eVoda to invest $400 m for NLD, ILD backbone

Spreading The Net:There’s Big Money Calling All Along The Business Course

EVEN as Hutch Essar (soon to be rechristened Vodafone-Essar) has an infrastructure-sharing pact with Bharti Airtel, the company has lined up close to $400 million (Rs 1,500-1,600 crore) for setting up a national fibre optic cable network for routing its own mobile STD traffic. Project details will, however, be finalised only after Vodafone acquires control in Hutchison Essar, post-FIPB clearance. The objective is to transform Hutch Essar from a pure mobility player to a full-services national telecom player along the lines of a Bharti Airtel, BSNL or Reliance Communications, company sources said. “Hutch Essar, under Vodafone control, will be positioned as an integrated telecom player with a national footprint. In such a scenario it will no longer have to lease capacity from existing NLDOs to route its mobile STD traffic,” said sources close to Hutch Essar. Incidentally, Bharti Airtel’s role in Hutch Essar’s NLD strategy, especially in the backdrop of the super-sensitive Vodafone-Bharti infrastructure-sharing pact could throw up interesting possibilities. A larger alliance with both companies pooling in their resources together cannot also be ruled out. In fact, Bharti group chairman Sunil Mittal told ET that both companies may move towards a common infrastructure over the next few years. “We can also build the common infrastructure together. Complete sharing of our existing networks cannot be ruled out.” The Hutch Essar top-brass, it is learnt, is weighing the pros and cons of laying its own groundlevel fibre optic NLD network which will connect all 23 circles (including the recently acquired Essar Spacetel licences). “Initial investment in laying fibre on the ground could be $250 million and go all the way up to $400 million. The investment size will hinge on a host of cost parameters. The average cost of laying optical fibre on the ground nationally could be Rs 4-to-5 lakh per route km. Key determinants would be cable cost, duct cost, the right of way (RoW) cost coupled with trenching and road-restoration charges. There are no decisions yet on whether the cable will be imported or procured locally,” sources said. A key issue that remains undecided is Essar’s eventual role in Hutch Essar’s NLD gameplan. According to Essar executives, its independently held NLD and ILD licences will not be part of the deal with Vodafone. “As with our infrastructure company — Essar Telecom Tower and Infrastructure, our ILD and NLD arms will also compete independently, and on rolling out services will offer them to all service providers. It will not get any preferential treatment from HEL,” Essar sources added. On HEL’s proposed NLD plans, Essar executives said: “All operational issues will be decided by the new board as and when it gets constituted.” Hutch Essar’s decision to hit the NLD turf was to rein in hefty carriage charges that it paid existing NLD operators for routing its mobile STD traffic. With an NLD licence, Hutch Essar can lease fibre capacity at a fraction of carrier charges and beef up tariff margins on long-distance calls. Earlier, in absence of an NLD licence, Hutch-Essar had to rely on NLDOs and its variable payout to route mobile STD calls was huge, including access deficit charges (ADC) payable to BSNL, carrier charges payable to the rival NLD carrier and terminating charges payable to the network into which the mobile STD call terminates.

CALL CENTRE

L O N G D I S TA N C E R U N

WHAT NOW

Hutch Essar could see Rs 1,500-1,600 cr investment in long distance segment Hutch currently has an understanding with Bharti for infrastructure sharing and for routing long distance calls

WHAT VODAFONE HAS IN MIND

Plan aimed at making Hutch Essar a national integrated telecom player Once aim is achieved, Hutch Essar will not have to lease capacity from outside

GREY AREA

Essar’s eventual role in Hutch Essar’s NLD gameplan is still not clear

Courtesy: EconomicTimes
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