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In an unusual tieup, IOL Netcom Ltd, a Mumbai-based broadband firm, will offer wireless telephony services using CDMA technology as a franchisee of government-owned Mahanagar Telephone Nigam Ltd (MTNL) in Mumbai and Delhi. This initiative comes after the business failed to bring in any significant revenues into MTNL’s coffers.

In a notice to the stock exchanges, IOL Netcom, with net sales of Rs 3 crore for quarter ending June 2008, said it has entered into CDMA franchisee agreement with MTNL as a lead consortium partner to provide CDMA mobile services in Mumbai and Delhi, which have the highest tele density. IOL Netcom plans to introduce its ‘IOL mobile’ brand within 90 days. Interestingly, Videocon, which has acquired a 14.9% stake in IOL Netcom, said it has no problems with the company launching wireless telephony services which would compete with its own wireless telephony service company, Datacom. The IOL Mobile brand would compete with MTNL’s own CDMA brand called Garuda, which has failed to take off in Mumbai and Delhi.

Siddharth Srivastava, President of IOL Netcom said the company bid for MTNL’s tender when it sought franchisee partners in Mumbai and Delhi for its “significant” spare CDMA capacity in Mumbai and Delhi. “We are now ready with our CDMA services and by Diwali we will launch our services in Mumbai and Delhi,” said he. Srivastava did not rule out launching GSM services in future and added that the company would be happy to partner with MTNL for its 3G services rollout.

“We are now a full-fledged telecom company offering end-to-end multiplay services,” he said. The company is expecting to add one million wireless telephony customers in the next few months with an expected combined average revenue per user (ARPU) at over Rs 450 per month.

MTNL had been evaluating the option of entering into an MVNO-kind of relationship to better utilise its networks. “MTNL will give IOL capacity of two lakh subscribers each in Delhi and Mumbai on its networks,” an MTNL official said. However, he refused to term the arrangement as purely an MVNO, saying the company was not sharing its spectrum with IOL. Also, while MVNOs include only mobile services, MTNL’s agreement with IOL will cover other services also like data cards, PCO, IPTV, Broadband and VoIP. IOL Netcom, earlier known as IOL Broadband, made news in 2005 when the Anil Ambani camp alleged that Reliance Infocomm, then controlled by Mukesh Ambani, had given one crore shares at a discounted price of Re 1 to four unlisted companies of IOL Broadband’s promoter Ashish Deora.

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