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| Tuesday, February 09, 2010 |
| Protect Revenue Market Share - Airtel |
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Bharti Airtel in a conference call has said that protecting revenue share leadership and driving further cost efficiencies remain the wireless segment strategy. The company manages revenue market share at a district level across 600+ districts in the country.
The company believes that it can protect its revenue market share leadership despite the advent of new competition. It also expressed confidence on maintaining wireless EBITDA margins at 30%+ over the medium to long term.
The company expects another quarter or two of intense price competition in the market. The management believes that the new operators will face a reality check over the coming quarters and drive consolidation in the industry.
the company expressed disappointment at the further deferral of the proposed 3G auctions, and the company will continue to grow its non-wireless businesses with a return ratio protection philosophy. |
Published on Tuesday, February 09, 2010 at 2:23 PM  |
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| Monday, February 08, 2010 |
| Vodafone 50% of subs have migrated to new tariffs |
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Vodafone Essar's growth becomes more impressive when seen in the context of its revenue breakup. The three metro circles, where traffic is less seasonal, contribute 26% to Vodafone's revenues vs. 17% for Bharti and 10% for Idea, which implies Vodafone-Essar may have gained the least from the seasonal uptick in 3Q. Management claims 50% of subs have migrated to new tariffs, rising by 3% per week.
Vodafone India's ARPU is Rs 230 while ARPM is Rs 0.66 [the highest in industry] and average MoU / month is just 318.
Revenue contribution from circles of DoCoMo's initial launch in June-2009 (AP, Karnataka, Kerala, Orissa, and TN) for Bharti was 36% in 2QFY10 vs. 25% for Vodafone and 27% for Idea. These five circles contributed 65% of Tata DoCoMo's sub adds during July-October 2009, thus potentially impacting Bharti's traffic more than Idea/Vodafone. However, this difference would normalise with DoCoMo's subsequent entry in other circles too. |
| Published on Monday, February 08, 2010 at 12:00 PM |
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| Thursday, January 28, 2010 |
| Aircel - VAS + PAN India Rollout - Top Priorities |
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Aircel management has told us that it is focused on value-added services and completing pan-India rollout with a target of 100m subscribers by 2012. Management expects tariff pressure to continue for 6-9 months before stabilising; consolidation unlikely until mid-2011.
Aircel plans to expand to 100m subscribers by 2012 (currently 31m). The benefit of the recent tower sale - immediate cash inflow of USD1.8bn; provides them access to an incremental 20,000 towers, which results in capex savings of USD1bn. The tower transaction allows the company to complete a pan-India rollout and expand operations in existing markets. Aircel plans to increase base station deployment from 38,000 now to 80,000 and achieve population coverage of 70% (80-90% revenue clusters) in the medium term.
Aircel's Views on Indian Telecom Tariff War - current low pricing levels are not sustainable. However, the expected launch by new players could result in further downward pressure over the next 6-9 months. |
| Published on Thursday, January 28, 2010 at 2:08 PM |
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| Tuesday, January 05, 2010 |
| Trend reversal in Wireless MoU |
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We forecast wireless revenues for GSM incumbents (Bharti/Idea) to grow 1-3%qoq aided by strong traffic growth though rev/min decline will be sharp at 3-4p. The encouraging traffic trend is also likely to limit EBITDA margin pressures which mean overall EBITDA to remain flat. Slight appreciation in Rupee will support performance at the PAT level.
Overall traffic should grow 6-12% QoQ resulting in slight improvement in MoU per sub. This is due to a combination of 1) base effect given seasonally weak 2Q, 2) sharp tariff cut would have helped incumbents gain back some mins from competition and (iii) some inherent elasticity.
We estimate rev/min for pure GSM operators to fall 3-4p. Decline for Idea could be more vs. Bharti given aggressive tariff cuts esp. in new circles. RCOM rev/min decline is also likely to be sharper at 5p due to tariff cuts announced at the beginning of the quarter. |
| Published on Tuesday, January 05, 2010 at 11:57 AM |
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| Wednesday, December 16, 2009 |
| Understanding the IMEI Number Enforcement |
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 In a bold and commendable move in the interest of National Security, we back the Government of India for strictly enforcing the IMEI Number compulsion on handsets making it easier for law enforcement agencies to investigate in crime situation.
What is IMEI Number ?
It is a 15 Digit Unique Number Known as International Mobile Equipment Identification (IMEI) number. It is internationally maintained by the GSM Association and updated every 15 days in network operators' Equipment Identity Registers.
It is for the Consumer Safety - Lets say if a phone is lost or stolen that whatever it is used for in the future does not come back to haunt the victim. Once reporting a phone lost or stolen, the network operator can ban the device from its network and others as well so that no more fraudulent activity can happen, however as a practical matter who ever is in possession of the device can still manage to get data out of it. [We will get more details on the Regulations and Ease with which one can report loss of stolen mobile and how to get it blocked]
Which IMEI Numbers are Blocked ?
Channel checks with Telcos indicate bulk of the handsets had iMEI numbers with all 0s or all 1s and they have been blocked. Some with random numbers continue to be existent but for sure they will be blocked shortly.
There were around 20 mn handsets without IMEI number that got blocked. But we did a street check and the Government has really taken measures to allot IMEI numbers through vendors after getting sufficient proof from the consumer. Dual SIM Phones need two IMEI numbers and they were being allotted just one initially because of lack of numbering blocks with vendors.
IMEI helps Mobile Money / m-Commerce:
IMEI numbers facilitate new opportunities and new business models such as micropayments and micro-transactions because the IMEI as a digital identifier or signature is so very lightweight. It can also be used for digital rights management of Audio / Video to curb piracy, just like pre-loaded songs on your Nokia N SEries handset don't work on any other set. |
| Published on Wednesday, December 16, 2009 at 5:52 PM |
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| Wednesday, December 09, 2009 |
| How the VAS Market Stacks Up ? |
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 Here is how the Mobile / Cellular Value Added Services Market Stacking up in India.
Delivery Platform is SMS:
- Entertainment - SMS, CallBackRingTone , Wallpapers, Quiz and Jokes
- Alerts and News - Cricket Alerts, News, Astrology, Banking Info and Travel alerts
- Commerce - Mobile banking, Ticketing, Travel bookings
- Social VAS - Advertising and Local search
- Enterprise- VAS - Push Advertising, Location based Service, Group Messaging and Enterprise IM
Delivery Platform - IVRs
- Entertainment- Religious Chant and Music on Demand
- Alerts - Astrology and Vastu
- Commerce - Mobile Banking and Ticketing
- Social VAS - Voice SMS
- Enterprise - IVR based call centers
Delivery Platform - WAP Portal
- Entertainment- Video Clips, Mobile Games, Radio and Themes
- Alerts - Movies, Stocks, News tickers
- Commerce - Banking and Ticketing
- Social VAS - Mail, Chatting, Greetings, Dating and Search
- Enterprise- Mobile e-mail
MVAS market is estimated around Rs 90 bn in 2009 which represents an 8-9% of total revenues for telecom operators. Going forward, higher revenue contribution from Non-SMS (64% currently) is expected. In the medium term SMS related entertainment services and Internet services are expected to drive VAS industry. |
| Published on Wednesday, December 09, 2009 at 12:36 PM |
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| Friday, December 04, 2009 |
| Uninor's tariffs - Competitive, not disruptive |
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Uninor today announced launch in 7 circles - TN, Kerala, Karnataka, AP, UP (East), UP (West) and Bihar with distribution comprising 1000 exclusive distributors and 210k retail points. With this, only Etisalat-Swan are yet to launch among the new entrants with strategic partners.
Uninor has announced plans for subs with longer duration calls (Talkmore) as well as frequent callers (Callmore). While headline local o/g rate is 29p/min, the effective rate is higher due to set-up cost/ rentals. For normal usage, the effective tariffs are at par with the prevalent benchmark for new entrants i.e. 50p/min. However, if used well by subs, it can lead upto 20-25% discount. Given that subs are likely to have a wider distribution of call durations as well as daily no. of calls, the effective discount is likely to be somewhere in between.
Though Uninor tariffs are neither disruptive nor simple (like Docomo's per sec or RCOM) and hence may not be a runaway success, its bound to have some impact on traffic distribution. |
| Published on Friday, December 04, 2009 at 9:54 AM |
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| Wednesday, November 25, 2009 |
| Top 4 Factors for Consolidation in Wireless Industry |
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We believe the following four factors are the drivers of consolidation in the Indian Wireless / Telecom industry.
- Ongoing Tariff War - We expect tariff pressures to continue. While we believe the price floor may not erode beyond 10%, we expect average prices to decline c25%, as the gap between prices of incumbents and new players will likely narrow.
- Spectrum and Scale - The total available spectrum in India is not aligned to a market structure of 11-12 players. We expect spectrum constraints to drive consolidation. Moreover, all new players have spectrum in the 1800MHz band, which seriously impairs their viability [High CAPEX] and scale even in the long term.
- Mobile Number Portability - The fact that the regulator has kept to timelines for the rollout indicates more rapid progress than we had estimated. This is negative for GSM incumbents as new players will make an attempt to target the post-paid subscribers and as a result, Incumbents will therefore have to bring down the premium
- Telecom Regulations - On one hand, the government seems intent on maximising proceeds from 3G spectrum auctions. It is unlikely that the government will make any regulatory changes required to facilitate consolidation until after the 3G auctions.
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| Published on Wednesday, November 25, 2009 at 10:20 AM |
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