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The Department of Telecommunications is preparing to enter the cellular services business as the third operator in 17 cities including Bangalore, Hyderabad, Madras, Calcutta, Ahmedabad, Pune and Jaipur.

According to department officials, the pre-launch planning has moved into top gear with final touches being given to equipment procurement guidelines.

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The turnkey tender for cellular equipment, which could well be the largest tender ever in the Indian telecom sector, is likely to be floated as early as July-August.

A meeting with telecom equipment vendors in this regard, which was scheduled this week, has now been postponed to June 4.

The nation-wide cellular service would be branded as the Indian Mobile Telephone Service and would be offered at extremely competitive rates, a senior DoT official has been quoted as saying.

Significantly, DoT is likely to go in for price differentiation across different telecom circles based on the packages offered by its competitors, with the chief general managers of individual circles having certain flexibility in tariff setting.

DoT has made a modest projection of 170,000 subscribers within the first year at an average of around 10,000 subscribers in the 17 cities and state capitals.

"We actually expect to have around 50,000 subscribers in big cities like Bangalore and Hyderabad and around 20,000 or so in Calcutta, but it is better to err on the side of caution," DoT sources involved with the exercise have been quoted as saying.

Even with this projected subscriber base, the equipment tender would amount to around $42.5 million (around Rs 1.82 billion) in the first year itself at $250 per subscriber.

But industry experts and equipment vendors foresee an exponential growth in DoT's cellular subscriber base in the following years, which could eventually make this contract even bigger than the MTNL's five-year cellular tender worth around Rs 10 billion which was allowed to lapse on April 30, 1999.

It is quite possible that in this case DoT will offer parts of the contract to all three lowest bidders at the lowest bid as the project involves setting up distinct operations in multiple cities, as opposed to the usual practice of giving the entire contract to the lowest bidder.

The Tender Evaluation Committee is deliberating on the issue and would soon announce parameters of the tender.

DoT's cellular service would be based on the prevalent GSM 900 technology, although the department will also be conducting "initiation meetings" with equipment vendors to understand competing technologies and select the right one.

- Compiled from the Indian media

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