CDMA mobile operator Sistema Shyam Teleservices will shortly launch internet services nationally on the Wi-Fi platform to drive well over 50% of its India revenues from data services, two executives aware of the matter told ET.
The Indian unit of Russian conglomerate Sistema JSFC has been recently issued a letter of intent (LoI) by the telecom department (DoT) for rolling out internet services as a pan-India internet service provider (ISP) licensee.”The company has completed all regulatory formalities for acquiring a pan-India Category-A internet service provider (ISP) licence,” a Sistema Shyam spokesman told ET in an emailed response. These include payment of Rs 30 lakh entry fee and submission of performance and financial bank guarantees.
Sistema Shyam’s decision to roll out Wi-Fi-based internet services nationally is, typically, aimed at boosting data revenues beyond its dongles business. More so, since a pan-India ISP permit would enable the company to launch Wi-Fi-based wireless broadband services in key data markets outside Sistema Shyam’s nine-circle mobile footprint.
At present, non-voice business accounts for roughly 47% of the telco’s quarterly revenues.
Sector analysts believe a possible reason behind Sistema Shyam’s plans to diversify into the ISP business is in light of its CDMA spectrum limitations, which is confined to just a few markets.
“Since the telco did not bid for expensive CDMA airwaves in the 800MHz band in the recently concluded auction, its planned diversification into the national ISP business is aimed at entering new markets, and in turn, address revenue growth challenges it could face with modest spectrum holdings in a just clutch of circles,” said an analyst who did not wish to be named.
Sistema Shyam declined to share details but two people aware of the matter said the company might, typically, set up “Wi-Fi zones in major airports, railways stations, bus stations, malls and emerging smart towns in some of India’s biggest data consumption zones like Mumbai, Maharashtra, Andhra Pradesh and UP-East where the telco does not operate mobile services.
Accordingly, sizeable investments in Wi-Fi connectivity infrastructure in regions where Sistema Shyam does not have mobile permits is likely soon, but the telco declined to comment.
“The objective would clearly be to boost Sistema Shyam’s share of data revenues by entering key markets with a national ISP permit as a mobile operator with a modest nine-circle footprint would, otherwise, face growth challenges by merely banking on voice and its dongles business,” said one of the persons quoted above.
At present, Sistema Shyam runs CDMA-based mobile services in Delhi, UP-West, Rajasthan, Gujarat, Tamil Nadu, Kolkata, West Bengal, Karnataka and Kerala.
Over the past six months, the telco has been active in the Wi-Fi hotspot space and has also worked with property developers to market its suite of smart home solutions, including WiFi-based wireless broadband devices and video surveillance systems.
A senior company executive acknowledged that the recent Railway Budget’s emphasis on creation of Wi-Fi zones in key stations was a trigger to explore the railways vertical, but added that the company’s Wi-Fi-based internet services strategy would look at multiple target zones such as airports, super-markets, bus stations and smart cities to spur data revenues.