`

Feedback

Reader's Poll

Which of the following technologies/concepts are likely to witness significant traction this year?
 
Any data to show

Teledata

Tele Data

Mobile Subscribers Yearwise comparision

AT&T - Looking for a bigger role

November 15, 2009
E-mail Print PDF



 -

India's telecom space is buzzing with interested parties following the decision to allow foreign players to bid for 3G spectrum. International operators and Indian firms are all jostling with each other, trying to carve out niches for themselves. US-based conglomerate AT&T, naturally, is in the fray.

AT&T, which has a market value of over $150 billion, is among the world's five largest integrated telecom service providers. Headquartered in Dallas, Texas, the MNC offers voice coverage in 215 countries, data roaming in 170 and 3G services in 95 countries. Its 2008 global revenues amounted to around $120 billion.

In India, it has been providing national long distance (NLD) and international long distance (ILD) services to the enterprise segment for quite a while and is now finalising plans to participate in the upcoming 3G auctions.

India connection
AT&T entered India in 1996 with a twoway joint venture (JV) called Birla AT&T Communications, partnering Grasim, an Aditya Birla group company. The JV launched services in 1997.

In 2000, the Tata Group too joined in to form BirlaTata-AT&T, with all three entities holding equal stake. In 2005, AT&T exited the Indian mobile market, selling its 33 per cent stake in the JV to its partners. The Tatas subsequently sold their stake to the Birlas and the erstwhile JV eventually became Idea Cellular. Meanwhile, the US-based giant remained a long distance player through alliances with operators such as Bharti Airtel, Tata and RailTel.

AT&T made a strong comeback when the Department of Telecommunications (DoT) lowered the entry barriers for long distance telephony in late 2005. It became the first foreign entity to win NLD and ILD licences. In July 2006, AT&T formed a JV with Mahindra Telecommunications Investment, named AT&T Global Network Services India, expressly for long distance services. AT&T had a controlling 74 per cent equity stake in the JV.

Current operations
India remains a key focus area for AT&T. In early 2007, the long distance JV began commercial operations and in November 2007, AT&T designated India a separate operating region in order to optimise its focus on the escalating demand for telecom services. "We have been doing well in Asia-Pacific and when it comes to numbers, India has the highest share. We hope to maintain that even in the future," says a senior company official.

Today, the company has over 1,000 employees across six locations in India. It has spent about $3 billion since 2007 on its operations across the Asia-Pacific and India regions.

As part of its long distance portfolio, AT&T offers wholesale ILD services and enterprise communications solutions such as virtual private network (VPN) and multi-protocol label switching (MPLS). In India, AT&T mainly serves the corporate enterprise market, including multinational customers, the ITeS industry, software and BPO firms. However, with DoT recently allowing ILD players to sell calling cards, AT&T may also take the opportunity to jump into the retail segment.

The company established the first data centre in Bangalore in December 2008 with a $1 billion global expansion plan in mind. It is targeting MNCs in India for developing online data centres. Its data centre customers will have access to a wide range of services such as AT&T's fully integrated managed hosting, application and networking services to support their data and e-commerce needs.

Worldwide, the company has 38 data centres and six super internet data centres (excluding Bangalore). Now that the Bangalore node is functional, AT&T is busy developing the eighth node in Delhi.

In February 2009, AT&T India commenced provisioning of its global managed internet service (GMIS) in the country. The service will help meet the growing demand for globally consistent internet access applications from multinational customers in India. AT&T's GMIS enables businesses to link multinational sites through a dedicated direct high speed internet connection. The service is available through private leased lines in more than 50 countries and has now been extended to India.

The way forward
A look at the relevant valuations indicates how the Indian telecom market has emerged as the fastest growing in the world. In 2005, when AT&T exited its stake in the erstwhile Birla-Tata-AT&T, it received around $250 million. Today that 33 per cent holding would be valued at a minimum of about $3 billion, as per industry estimates.

A pan-Indian licence will cost AT&T Rs 16.51 billion. Factor in the reserve price for all-India 3G spectrum auctions, which is set at Rs 35 billion. The more optimistic estimates suggest that up to Rs 80 billion could be realised from the 3G auctions. Some industry analysts believe that gaining a foothold in the Indian mobile market is worth that sort of investment.

As far as ILD operations are concerned, the company faces competition from international operators like Cable & Wireless and BT apart from domestic carriers. However, the operator refuses to acknowledge a serious threat from any of its competitors. "We do not see anyone as our competition as no one in India is a global provider. Moreover, considering competition from other global service providers, AT&T sees no threat as these firms are yet to establish a base in India," says a senior company official.

To an extent this perception may be true. Certainly AT&T is well ahead in the race since it possesses substantial infrastructure. Other global players such as BT have received their long distance licences much more recently, and many MNCs are still in the queue.



 
 
 Your cart is empty

juniper

 

Monday morning