MTS may acquire another telecom operator : The Telegraph

Stake shake buzz in telecom
- MTS hunts for more spectrum
JAYATI GHOSE
Rozanov: Growth focus

New Delhi, May 4: MTS is likely to take the acquisition route to grab the extra spectrum necessary to improve its mobile services.

“We need additional spectrum to improve speed (of data services),” Vsevolod Rozanov, CEO of Sistema Shyam Teleservices Limited (SSTL), told The Telegraph.

SSTL is a joint venture between Russia’s Sistema and India’s Shyam Teleservices and operates under the MTS brand.

MTS, the only company in India that offers mobile services using CDMA technology alone, is betting on the mobile data segment to increase market penetration and generate high revenues.

Tata and Reliance Telecom offer CDMA services, but they also have mobile services that run on GSM technology.

Analysts said the firm could acquire another player to get additional radiowaves as the government has refused to hand out extra CDMA spectrum.

Rozanov said while the company believed in reasonable, organic growth, it was not averse to buying another player in the Indian market if the acquisition had potential.

The company recently requested the department of telecom (DoT) to grant additional airwaves as allowed for entrants using GSM technology. While CDMA players get 2.5 megahertz (Mhz) of start-up spectrum, GSM players get 4.4Mhz.

However, the DoT turned down the request saying CDMA is a more spectrum-efficient technology compared with GSM and can cater to “more customers for the same amount of spectrum”.

MTS is not planning to get into the GSM segment. Rozanov said, “CDMA is the technology of choice for data and demand for data services will increase in the future.”

He expects the market for mobile data services to expand beyond just corporate users to include SMEs, students and small households, given the popularity of live infotainment and social networking in India. The company recently launched high-speed data service Mblaze, which includes mobile TV, and plans to launch more data services this year.

MTS, which has over 4 million subscribers, is focusing on revenues and not on subscriber additions.

“There is no sense in entering a race over subscribers. Our key focus is to improve average revenue per user (ARPUs) and it is seen that data subscribers have low churn rates and generate high ARPUs,” said Rozanov.

MTS competes with Reliance Communications, Bharti Airtel, Vodafone and Tata DoCoMo to attract high revenue generating data users.

The firm is expecting an investment of $800 million from the Russian government for a 20 per cent stake in the company by end of 2010. The money will fund the company's expansion plans.

MTS, which debuted in India on March 26, 2009, has rolled out services in 11 circles and is expected to complete its pan-India coverage by the end of the year.

The company said it has sufficient start-up spectrum to complete the rollout in all circles.
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