr Chandra said.

Unitech’s decision to enter the telecom business comes at a time when discussions over spectrum are poised at a crucial stage. The government is looking at allocation of more spectrum to telecom companies after the defence forces vacate some of the capacity used by them. The key question of pricing spectrum is also under discussion.