20 GSM Operators Join hands against Virgin Mobile

Thursday, March 20, 2008 | | |

20 GSM operators have urged the Department of Telecom to reinvestigate the deal between Tata Teleservices and Virgin Mobile for a possible violation of the Foreign Direct Investment (FDI) norms.

In a communication to DoT, the Cellular Operators Association of India said that rules regarding Mobile Virtual Network Operators should be made clear and no operator should be allowed to take a back-door entry into the telecom sector. The DoT had earlier given a clean chit to the Tata-Virgin deal.

However, COAI wants the issue to be examined once again. “The arrangement between Virgin Mobile India and Tata Teleservices has implications from the perspective of the foreign direct investment policy of the Government of India. The FDI Policy limits foreign investment in the telecom services sector and completely bars it in the retail sector. It is important, therefore, to examine whether the mobile services being provided by Virgin Mobile India meet the restrictions imposed by the FDI Policy,” said the COAI letter.

COAI has also urged DoT to clarify the rules for providing MVNO and franchising. “Virgin Mobile India claims to be a franchisee of Tata Teleservices offering in India the “Virgin Mobile” brand of services of Tata Teleservices. It is well known that the brand “Virgin Mobile” belongs to the Virgin Group of companies based in UK. It is equally well known that the mobile services that have been launched in India by Virgin Mobile India are the same services that the Virgin Group already offers, as an MVNO, in other parts of the world under the same brand. It is counter-intuitive that a group with a well-known brand of mobile services would first transfer its brand and expertise to Tata Teleservices and then take the same brand and expertise back for use in India under a franchising arrangement, unless this double loop is deployed to overcome a regulation,” COAI said.