India is the world’s fastest growing telecom market where new subscriber addition records are being set each month. The operators, vying to capture a greater share of the market in the face of cut-throat competition, have to make huge investments in improving network coverage, enhancing service offerings, expanding tower portfolios and improving quality of service.

Thus, despite the slowdown in industrial growth, the capital expenditure (capex) plans of most telecom operators are far from conservative. For the next few years, mobile operators have lined up huge investments to increase their market share. The new entrants too have drawn up large capex plans. tele.net takes a look at the investment plans of the major players…

Bharti Airtel
India’s largest telecom operator by subscribers as well as revenue, Bharti Airtel has earmarked around $5 billion as capex for mobile services and the infrastructure business for 2009-10. Of this, about $2.5 billion is meant for mobile services. The remaining will be invested in the tower business by Bharti Infratel (a wholly owned subsidiary) and Indus Towers, an independent tower company formed by Bharti Airtel, Vodafone Essar and Idea Cellular to provide passive infrastructure services. However, the $5 billion capex does not include the amount the company will spend on 3G auctions.

Reliance Communications
 Reliance Communications (RCOM) has planned an expenditure of Rs 240 billion for the 15-month period January 2009March 2010. According to the company, debt totalling Rs 130 billion will be raised over the next three months to meet a part of the capex requirements and the scheduled debt repayment obligations.

The company’s capex plans include expansion of its GSM network as well as its telecom infrastructure subsidiary, Reliance Infratel. RCOM is believed to be at an advanced stage of discussions with some foreign investors for divesting additional stake in Reliance Infratel. The operator has already divested 5 per cent stake in the tower company.

Aircel
A pan-Indian aspirant, Aircel plans to spend more than Rs 250 billion over the next three to five years. The 17-circle operator, which recently launched mobile services in the Mumbai, Delhi, Uttar Pradesh, Uttarakhand and Karnataka circles, intends to cover the Gujarat, Madhya Pradesh, Rajasthan, Punjab and Haryana circles by mid-2010.

Of the total funds lined up, Aircel plans to invest Rs 10 billion in the Andhra Pradesh circle by the end of 2009. In the first phase, the company will spend Rs 5 billion by mid-May for building base stations, installing switches and setting up an intelligent network, a data centre and offices, besides enhancing its retail presence. An equal amount will be invested in the circle by end-2009.

Tata Communications
Tata Communications plans to spend $400$500 million as capex in 2009-10. To fund its expansion plans, the company had approached its major stakeholders ?? the government and Tata Sons ?? for a Rs 10 billion rights issue in addition to raising more debt. But this did not work out as the Department of Telecommunications was reportedly not in favour of the rights issue since it would have reduced the government’s stake in the company.

The company has now arranged sufficient funds for its capex plans. It has raised $350 million in debt over the past few months and has $300 million in cash on its balance sheet as of endJanuary 2009. This is sufficient to fund Tata Communications’ ongoing expansion plans ?? apart from the Wi-Max spectrum auction.

Idea Cellular
 Idea Cellular’s capex for financial year 2009-10 is reported to be around Rs 60 billion. This is slightly lower than the capex of Rs 65 billion in 2008-09.

New players
 Foreign telecom operators like Norway’s Telenor and Russia’s Sistema, which have bought majority stakes in new entrants like Unitech Wireless and Sistema Shyam TeleServices, have also announced their investment plans. Telenor, which owns over 67 per cent stake in Unitech Wireless, is planning to invest $3.2 billion in India over a period of five years. Sistema has announced a $5 billion investment over the next five years.

Apart from these companies, global operators such as Vodafone and NTT DoCoMo (which has bought stake in Tata Teleservices) have strategic interest in the Indian telecom market, and are expected to drive investments. The entry of new players through the 3G, Wi-Max and mobile virtual network operator routes is also expected to increase investments in the Indian telecom sector.