Two competing cellular operators in the south, JT Mobiles (JTM) and Spice Telecom, are holding talks for sharing the backbone telecom network.
JTM, a cellular phone licensee for Karnataka and Andhra Pradesh, initiated talks with Spice Telecom, a B K Modi company, for sharing cellular backbone network with a view to cut costs by half. This is the first time that two cellular operators in the south initiate such a move.Weve opened our doors (to Spice), talks are yet in initial stage. If it materialises, the cost of building a backbone network in Karnataka can come down to half. Thisll benefit both, Frank D Hough, executive vice-president, JTM, said.
The arrangement will enable Spice to use JTMs network in Karnataka. We felt this was a logical move; were working at an arrangement (with Spice), Hough said.
Reasoning the move, he said, Telecom sector has to work very closely. Huge amount is involved here, moreover, equity also costs a lot.
Spice Telecom launched its service in Bangalore in April and has licence to operate only in Karnataka. JTM, on the other hand, was the early player with services launched in last November.
JTM has already drawn plans to build a 4,000 km GSM backbone network for mobile phone across Karnataka and Andhra at an estimated cost of Rs 270 crore. The mobile operator requires a large sum of Rs 600 crore for launching the cellular network across the two states.
It has already shortlisted IDBI, SBI Capital and ABN Amro to raise long-term loans. In view of the large sum involved, it expects to arrive at a reasonable rate of interest before it borrowed money. Likewise, Spice has also drawn a massive plan to invest Rs 800 crore in Karnataka circle in the next four years.
JT Mobiles which was started with an equity base of Rs 250 crore has now raised it to Rs 350 crore and is targeting an increase to Rs 600 crore. The entire equity has come in form its five equity partners: Telia AB of Sweden (26 per cent), Jasmine Internatioanl (13), ToT of Thailand (10 per cent), Sanmar (20) and United Telecoms Ltd (31).
Spice Telecom, a joint venture between Modicorp of the BK Modi group, Distacom Communications of HongKong and Motorola of UK, has been formed with an equity share of 51:39:10.
Its current equity base if Rs 400 crore. Motorola in Spice is represented by its investment arm Motorola Network Management Group.
Besides Karnataka, Spice Telecom has also license to operate in Punjab, and is a consortium member of World1 Network.
