Tata DoCoMo brings 1p/sec calling to Maharashtra

Tata Teleservices Maharashtra (TTML), the Maharashtra and Goa unit of Tata Teleservices (TTSL) launched its GSM services on Thursday. In line with Tata's strategy in the Southern states, it has introduced a "Rs 1 per minute" tariff as an introductory offer. 

Tata DoCoMo outlets in Bangalore are already facing a supply crunch due to high demand for the introductory offer and the company managed an unprecedented five lakh subscribers in the first month of its launch in Tamil Nadu.

The new service is offering one paise per second tariff on all calls, including domestic long distance (STD). "This is an introductory offer, so the tariff will remain one paisa per second for the customers under the scheme for life. But the scheme may be withdrawn later," Mukund Govind Rajan, MD of TTML said.

There are already around eight operators in Mumbai, incuding recent entrants like Reliance GSM and Aircel. TTML's chief financial officer S Venkatesan said his firm, which has always been making losses, will use its new-found access to the GSM market to emerge out of the red zone. 

"We have started making cash profits. We are booking losses at the net level because of the very high capital expenditure we have been putting in," he said. Companies with cash profits can turn in losses at the net profit level if the depreciation and other non-cash expenses are very high.

The company said it has increased the number of towers under its fully-owned tower subsidiary, 21st Century Infra Tel, from 1,300 to 2,000 over the past year, mainly on account of the need for new towers in the GSM network. It said it is still adding towers as the GSM network is being expanded, but refused to give out a target for the end of the year. Due to the difference in the operating frequency and network architecture, CDMA operators like TTML are not able to fully utilize their existing towers and installations while rolling out their GSM network. "In Mumbai, we have used 60% of the CDMA sites for GSM also," Rajan said.

CFO Venkatesan said the company, which already has a debt of Rs 3,150 crore, may end up with "marginally higher" debt levels at the end of the current year. He said the company is looking to fund part of its requirement by selling upto 49% of its tower subsidiary to any investor, but is waiting to finish the GSM expansion. The company, which has an average of around 1.4 users per tower, expects the number to go up to 1.7 to 2 users per tower by the end of the current year as it increases the capacity of its GSM network.

Though valuation of tower assets are a function of both the number of towers and the number of users per tower, such companies usually fetch between Rs 30 lakh to Rs 70 lakh per tower.

The tower subsidiary currently has installations from most of the operators, including Idea Cellular, Aircel, Vodafone, Unitech Telenor and Shyam Sistema, Venkatesan said. He also added that TTML may divest the tower subsidiary in favor of Wireless-TT Infoservices, the tower arm of its parent company Tata Teleservices (TTSL), but only in the absence of a higher bid from any other firm. TTSL owns around 38% of TTML while DoCoMo holds a 12.2% direct stake and an indirect stake of 9.5% inthe company.

The company also said that the new installations also have 3G antennae built-in, and a new 3G network can be overlain on the current one by the adding the electronics. Minister of state for communications, Gurudas Kamat, who was present at the launch, reaffirmed that 3G spectrum will be auctioned before the end of the year. Most operators are gearing up to launch 3G services by April next year.