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Kripa Raman

Mumbai , Oct. 2

PAYPHONE service company Zip Telecom is in the process of shutting down operations, and is currently in negotiations with Tata Teleservices for sale of its assets located across the country.

Zip has around 25,000 machines installed across the country, with 13,000 of them in Maharashtra. The rest are scattered across the country, with a higher concentration in Chennai, Bangalore, Delhi and Kolkata.

In Maharashtra, the company already has an agreement with Tata Teleservices (Maharashtra), making available the Tata Indicom service on its network of public calling machines.

Talks between Zip Telecom and TTSL are going forward; however, there is nothing yet on paper, said sources close to the negotiations. They said a decision would be arrived at in a week's time.

Apparently, continuing services became unviable for Zip following the slashing of STD tariffs. At the time when Zip Telecom started operations, STD tariffs were as high as Rs 50 a minute, now they are less than a tenth of that.

Zip is believed to have already given notice to its employees for termination of their services but the Zip management has also been saying that they will continue to fulfil their remaining obligations in the marketplace, which essentially consists of managing the company's network of machines.

The model that Zip had been following fetched it revenues from franchisees, maintenance revenues as well as advertising revenues through the medium of the LCD scroll display on the Zip machines.

Eventual plans were to also offer the Zip Fone as an Internet access device with users allowed to send e-mails through the public machines. Autoconferencing was also on the cards.

Apparently, even as late as June this year, Zip was in talks with the Bharti group for the latter's plans for starting a pilot project of `Fixed Cellular Telephones', basically pay phones based on GSM technology that would be installed in public places in circles where Zip did not have arrangements with other operators. (Zip machines can be both CDMA and GSM-enabled.)

But since Zip later on decided to call it quits, these discussions with Bharti were also terminated.

For Tata Teleservices, such an acquisition would mean covering several steps in the move to an extensive network of public phones. Public telephony is "good business" and almost every private operator is currently working on public telephony network models, said sources.

More Stories on : Mergers & Acquisitions | Telecommunications

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