The Hindu Business Line : Spice Tele-Spanco venture wins 10-year Rlys contract

RAIL PHONE: Mr B. K. Modi (left), Chairman, Mcorp Global, and Mr Dilip Modi, CMD, Spice Telecom, at a press conference in Bangalore on Wednesday. - G.R.N. Somashekar

Bangalore , Jan. 3

Spice Telecom on Wednesday announced its win of a 10-year contract from the Indian Railway Authority to offer railway passengers a range of services including enquiries, ticketing and entertainment on the train on mobiles.

The contract, based on a licence fee model, is valued at Rs 100 crore and was awarded to a 50:50 joint venture of Spice Telecom and Mumbai-based Spanco Telesys, a systems integrator, informed Mr Dilip Modi, Chairman and Managing Director, Spice Telecom.

Regional hubs, call centres

Indian Railways has outsourced its enquiry service for both mobile and fixed line users to the joint venture. It will be ready by March. In order to offer this service, Spice will set up four regional hubs and call centres across the country.

Handsets to enable travellers to stay connected, across their journey through the country, will also be launched in March. To cost less than $20, which is around Rs 885. That's for the handset. The connection will cost around Rs 50 for a SIM card. Roaming charges are still being explored and Spice is in "active negotiations" with other operators to offer special tariff plans.

Spice, which manufactures handsets, sees this anopportunity to ramp up its business both for its service and handsets.

The company would be launching handsets in the high and low-end with the latter costing sub-$20, said Mr B.K. Modi, Chairman, MCorp Global, the entity that owns 51 per cent stake in Spice Telecom. The rest is owned by Telekom Malaysia, which bought the stake from Deutsche Bank and Ashmore fund recently for around $179 million.

A scheme to rent a phone for a day or just for the length of the journey will also be introduced for convenience of users, he added. The mobiles will be produced from the firm's manufacturing plant at Baddi, Himachal Pradesh. The 10-year contract covers ticketing, queries, hotel and taxi bookings and other train-related software services for mobile users. It will also include entertainment (value added services) such as radio on the high-end handsets.

IPO

Spice Telecom has also finalised its decision to go for an IPO (initial public offering) to raise $150 million to finance its expansion plans, which includes the launch of national and international long distance services. It would also be entering into an arrangement with Telekom Malaysia for INLD service.

Spice will be filing with the SEBI soon and will complete the process by March. Spice operates in two circles — Karnataka and Punjab — with a total subscriber base of around 2.3 million.

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