MTNL Considering MVNO Tie-Up For Garuda; Mittal Skeptical – Low ARPUs

According to an HSBC Global Research Report, public sector telco MTNL may also do a branding deal, similar to that between Virgin Mobile (NYSE: VM) and Tata Teleservices. However, this offering is for its CDMA based service – Garuda. The report voices scepticism over whether a foreign player would like to align itself with a PSU style of working. The source of the HSBC report is not known, though MTNL CMD RSP Sinha has told ToI that they’re exploring a franchise relationship with a foreign operator.

I thought Garuda was operational only as a Wireless Local Loop (WLL) service, and restricted to Delhi and Mumbai – so yes, they’re likely to have CDMA spectrum to spare. Intrestingly, DNA reports that MTNL has also applied for a pan-India license, which isn’t likely since an MTNL-BSNL merger is on the cards.

Meanwhile, Sunil Mittal, CMD of Bharti Airtel has said that he doesn’t think MVNOs will succeed in India, due to the situation of the tariffs. He’s essentially hinting at the low ARPUs in the market. I don’t quite agree: low ARPUs are a result of operator practices, and not a cause. The operators dropped prices and introduced “lifetime unlimited” plans in order to garner more subscribers (and consequently increase allocation of spectrum), and ARPUs have dropped as a result. There are services like the exam results mentioned in the last post, temple donation services, reverse auctions etc that people are willing to pay for. There’s a market for services and content, and it’s time that someone came in and pushed up ARPUs. I think Virgin’s also playing the subscriber gathering game right now.