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AT&T Inc. (NYSE:T) is Coming Soon to India – Again?

AT&T Inc. and its rival Virgin Media may once again enter one of the hottest telecom markets in the world. The Indian telecom market has some of the cheapest call rates offered by operators. Competition is cut-throat and there has been a lot of M&A activity in this sector throughout the last two decades. This is as per a report in the Times of India.

AT&T Inc. Will Take the MVNO Route

The firm will start off with being a mobile virtual network operator (MVNO), as per government sources. The sources say that both AT&T Inc. and Virgin Media expressed their interest in entering the market again. This could be seen as just getting a foothold onto the market, because moving forward, more than 2000 Mhz of spectrum is going to be put up for auction soon. The above-mentioned report says that the two MVNOs were approved by the telecom commission on the 28th of March.

AT&T had left the market more than a decade ago. It was part of a joint venture that is today known as Idea Cellular. It was a partnership with the Tata group. Virgin Media joined hands with them in 2008 and left a few years later, now being under Liberty Global.

How is the Sector Currently?

Out of the many players present in India, Vodafone is the most familiar name that can be recognized outside India. During the early 2000s, the business was actually under Orange, later on acquired by Hutch and now by Vodafone. The firm has been embroiled in a tax dispute since a long time and its ex-CEO has been vocal in lashing out at the retrospective tax regime that is being practiced.

The sector, including the auction process itself, has been the subject of controversy. One of the reasons behind the earlier central government’s drastic failure in the most recent election was a scandal that came to be known as the ‘2G scam’, in which several ministers were accused of corruption.

If we look at the latest figures given out by TRAI (on behalf of the service providers) as released on the 26th of April, we come across some interesting statistics which can give a hint of what AT&T is about to face, should it succeed in re-entry. These figures are as of 29 February.

As far as mobile phones go, most of the users use unlocked handsets (especially when it comes to GSM). COAI (Cellular operators’ association of India) is the trade body that stands for most of the players in the sector. As far as Idea Cellular is concerned, it is a network having a large number of in-roamers, more than its subscriber base in fact. It is the 3rd top broadband provider in the country (both overall and in wireless), having 22.2 mn subscribers.

Many players are also worried about the long-delayed launch of Reliance’s 4G services, under the ‘Jio’ brand. Analysts are speculating over whether Reliance will disrupt the market the same way that it did in the early 2000s when it first entered the market. At such a time, when AT&T is already looking at expanding outside US, it doesn’t seem very clear as to why does it want to enter a market where low margins are the norm and call drops are actually penalized. Maybe the firm will shed some light on this when it participates in the Jefferies Technology Conference on Thursday.

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