Tata Teleservices is gradually shutting its CDMA operations running on the 850 Mhz band and writing off its equipment value, said three people familiar with the company’s plans. The company’s airwaves across all 22 circles in the band can’t be used for 4G as they weren’t bought in auctions.
The loss-making Tata Group telco, which has been looking for a buyer for long, may look to buy some 850 Mhz band spectrum in the three circles of Andhra Pradesh, Mumbai and Maharashtra – where its permits are up for renewal in the upcoming sale – plus some in the 1800 Mhz band, sources said. Both bands can be used for 4G services.
Prices of 1800 Mhz band airwaves is far cheaper than those in the 850 Mhz band.
Yet, the Tata group has taken a call that it doesn’t want to stay invested in the business for the long term. “It is unlikely to be too aggressive in the market,” said one of the persons in the know. The upcoming auctions are scheduled for late August or early September.
The company is likely to have a coffer of around Rs 7,000 crore for the upcoming spectrum auction, say industry experts.
The Tata Group recently approved an investment of Rs 3,000 crore in Tata Teleservices.
The mobile phone operator, which has been struggling to match up to larger rivals such as Bharti Airtel and Vodafone India and faces a big threat from newcomer Reliance Jio Infocomm, said it’s too premature to talk about shutting off any specific service at this juncture.
“Telecom licenses for several circles such as Mumbai, Andhra Pradesh and Maharashtra are due for renewal in September 2017. Tata Teleservices Ltd and Tata Teleservices (Maharashtra) Ltd will evaluate their options on technologies based on various factors including the outcome of the spectrum auction to be held shortly,” it said in a statement.
But a recent statement to the stock exchanges gave an indication of the withdrawal of CDMA services.
In the quarter that ended on March 31, Tata Teleservices Maharashtra, listed on stock exchanges, running Mumbai and Maharashtra service areas for Tata Teleservices, reported Rs 29 crore loss as a “provision for impairment of CDMA fixed assets” given that the license is expiring in September 2017.
This is true for the rest of the organization too, said one of the people familiar with details. Tata Teleservices is the only CDMA operator left in the Indian telecom market after MTS, the brand name for Sistem Shyam, merged into Reliance Commmunications, which in turn is shutting its CDMA network in favour of 4G services.
The CDMA airwaves were allocated for the purpose of CDMA mobile services and as such need to be liberalized by paying the difference between the allocation price and bid price for similar airwaves in a 2015 auction. The amount comes close to Rs 4,000 crore for Tata Teleservices, given the time to expiry and amount of spectrum, an expert said.
Tata Teleservice had elected to use CDMA as its preferred mobile technology in 2003, shortly after Reliance chose it too. Then it adopted dual technology in 2008, also in tandem with Reliance.
The company had three spectrum carriers in most circles, while four carriers account for 5MHz that is essential for 4G service. In 2013 Tata Tele surrendered one carrier under protest as the government sought a one-time penalty for keeping extra spectrum. It thus has only two carriers in most circles apart from Andhra Pradesh, Mumbai and Maharashtra. In those three circles, the company is expected to pursue a renewal of its old spectrum because it will be able to secure enough for 4G services.