“The combination of the capital gains tax, uncertain regulation and the very tough competitive environment has caused investors to say it wasn’t great timing” to do the deal, said Robert Grindle, an analyst with Deutsche Bank in London.

Still, he said, “India is one of the fastest growing assets in Vodafone’s footprint, and without the contribution from India the company would have much lower top line growth than it does.”

Vodafone’s total revenue, excluding asset sales, will grow about 2.4 percent this quarter, Mr. Grindle estimates. Without the India business, growth would be just 1.3 percent, he said.

Vittorio Colao, Vodafone’s chief executive, alternates between enthusiasm and frustration when discussing India. The country’s “communicative, talkative society is the ideal ground for a communications company,” he said in a telephone interview.

At the same time, he said, “in the Indian regulatory system sometimes there is a tendency to see the telecom sector as a lemon to be squeezed.”

Full story.

Bus tickets:

The use of mobile phone to buy tickets has shown promising results for the public transport system in Sri Lanka. Currently, Government buses use both ticket books and manual ticket machines to issue tickets on payment of cash. Private buses mainly use digital ticketing machines that print out the tickets, said Harsha de Silva of LIRNEasia.

The major problems in this system include a 25 per cent revenue leakage for the bus operator, a process that is time-consuming and the bother of carrying exact change, for the commuter. The challenge is to reduce revenue leakage and speed up the transaction.

With 10 million passengers daily using 10,000 private and 5,500 Government buses, and 13 million of the 20 million Sri Lankan population having access to mobile phones, there is a fit case for mobile-based ticket vending, de Silva said.

…NFC is a standards-based, short-distance, wireless connectivity technology which enables two-way conversation between electronic gadgets. The user can authorise the payment requested by the NFC reader. While Nokia had introduced the NFC technology in 2005, in recent times an NFC SIM has also been introduced by China Telecom, Nokia and Japan’s NTT DoComo. Mobile-based bus and rail ticket systems are operational in developed nations, and it is time to try them out in South Asian countries with appropriate innovations, de Silva added.

Pakistan: Experiencing Easy Paisa

In Pakistan, Telenor has in collaboration with the State Bank of Pakistan launched ‘Easy Paisa’, whereby the mobile phone can be used for payment of utility bills and money transfer through banks. The service was launched last year with the help of the Pakistan Telecom Authority (PTA).

Kenya: Embarking on M-PESA

This African country with 75 per cent of its 39 million people living in rural areas has an interesting story on M-PESA ( pesa is Swahili for money). In five years, the mobile-based initiative has virtually killed all informal and some formal modes of money remittances in this country. It has indeed nearly killed the post office, said Muriuki Mureitha of Summit Strategies.

India: Agri value-addition

About eight services have been launched in India since 2007 targeting the agricultural sector, said Sriganesh Lokanathan of LIRNEasia in his presentation.

Of these, the Reuters Market Light (RML) is a subscription-based model while IFFCO Kisan Sanchar Ltd (IKSL) is free. Technologies such as IVR, SMS, WAP and so on are being deployed to provide the services in at least nine languages at present, Sriganesh told Business Line.

Read the full article here.

The cuts will likely please fixed operator BT and small mobile operator 3, who both teamed on a campaign to get the rate either cut or dropped entirely. Smaller mobile operators tend to pay more in mobile termination rates as their users are likely to spend more time communicating with other networks than their own. The UK’s larger operators – Vodafone, O2, Orange and T-Mobile – face losing out on up to £1 billion in revenue according to reports. Ian Scales of Telecom TV demands, “Why not take it to zero?”  But the Guardian is skeptic, “This is only a proposal from Ofcom so there will be an awful lot of lobbying from the four big networks, not least of the potential Conservative government, to reduce the severity of the price cuts.”

Yet these global trends hide starkly different national and regional stories. Vittorio Colao, the boss of Vodafone, which operates or partially owns networks in 31 countries, argues that the farther south you go, the more people use their phones, even past the equator: where life is less organised people need a tool, for example to rejig appointments. “Culture influences the lifestyle, and the lifestyle influences the way we communicate,” he says. “If you don’t leave your phone on in a meeting in Italy, you are likely to miss the next one.”

But that aside, not a bad overview of what Northern researchers have to say about how mobiles are used.

Note to Economist: most of the world’s mobile users live in Asia. Might be useful to talk to people who research teleuse here.

A year after Google introduced its Android operating system on T-Mobile, the smallest of the major wireless carriers in the United States, it announced a deal to offer handsets with Verizon Wireless, the nation’s largest carrier.

The carrier said Tuesday it expects to introduce two Android phones this year. It didn’t name the manufacturers, but one is expected to be made by Motorola. In addition, Verizon and Google said they would work together along with manufacturers to design handsets specifically for Verizon’s network.

“This is a very big deal for us,” said Eric Schmidt, Google’s chief executive, on a conference call Tuesday morning. “It is a major milestone in the development of Android as a platform.”

Two of the world’s largest cellphone operators, the Spanish company Telefónica and the British giant Vodafone, said Monday that they would share infrastructure in several European markets in an effort to cut costs and protect profit margins.

The companies said in a statement that they had agreed to share networks in Britain, Germany, Ireland and Spain, and were in “detailed discussions” about doing so in the Czech Republic. In practice, the agreement means the companies will jointly build sites or consolidate existing antenna towers and infrastructure for second- and third-generation networks, reducing the total number of cellphone towers in operation and cutting the amount they pay to rent equipment.

The research also highlights the role of mobile along with complementary skills and other infrastructure, for the full realization of benefits of access to communications in agriculture and among SMEs.  Importantly, telecommunications cannot be seen in isolation from other parts of the development process. In urban slums, the research reveals the importance of network effects, i.e. the value of mobiles increases if the social and economic milieu is also users of mobiles.

This report argues that a policy shift is necessary to sustain the progress towards a truly world-class telecommunications service that India and its citizens deserve.  This will underpin India’s competitiveness in the volatile global marketplace, and ensure that the benefits of growth are more widely shared as the economy grows and further integrates with global markets.

Read the full report here.

***

LIRNEasia‘s Teleuse@BOP3 research also considers similar issues and more, findings which will be made available in February 2009.

This includes higher termination rates (levied for ending calls from a new operator’s subscriber to an incumbent player’s network) and port charges (for accepting traffic from a new player to an existing network).

Incumbent operators such as Bharti Airtel and Vodafone are at an advantageous position because they have a large subscriber base and, therefore, it is necessary for the new players to interconnect. If the new operators do not interconnect with them then their subscribers will not be able to call users on the incumbent player’s network.

“The interconnection charges being imposed by the existing players are based on the telecom regulator’s order issued in 2003. Since then the costs have come down drastically. However, the existing players want to continue with the current charges because it benefits them,” said an executive of a new telecom company.

Read the full story in ‘The Hindu Business Line’ here.

Mittal was reacting to a ‘notice of enquiry’ by anti- monopoly watchdog MRTPC last week against three big telecom operators – Bharti Airtel, Vodafone Essar and Idea Cellular — for allegedly forming a cartel to distort competition.

Earlier this month, the Monopolies and Restrictive Trade Practices Commission (MRTPC) Bench had directed the three companies to file their reply within four weeks.

Read the full report in ‘The Economic Times’ here.

“This is really the early days, but when you see the low banking penetration in emerging markets, compared to rapidly growing mobile penetration, the potential is very big,” said James Moberly, senior manager for payment solutions at Vodafone on the sidelines of the Mobile World Congress here.

The GSM Association, the global mobile phone industry body, estimates that about a dozen such schemes involving money transfer services are in operation throughout the world, with 10 million users.

Vodafone plans to launch cash transfer services soon in India and other African countries.

“You can send money, withdraw cash, pay your bills or your loan, and all this is within seconds,” said Aleeda Fazal, head of product development at Afghan group Roshan, which is the partner for Vodafone in the troubled country.

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India’s booming mobile services market will see investments of over Rs 100,000 crore (around $24 billion) by 2010, the fastest investment ramp-up seen in any telecom market globally even as analysts predict a bruising battle that will see tariffs fall sharply.

The investments include between Rs 48,000 crore and 60,000 crore ($12 billion to $15 billion) from six new telecom players (including Reliance and Tatas’ proposed GSM mobile services) over 12 to 24 months to create capacity for 250 million more mobile subscribers.

This fresh investment will be over and above the estimated Rs 48,000 crore ($12 billion) being put in by incumbents like Bharti Airtel, Vodafone-Essar, Idea Cellular, Bharat Sanchar Nigam Ltd, Reliance Communications and Tata Teleservices (the latter two for ramping up CDMA mobile operations) in 2008-09 alone.

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The LTE / SAE (Long Term Evolution/System Architecture Evolution) Trial Initiative (LSTI) launched in May this year has reported the successful delivery of the first in a series of test results aimed at proving the potential and benefits of LTE, which is being standardized by the Third Generation Partnership Project (3GPP) as a next generation mobile broadband technology.

The Initiative was founded by leading telecommunications companies Alcatel-Lucent, Ericsson, France Telecom/Orange, Nokia, Nokia Siemens Networks, Nortel, T-Mobile and Vodafone, and was recently expanded with China Mobile, Huawei, LG Electronics, NTT DoCoMo, Samsung, Signalion, Telecom Italia and ZTE joining as new members.

As mobile devices become increasingly sophisticated and handle more and more complex multimedia applications, the LTE/SAE technology is designed to give end users wireless access to growing levels of data throughput on the move.3GPP LTE is specified to enable downlink/uplink peak data rates above 100/50 Mbps in initial deployment configurations.

Read the full story in http://www.3g.co.uk/PR/Nov2007/5407.htm

The fight is so intense that Vodafone chief executive Arun Sarin too jumped in, dashing off letters to Prime Minister Manmohan Singh and communications minister A Raja, complaining against the stiffer spectrum allocation norms proposed by the Telecommunication Engineering Centre, an arm of the department of telecommunications.

Reliance Communications chief Anil Ambani, whose company uses CDMA technology, too wrote to the Prime Minister. He accused some “large GSM players”, a reference to Vodafone and Sunil Mittal’s Bharti Telecom, of spreading “misleading and false propaganda” to block fresh competition in telecom, hoard spectrum and indulge in “anti-consumer practices like cartelisation”.

Read the full story in ‘The Times of India’

Other related stories:

Anil Ambani takes telecom rivals to PM – Hindustan Times

Telcos sweat under spectrum deadlock – Business Standard

Telecom tussle engulfs all major players, Ambani writes to PM – The Indian Express quoating PTI

The move comes as some of the foreign investors say the that the new policy announced last week, which allows dual technology “favoured only CDMA players, especially, Reliance Communications”. Besides, the new policy has also enhanced subscriber-linked criterion for spectrum allocation by multiple times – this implies, operators such as Bharti Airtel, Vodafone, Idea Cellular cannot get additional spectrum in their existing circles unless they increase their subscriber base between two-six times, a process that will take anywhere between 18-48 months. This has also led to the pending applications of all GSM players being disqualified.

The new norms, if implemented, will hit the expansion plans of all telcos and also lead to a heavy increase in the capex for the next couple of years. Additionally, it will also result in the valuations enjoyed by Indian telcos witnessing significant falls.

Read full story in The Economic Times

SAN MIGUEL, Philippines–It’s Thursday, so 18-year-old Dennis Tiangco is off to a bank to collect his weekly allowance, zapped by his mother–who’s working in Hong Kong–to his electronic wallet: his cell phone.

Sauntering into a branch of GM Bank in the town of San Miguel, Dennis fills out a form, sends a text message via his phone to a bank line dedicated to the service.

In a matter of seconds, the transaction is approved and the teller gives him P2,500 (US$54), minus a 1-percent fee. He doesn’t need a bank account to retrieve the money.

More than 5.5 million Filipinos now use their cell phones as virtual wallets, making the Philippines a leader among developing nations in providing financial transactions over mobile networks.

Mobile banking services, which are also catching on in Kenya and South Africa, enable people who don’t have bank accounts to transfer money easily, quickly and safely. It’s spreading in the developing world because mobile phones are much more common than bank accounts.

The system is particularly useful for the 8 million Filipinos–10 percent of the country’s citizens–who work overseas and send money home, like Dennis’ mother, Anna Tiangco. Previously, she sent money via a bank wire transfer, which costs HK$20 (US$2.50, â‚1.83) and takes two days to clear. The cell phone method costs only HK$1 (13 U.S. cents, 9 euro cents) and is nearly instantaneous.

“The good thing here is, wherever my children are, they can text me and I can send money immediately,” she said by telephone from Hong Kong.

Consumers also can store limited amounts of money on their cell phones to buy things at stores that participate in the network–although this practice isn’t yet widespread in the Philippines.

Many more Filipinos use their phones to send airtime values called “loads” to prepaid subscribers. A parent, for example, can send a 60-peso load to replenish a child’s cell phone, charged to the parent’s account.

While Japanese and South Korean consumers have been using cell phones as virtual wallets for several years, those systems use a computer chip implanted in handset that allows people to buy things by waving the phone in front of a sensor. The Philippine system relies on simple text messages, which cost just 1 peso (2 US cents) to send.

The 41 million cell phone users in the Philippines are avid texters. The electronic connections have fostered a culture of quick greetings and forwarded jokes. Text messages also played a key role in mobilizing crowds that fueled the 2001 “people power” revolt that ousted President Joseph Estrada.

The Philippines’ two biggest mobile service providers, Globe Telecom and Smart Communications, have harnessed this penchant for text messaging to enable consumers to enter the world of e-commerce.

Tapping into the cash flow from overseas Filipinos–who sent home US$12.7 billion last year–Globe and Smart forged partnerships with foreign mobile providers and banks, as well as with local banks and merchants, to create a network that allows users to send and receive cash internationally.

When Anna Tiangco wants to send cash home, for example, she goes to a branch of her local provider, Hong Kong CSL Ltd., where a clerk credits her cell phone with the amount she has brought with her. She then transfers the money to family members via text messages–in essence instructing her providers to deduct money from her balance to the recipients she indicates.

If a cell phone loaded with cash values is lost or stolen, the money can’t be tapped as long as the personal identification number isn’t revealed. Control over the funds can be restored with a replacement SIM card from either mobile provider.

The system was “built for remote payments and for the unbanked markets,” said Rizza Maniego Eala, president of G-Xchange, Globe’s subsidiary in charge of its G-Cash money transfer service.

Eala said her company’s 500,000 G-Cash users transfer about US$100 million monthly (â‚73 million), but she declined to say how many transactions involve remittances from overseas.

Smart offers a slightly different money transfer system, used by about 5 million Filipinos, that links cash or a debit card to a cell phone.

Users load up their phones with money via text messages. The card–which costs P200 but does not require a bank account–can then be used to purchase goods in establishments that accept MasterCard, or to withdraw cash from an ATM machine.

Smart Communications spokesman Ramon Isberto said each time the recipient spends the money, the sender receives a transaction message. That allows the sender to see how the funds are used.”The added value there now is that Filipinos overseas have greater control over their funds. Believe me, that is important to them,” he said.

Smart and UAE’s leading telecommunications operator, Etisalat, have agreed to provide money transfer service to hundreds of thousands of Filipinos in the Middle East. Smart also will soon launch a remittance system in Bahrain in partnership with MTC-Vodafone and Ahli United Bank there, and Banco de Oro in the Philippines, Isberto said.

“The bank products remain clearly bank products. We positioned ourselves as an enabler for banks and other financial institutions to provide products and services to their customers in ways they would otherwise not have been able to,” he said.

Aside from transferring cash and making purchases, both Globe and Smart also allow their users to pay bills with their phones. Anna Tiangco said she pays her family’s electric bills in San Miguel from Hong Kong via text messages, just like she sends money.

“Even if we are far apart, it’s like we are still together,” she said. “This is like my wallet now.”