Consumer durables major Videocon Industries [Get Quote] has firmed up its telecom plans and is making an initial investment of Rs 6,000 crore for rolling out GSM services, notwithstanding spectrum and legal issues besieging the sector.

The services will be launched through its subsidiary, Datacom Solutions, by May. In case of a delay in spectrum allocation, the company may opt for taking spectrum on lease.

In another important move, the company has roped in former Alcatel-Lucent president and managing director (India and South Asia) Ravi Sharma to head its telecom operations.

This is the first instance of the head of a global telecom infrastructure major moving over to a service provider. However, this could become a trend as others in a situation of talent crunch will follow suit.

Videocon [Get Quote] Chairman and Managing Director Venugopal Dhoot confirmed the development, "We are making an initial investment of Rs 6,000 crore to kick-start the services across all the 23 circles in the country. The investment would be made immediately and we would look at increasing capital expenditure depending on growth."

The Rs 6,000-crore investment would be made immediately to roll out the services, while the company has completed all technical formalities and is awaiting spectrum allocation.

"We don't think the spectrum allocation would be delayed as start-up spectrum is available in many circles. Moreover, spectrum is also lying unused that will be offered to new entrants," Dhoot said.

In the worst case of spectrum allocation being delayed, Datacom Solutions would take spectrum and infrastructure on lease from the existing players.

Datacom would rope in over 4 crore subscribers in the next five years and expected to break even in the next couple of years, he added.

The department of telecommunications (DoT) is planning to allocate spectrum in four circles -- Andhra Pradesh, Kerala, Orissa and Tamil Nadu (including Chennai) � to new licensees.

The move comes after the wireless planning and co-ordination (WPC) cell of DoT has identified 4.4 MHz spectrum under the 1,800 MHz band lying vacant in these 4 circles. This was expected to benefit nine new entrants, including Datacom Solutions.

Although renting out spectrum is not permitted under the existing telecom policy, DoT is looking at this option to enable new players commence operations.

Datacom Solutions has been awarded Universal Access Service Licence (UASL) that permits commencing telecom operations in all the 23 circles. The company is also leading the queue for spectrum allocation in these circles, except Mumbai and Delhi, where it is in the second position.