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July 9, 1997


Spice Telecom, JTM may share infrastructure

The two rival cellular phone operators in Karnataka, Spice Telecom and JT Mobiles, are considering the option of sharing infrastructure to cut costs.

N K Raveendran, chief financial officer of Spice Telecom, is reported to have said that the two companies were looking at sharing infrastructure mainly for inter-city connectivity in Karnataka. However, its would not be applicable to Bangalore city where JTM, which had launched its services early this year, has already rolled out its network.

"By sharing the infrastructure the two companies will be able to cut down costs by at least 30-40 per cent," he said. "We will probably start with connecting Bangalore and Mysore and also within other districts like Mangalore, Mysore, Hubli and Dharwad. We may consider the possibility of sharing the base station towers," he added.

Intercity connectivity may be achieved through optic fibre cable or microwave depending upon the viability of the medium, he said. While the deployment of optic fibre cables throws up issues of cost and maintenance, the microwave route may not be a reliable via media due to the erratic power situation.

Raveendran clarified, though, that there will be no scope for sharing the bandwidth which has been allotted to the individual companies by the Department of Telecommunications.

According to Raveendran, there could be no conflict of interest once the two companies start sharing infrastructure even within the cities because "the two companies would be looking at the markets differently and will have a different marketing strategy".

According to Raveendran, it makes sense for cellular phone operators to share infrastructure considering the enormous expenditure incurred by these companies towards licence fees and project costs. The cellphone operators also have to pay a hefty duty for import of GSM equipment.

As per the government notification early last month, the import duty on telecom equipment has been reduced to 22 per cent. But the list of items that came under the duty reduction scheme were only broadly defined and, therefore, the numerous components that went into these equipment were not brought under the duty reduction.

Raveendran said the company had managed to obtain customs clearance for the equipment by giving a bank guarantee of 32 per cent of the import value. According to Raveendran, the customs had taken a sympathetic view and had agreed to take up the issue with the Department of Telecommunications.

He said the company had also written to the Cellular Phone Operators Association of India to lobby with DoT and the ministry of finance.

- Compiled from the Indian media

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