AT&T and Virgin Media reportedly planning India operator move

As the mobile industry increasingly looks to India for growth, a report by Indian newspaper Economic Times suggests both AT&T and Virgin Media are mulling a return to the country.

The report cites a single inside source and claims the potential move is fuelled by the prospect of a lot more spectrum being made available. Apparently over 2 GHz of spectrum is due to be made available for purchase in India in the second half of this year, which provides the natural strategic juncture to make a move. Neither company offered significant comment to ET when asked.

AT&T first dipped its toe in the water in India in partnership with the Birla and Tata groups in the mid-90s but by 2005 decided to pull out. Virgin Media (now owned by Liberty Global) also gave it a go with Tata’s help in 2008 but called it a day just three years later. The AT&T JV ended up being Idea Cellular, which currently has 175 million Indian subscribers, according to Ovum’s WCIS.

According to ET Indian incumbents such as Idea Cellular and Bharti are already quite heavily indebted, so they may be limited in their capacity to buy much of this new spectrum, especially since a 5 MHz block of nationwide spectrum is expected to cost Rs 57,425 crore, which translates to around $8.5 billion. This seems like a very high number, and may only apply to precious 700 MHz spectrum, but higher frequencies costing less.

The report suggests the initial move would be via the MVNO route, but should be just a preliminary to a full network launch for any new company buying significant chunks of spectrum in the auction. The Indian mobile market is already very competitive, with eight operators having in excess of 50 million subscribers. The Indian state seems determined to extract maximum revenue from the impending spectrum sale so it could be that only the biggest companies with the deepest pockets will survive.