Aircel moves north, to roll out in 7 circles

Sivasankaran lines up Rs 2,000 cr capex.

Chennai-based C Sivasankaran may want to sell off his mobile phone service in the south, but he has lined up Rs 2,000 crore of investments in telecom circles up north.

Come January, Sivasankaran's company, Dishnet Wireless, will launch GSM mobile services in seven circles: the Northeast, Assam, Bihar, Orissa, West Bengal, Jammu and Kashmir, and Himachal Pradesh.

Sivasankaran has already awarded the contract for installing the network equipment to Ericsson. Dishnet Wireless is building infrastructure that will have the capacity to serve 5 million subscribers in these circles. It has targeted 2.5 million subscribers by the end of 2006.

In the first phase, the company will cover over 250 towns and the service will be under the Aircel brand. Another 450 towns will be covered in the second phase.

Speaking to Business Standard, Dishnet Wireless Director and Chief Executive Officer Rohit Chandra said: "We want to get into markets where the coverage at the moment is low, and where there is a large market waiting to be tapped. In most of these circles, competition is limited, with state-owned Bharat Sanchar Nigam Ltd (BSNL) being the only key player."

Chandra said the company would roll out state-of-the-art EDGE-enabled networks from day one.

The company has also applied for GSM licences in the Uttar Pradesh East and West circles as well as Madhya Pradesh.

Sivasankaran is not new to the telecom business. The group had won the Delhi GSM cellular licence, which it sold to the Ruias. However, its attempt to sell Aircel, the company that operates cellular services in Tamil Nadu and Chennai, to Hutchison-Essar for $361 million has been stymied by the government.

Most of the circles Sivasankaran now plans to get into do not have a clear number three, a space that Dishnet will initially aim to capture. For instance, in Bihar, BSNL has over 363,000 customers, followed by Reliance Telecom, which has over 300,000. There is no third GSM operator.

In West Bengal, BSNL, with 279,000 customers, is well ahead of Reliance Telecom with 141,000 subscribers.

Bharti has just launched its services in the state. In Jammu and Kashmir, where Bharti moved in as the second operator a few weeks ago, the only other service provider is BSNL, with over 100,000 subscribers.

Adding to Dishnet's advantage, even CDMA-based service operators have only limited penetration in these markets. For instance, in West Bengal, Reliance Infocomm has a subscriber base of 74,000 and in Orissa it is a distant third, with over 93,000 mobile subscribers.

Siva's signals

Develop circles like West Bengal, Orissa, J&K where there is no clear No. 3

Jack up competition in circles where BSNL is the only key player; target 2.5 million subscribers by end-2006

Roll out state-of-the-art EDGE-enabled networks "" that enable faster data transfer "" from day one