Indian BWA interest shifting to TD- LTE

Given the latest HSPA evolutions announced and the maturity of that technology, 3G licensees in India can directly compete with BWA licensees, since TD-LTE devices will be more expensive and it will take another few months for the first ones to appear in the worldwide market.

Tata Communications, by complementing its 3G deployment with residential Wimax offload, could have the opportunity to attract customers early and engage them by developing appealing value-added services – in particular, voice, since VoLTE is still far from becoming a reality in that market.

After the 2G scandal in India, providing voice services over 3G is a good way to attract and secure new customers.

There is a possibility that nationwide licensee RIL can sell wholesale services to other BWA licensees like Augere and Tikona who would be willing to expand to other circles. Augere won spectrum in one circle, while Tikona obtained spectrum in five circles in the Indian BWA auction.

Augere has funding from Orange and is in a good position to expand to other circles in India. On the other hand, Tikona received approval to increase foreign investment in the company up to 74% in March 2010. Tikona’s investors include Goldman Sachs Investment Partners, Indivision India Partners, Oak India Investments, and L&T Infrastructure Finance.

With RIL opting for TD-LTE, Wimax advocates are now betting high on the BSNL’s Wimax plans in India. BSNL is set to receive a $524 million grant to complete the rollout of a Wimax network in rural areas, having informed the government that it would only continue the buildout with additional compensation for the project.

BSNL, which acquired the BWA spectrum almost a year ago, has not been able to take advantage of the lead it had over private players due to delays in finalizing the tender.

BSNL has made its franchises contractually commit to converting to LTE in the event that the other operators in the country support the standard.

There certainly does seem to be cause for concern for Wimax advocates now that RIL has decided to deploy TD-LTE. However, considering that BSNL is the only operator in India who has been very active rolling out Wimax, and that it has major plans and government support, we expect it to be a late entrant (no earlier than 2012) to the LTE market.