Wednesday, February 02, 2005
India telecom update
The Indian telecom industry received an excellent bit of news earlier today when the goverment announced its decision to hike the FDI cap from 49% to 74% as promised in the last budget. This is great news since it will allow telecom companies to tap foreign sources in order to raise the $30 to $40 billion required to reach the average worldwide figure for tele-density (around 15), and to leapfrog past the copper phase straight into ethernet-based networks and so on. The cabinet decision came with some caveats, including one about the traceability of subscribers.
In order to address the concerns raised by the security agencies and the Left parties, the Cabinet has put in place certain conditions "to safeguard the national interest." The conditions specify that the majority directors on the board including the chairman, the managing director and the chief executive officer shall be resident Indian citizens. To ensure monitoring of the network, the companies will not be allowed to transfer sensitive information relating to subscribers and accounts to destinations outside India. These conditions will also be applicable to the companies operating telecom service with the existing FDI ceiling of 49 per cent.
In other news, Warburg Pincus, one of the big investors in Bharti Telecom, sold 3.2% of their share for a very profitable $306 million. This is on top of the 3.35% that Warburg sold in August of last year for $208 million. They still own about 12% of Bharti. Given that Bharti's profits increased by about 131% in the last quarter, Warburg must feel very good about its investment indeed.
UPDATE: Talking about leapfrogging, apparently Tata Teleservices is using lasers to get around last mile connectivity issues. What's more, the laser bridges can route data at pretty impressive speeds (1.2 GBps).
In order to address the concerns raised by the security agencies and the Left parties, the Cabinet has put in place certain conditions "to safeguard the national interest." The conditions specify that the majority directors on the board including the chairman, the managing director and the chief executive officer shall be resident Indian citizens. To ensure monitoring of the network, the companies will not be allowed to transfer sensitive information relating to subscribers and accounts to destinations outside India. These conditions will also be applicable to the companies operating telecom service with the existing FDI ceiling of 49 per cent.
In other news, Warburg Pincus, one of the big investors in Bharti Telecom, sold 3.2% of their share for a very profitable $306 million. This is on top of the 3.35% that Warburg sold in August of last year for $208 million. They still own about 12% of Bharti. Given that Bharti's profits increased by about 131% in the last quarter, Warburg must feel very good about its investment indeed.
UPDATE: Talking about leapfrogging, apparently Tata Teleservices is using lasers to get around last mile connectivity issues. What's more, the laser bridges can route data at pretty impressive speeds (1.2 GBps).
