Telstra applies to re-enter Indian telecom market

Plans majority stake in JV; to offer NLD, ILD, ISP services.

Telstra, the Australian communications major, is planning to re-enter India's telecommunications services space after several years, by offering national (NLD) and international long distance (ILD) services. It also plans to acquire an internet service provider (ISP) licence in India.

Telstra Holdings, a 100 per cent subsidiary of Telstra, has applied to the Foreign Investment Promotion Board (FIPB) for increasing its stake in the Indian company, Telstra Telecommunications, to 74 per cent from 49 per cent.

After approval from FIPB, the company plans to acquire NLD, ILD and ISP licenses from the Department of Telecommunications, the company said in a note to the former on November 16.

Telstra has been a key player in the 3G technology space, for which an auction is being conducted in the country in January next year. However, it is not clear if Telstra's re-entry into India could also expand to the mobile services or to the broadband wireless space. An email to the company went unanswered.

Telstra Telecommunications is a joint venture company in which India’s Microland Investment (promoted by Pradeep Kar) has a 51 per cent stake and Telstra Holdings has a 49 per cent stake. Prior to increasing its stake to 74 per cent, Microland, an IT infrastructure services provider, would replace Microland Investment as the shareholder and ultimately would have a 26 per cent stake in the entity.

The JV company was incorporated in August this year as Tonexact Telecommunications, which was changed in October to Telstra Telecommunications.

Telstra earlier had a joint venture with the B K Modi Group in India, 14 years earlier. Modi Telstra’s MobileNet was the country’s first cellular service, launched in Kolkata in 1995. However, Modi fell out with Telstra and the mobile service in the city was later sold to Sunil Mittal's Bharti Airtel for $90 million. After that, Telstra has not played any role in the country's growing mobile telecom sector.

Foreign players who offer NLD and ILD services in India include Vodafone, AT&T, BT Global, Verizon and SingTel. The telecom sector currently has a foreign investment limit of 74 per cent.

The entry fee for a new NLD licence was recently reduced to Rs 2.5 crore from Rs 100 crore and for an ILD to Rs 2.5 crore from Rs 25 crore.