Ministry orders number portability by September

Source :21 May 2010, 0831 hrs IST,Joji Thomas Philip,ET Bureau

    

NEW DELHI: The communications ministry has given an ultimatum to telecom companies to implement mobile number portability by September , a step fraught with major implications on the financials of operators that won 3G airwaves in Wednesday’s auctions.

If the diktat is enforced, customers will have access to number portability well before the launch of 3G services, due for the year-end or early next year. In the absence of a pan-India 3G operator, the ministry’s order means top-end users yearning for highspeed data services might ditch their telcos and shift to the services of a 3G operator.

The country’s top two mobile firms, Bharti Airtel and Reliance Communications (RCOM), each won 13 of the 22 telecom zones on offer while other major operators Aircel, Vodafone Essar, Idea Cellular and Tata won a total of 13, 9, 11 and 9 circles, respectively . Though these companies are due for a big leap in market shares in these zones, there is the possibility of losing customers in circles they were bereft of 3G. Bharti, for instance, could lose up to 6% of its postpaid customers in circles where it failed to bag 3G airwaves when MNP is implemented, a potential revenue loss of up to 8%, said IDFC Securities in a report on Thursday.

“For Bharti, the key circles missing are Maharashtra , Gujarat, Kolkata, Kerala, Punjab and UP East. The nine circles in which Bharti is among the top three operators and has failed to obtain 3G licences account for 31.4% of its total wireless revenue ,” IDFC security analysts Chirag Shah and Abhishek Gupta said.

Likewise, “Vodafone stands to lose in Karnataka, Kerala, Rajasthan, Punjab and UP West, which account for about 22.8% of its wireless revenue base” , they said, adding that the winners here could be Aircel or Tata Teleservices. RCOM is similarly absent from the 3G scene in lucrative circles such as Maharashtra , Gujarat, Uttar Pradesh and southern India.

The IDFC report added that MNP could power Idea Cellular and Aircel revenues by 8% and 22% respectively. “The loss of top operators like Bharti and Vodafone in circles like Punjab, Kerala, Gujarat, Maharashtra and UP East could benefit Idea,” IDFC said. India has to date missed four deadlines to implement the number portability facility, which allows consumers to dump the service provider, but retain their mobile number. At the end of April, the last such deadline, telcos again blamed a combination of factors ranging from underprepared networks to security agencies seeking more time to carry out tests on mobile networks for their inability to switch to MNP.

Analysts also say telcos such as Bharti, Vodafone and Idea are likely to sew up roaming agreements with each other to retain high-end users.

‘The 3G rules allow us to enter into roaming agreements. So, in a zone where we do not have 3G spectrum, we can avail a roaming pact and offer 3G service to our customers for a small premium,” said a top executive with a telco.

“This is not spectrum sharing, but a commercial pact where we can offer our customers 3G services on another operator’s platform,” he said. Credit Suisse analysts on Thursday pointed to the possibility of such steps.