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| Thursday, April 30, 2009 |
| RCom Struggling Wireless + Hopes of GSM Revenue Recovery |
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Reliance Communications Wireless Operations were Patchy. Minutes growth of only 3.7%qoq (lowest among peers) and mobile revenue growth of 2%qoq surprised negatively as free minutes on GSM were expected to show up more. Termination cost on free mins (net revenues down 2%qoq) and higher nenetwork opex led to flat mobile EBITDA sequentially; margins, however, were in-line and relatively steady at 36.9%, as SG&A (no additional costs for GSM) and employee costs were stable.
FY09 capex came in at Rs194bn (vs. Rs250bn) and FY10E guidance was lowered to Rs100bn (vs.Rs150bn). As a result, FY10E net debt stands reduced to Rs343 bn (3x EBITDA) from Rs415bn; strategy seems to be to sweat the existing assets and conserve for 3G.
- Wireless Revenues - QoQ decline from higher access and interconnect charges
- ARPU + MoU reach new low of Rs 224 and 372. Lackluster usage trend despite offer of
free mins, management confident of a pickup in 1QFY10 - Revenue per Minute of Rs 0.60 is stable and surprising.
- NLD - 9 bn minutes higher than Industry peers.
- Broadband revenue growth continues with launch of Reliance Netconnect + 3G Wireless Services
- ARPU of Broadband Subscriber increases to Rs 1,735 connecting 929,600 buildings
- Reliance Communication GSM Net adds Slowdown in March.
The battle for Wireless supremacy in India has entered a stage of bloodbath as new operators bleed while incumbents struggle to survive with positive cash flow they have enjoyed by diversifying into other areas of Telecom. |
Published on Thursday, April 30, 2009 at 12:30 PM  |
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| Thursday, April 09, 2009 |
| Understanding IMEI Number for Handsets |
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Department of Telecommunications (DoT) has asked operators to disconnect services to handsets that do not have an International Mobile Equipment Identity (IMEI) number and estimates ~25 mn handsets to be out of service from Apr 15.
What is the IMEI number and what does it have to do with illegal handsets?
IMEI is a British standard which is gaining popularity in the world. It is a 16 digit code that is addressed to each handset, which helps in tracking the location of the handset and the user. When a call is originated or terminated on an IMEI phone, along with the flashing SIM card mobile number, one can then track the phone through satellite networks.
What is at stake?
In October the Indian DoT had issued a directive to operators to ban non IMEI mobile phones, both existing in the network and new phones getting into the country's network; with an objective of increased National Security and ease in tracking down the user from the channel he bought the physical handset. Our discussion with the government suggests that they plan to implement the directive as soon as possible; though operators have asked for additional time to track down the non-IMEI phones.
We estimate handsets not having a valid IMEI number to constitute ~6% of India’s wireless subscribers and ~4% and 1% of the country's wireless revenues and EBITDA respectively. While these numbers are small, operators do not want to lose the customers and hence are keen to stretch the deadline. [We feel Government must not budge and enforce it strictly from April-15th] |
| Published on Thursday, April 09, 2009 at 10:06 AM |
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| Wednesday, April 01, 2009 |
| TDSAT Order - Too Late and a Non Event |
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The TDSAT order stated that the GSM operators don't have rights beyond 6.2MHz, in the same breadth TDSAT has termed the interim subs criteria as "reasonable" and even questioned the need to give additional licenses and hinted at relaxed M&A rules. Given that allotted spectrum is unlikely to be taken back, worst case involves payment of a one-time fee, which given upcoming elections and legal challenges carries implementation risk.
TDSAT, in the same order has also questioned the need to allocate new licenses given existing high competition, spectrum scarcity and low spectrum allotment /operator. It has therefore hinted to the DoT for relaxed M&A norms to achieve required spectrum efficiency.
We feel that the TDSAT Order is a Non-Event as it is too little and Too Late to have any significant impact on the Telcos. However, sufficient precautions will be taken during 3G auction unless we get another Minister like A. Raja who will behave as though it is his grandfather's India. |
| Published on Wednesday, April 01, 2009 at 1:02 PM |
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