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India is the new China at biggest wireless fair

india Updated: Feb 17, 2007 03:04 IST
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The mobile telecoms industry turned its focus on India at this year's 3GSM trade fair and away from China, after years of talking about little else but China's huge market and potential third generation licences.

Vodafone's $11 billion deal to buy a controlling stake in India's fourth-biggest mobile phone firm, Hutchison Essar, announced on the eve of fair, set the agenda as those participants who had not already done so woke up to India's potential.

With 150 million subscribers but market penetration of still only 15 per cent, India is already the world's fourth-biggest mobile market behind China, the United States and Russia.

It is also the fastest-growing major market and is expected to overtake Russia this year. At its current growth rate, there will be half a billion mobile subscribers in India by 2010.

Mobile group Orange was one of Vodafone's rivals that looked on with some envy at 3GSM in Barcelona this week, with Chief Executive Sanjiv Ahuja saying he could follow Vodafone's lead.

"India is a fast-growing market, and if a right opportunity emerges at the right kind of valuation, we would look at it," he told in an interview.

Although analysts said near-term multiples made it look as though Vodafone had paid a high price for Hutchison Essar, most agreed the deal was a no-brainer for the UK operator.

Meanwhile, Indian carriers such as top mobile operator Bharti Airtel said they were keen to expand abroad.

Bharti Airtel Chairman Sunil Bharti Mittal said in an interview the company was in "hot pursuit" of overseas telecoms acquisitions.

All quiet on the Chinese front

There was little noise at the fair, on the other hand, about China, which in past events was often likened to a hare against India's tortoise. Top Chinese players such as China Mobile and China Unicom were nowhere to be seen.

Western telecoms equipment makers, who had talked in past years about the opportunities to be opened up by China's awarding of third-generation licences, appeared to have grown tired of the subject.

"I've given up trying to predict when the licences will be awarded," Qualcomm Chief Executive Paul Jacobs told Reuters in an interview at 3GSM. "It heats up; then it cools off."

A couple of tens of thousands of subscribers are currently taking part in trials in China using the home-grown TD-SCDMA third-generation standard, which was accepted as an international 3G standard as long ago as 2000.

The world has been waiting since then for the Chinese government to award licences so that the construction of commercial networks can start. For several years now, the awards have been seen as imminent.

As recently as November, Tang Ru'an, vice president of the Datang Group, which is the lead developer of the Chinese standard, told an industry forum that this February, 18 months before the Beijing Olympics, would be the last possible date to have something in place.

The 3GSM fair would have been an ideal forum for such an announcement, but instead the China Pavilion housed just a few minor firms and attracted little attention.

Lin Cheng, European president of Chinese telecoms equipment maker ZTE Corp, said at the fair: "I think the government wants to make sure it chooses the right standard. Third-generation is still improving."

But he said it would take at least five to 10 years to deploy the standard across the vast country.

Many industry observers noted that newer and better wireless standards will have been introduced long before then, such as WiMAX and 4G technologies which are due to start commercial operations as early as this year, and that China's own 3G standard is increasingly looking "too little, too late".

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