AT&T to re-enter Indian telecom market

Sufia Tippu
Thursday, 25 May 2006 04:14

IT Industry - Market

Global telecom major AT&T Inc is planning to re-enter the Indian telecom market through a joint venture with Mahindra Air Services, part of a leading corporate group, Mahindras.
  The venture, 74 percent owned by AT&T Global Network and 26 per cent by the Indian partner, will offer Internet, international long-distance and national long-distance services. 
 
This would be AT&T’s second entry in the Indian telecom services space. Earlier, AT&T Wireless had a 33 percent stake in Idea Cellular Services along with two large Indian corporate houses -- the A.V. Birla Group and the Tata Group – which was later sold in 2004. 

The new company will be called AT&T Global Network Services India and AT&T will invest $4 million n the business initially as its equity contribution. 
 
As per the company's new plans, it will have a service mark agreement with AT&T Inc of the US to use the AT&T brand. The Indian company will pay a royalty fee of $5,000 initially and 4 percent of the annual sales subsequently. 
 
The new company will also offer services like global networking and broadband services, video multicasting and global scheduling. 
 
The company has applied to the Foreign Investment Promotion Board (FIPB) for its permission to invest in the Indian telecom business. 
 
As per the present policy, foreign direct investment (FDI) upto 74 per cent is permitted in the areas the company plans to enter while FDI up to 49 percent is allowed in the telecom services through automatic route and upto 74 per cent with the permission of the FIPB. 
 
In addition, the present policy also permits 100 percent FDI in Internet service providers (ISPs) without gateways, infrastructure service provider companies, electronic mail and voice mail services. 

This proposal, submitted  last month, was earlier deferred by the FIPB following the Department of Telecom (DoT) seeking some clarifications. The decision to defer permission to AT&T followed requests from DoT that since the company proposed to undertake a very wide range of activities, the DoT needed more time to examine the details.