Spice Telecom, a joint venture cellular company of the B K Modi group and their international partner Distacom, flagged off its services in Bangalore yesterday. The company is the second cellular operator in the city.
Fergus Wilmer, managing director, Spice Telecom, was confident of providing cost-effective services to attract customers. The high costs are often a deterrent but we hope to bridge these entry barriers by providing low tariffs and handsets at competitive prices, Wilmer said.
To catch up with their competitor, JT Mobile, which had a four-month headstart in the city, Spice Telecoms airtime rate will be around Rs 5-Rs 6 during peak hours.
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They also plan to sell handsets very soon at around Rs 10,000. The company has also announced an investment plan of Rs 1,600 crore for their twin cellular operations in India. Chief financial officer N K Raveendran said, We plan to invest around Rs 800 crore in Karnataka and a similar amount for our Punjab cellular operations.
The company has already made an initial investment of about Rs 100 crore to set up its global system for mobile communications (GSM) network in Bangalore.
With an authorised capital of Rs 400 crore, the company is entirely funded through equity till now by the three partners, Modicorp Private Ltd India, Distacom Communications and Motorola. The majority stake (51 per cent) is held by Modicorp while Distacom and Motorola have a share of 39 per cent and 10 per cent respectively. Raveendran said, We will also mobilise money through debt instruments . With the announcement of the new credit policy, we hope to tap more innovative products offered in the market soon.
Modicorp has also signed up with Distacom to offer cellular services in Calcutta.
Distacom, the $ 1.1 billion US company, has a 20 per cent stake in the Hutchison Max joint venture, and investments in an Indian software company, ModiSoft.
Motorola is the major supplier of base stations and radio equipments in Spice Telecoms wireless GSM network system. The switches and the microwave network have been provided by Siemens.
Spice Telecom hopes to achieve a subscriber base of 25,000 in Bangalore soon. The company also plans to start cellular services in cities like Mysore, Mangalore, Hubli-Dharwar and Belgaum by the end of their first year of operations.