Bharti Airtel Ltd. said Monday it will launch third-generation mobile telephony by the end of this year, becoming the third private operator after Tata Teleservices Ltd. and Vodafone Essar Ltd. to announce specific plans to offer the service in the world's fastest growing telecommunications market.
Third-generation services allow multimedia capabilities on mobile networks and are likely to improve the operating performance of telecom companies as they can charge higher tariffs in a market where cut-throat competition has hurt their profitability.
Competition may not be as stiff in the 3G space as several companies couldn't acquire the required bandwidth earlier this year in a hotly contested auction that drove up the total price of airwaves on sale for 3G telecom services to more than $15 billion. However, they are unlikely to make any immediate profit on the service due to the high cost--including interest expense on debt--they incurred to acquire the bandwidth.
Bharti Airtel had won 3G radio spectrum in 13 of India's 22 telecom circles for INR122.95 billion ($2.77 billion).
The company said the service areas where it has 3G bandwidth contribute 68% of its revenue. These 13 areas include key markets such as Delhi, Mumbai, Bangalore, Chennai and Hyderabad, which account for 21% of all data traffic in the country and are expected to lead the demand for 3G services, it added.
Bharti Airtel, India's largest telecom company by users, offers second-generation services in all the 22 service areas and, according to data from the telecom regulator, had about 141.25 million users at the end of August.
The company is in advanced talks with other operators for arrangements to offer 3G services beyond the 13 areas, it said, without naming the potential partners.
Vodafone Essar, which plans to launch its 3G services during January-March, said last week it was talking to operators such as Bharti Airtel for tie-ups.
"This will not only ensure seamless roaming, but also offer 3G broadband to its (Bharti's) entire customer base in India," Bharti Airtel said.
Earlier this month, Tata Teleservices said it planned to launch 3G services by Nov. 5. Apart from Vodafone Essar and Tata, Bharti Airtel will be competing with smaller rivals Reliance Communications Ltd., Idea Cellular Ltd., Aircel Ltd. and S Tel Pvt. Ltd. in some service areas for the 3G market share.
Reliance Communications, Idea Cellular, Aircel and S Tel haven't announced any specific launch plans yet, but said they could roll out operations either late this year or early 2011.
State-run Bharat Sanchar Nigam Ltd. and Mahanagar Telephone Nigam Ltd. (500108.BY)--which didn't have to participate in the auction and were allocated bandwidth in 2008--launched 3G services in early 2009, but have so far got a lukewarm response.
Bharti Airtel has already given the contracts to set up its 3G mobile-telecom networks in India to the local units of L.M. Ericsson Telephone Co. (ERIC), Huawei Technologies Co. and Nokia Siemens Networks.