MVNO models won't work in India at current tariffs: Mittal

By Sandeep Gurumurthi, CNBC-TV18

Mobile virtual network operator or MVNO will not work in India. That's the verdict from telecom operators. A mobile virtual network operator is a telecom company that buys airtime in bulk and retails them under its brand name. But that it is an idea that appeals to new entrants.

Telecom regulator Nripendra Misra hasn't started work yet on the policy framework for MVNOs. They are essentially operators who don't own spectrum but lease it from other operators to offer mobile phone services. But even before Misra gets started on the policy, Sunil Mittal has this piece of advice.

“I understand a bit about telecom and given where tariffs are, I don't think MVNOs  will succeed in India,” said Sunil Mittal, CMD, Bharti Airtel.

This is a sentiment that is echoed by most others in the industry. Tata Tele, which currently has a franchise arrangement with Virgin Mobile, one of the world's most successful MVNOs is guarded as well.

“One will have to explore related issues, including short band of spectrum that some players may have, out of which they may not be able to conveniently share part of the airtime,” said Anil Sardana, MD, Tata Teleservices.

That is an argument that most analysts seem to agree with. In most countries where MVNOs operate, spectrum allocation has been very liberal. So, hosting a MVNO allows higher network utilisation. Ask any operator in India and they will tell you how capacity constrained they are.

“The Indian market is not matured enough to host MVNOs,” said Prashant Singhal, Partner, E&Y.

But a section of the industry believes that it’s too early to write off the MVNO model. For new operators especially, it could be a huge boon as they seek to expand coverage quickly. A new operator could typically roll out a network in a few circles and then sign up as an MVNO in all other circles. This could well be the way to go for all new operators.