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| Tuesday, June 30, 2009 |
| Revenue + ARPU + Penetration of Wireless Companies |
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We did an analysis on how Telcos will expand and serve in the near future. Out study suggests that South India has relatively low penetration and above average ARPUs, and represents the best opportunity for near-term growth for telcos in the near term. This helps explain why several new entrants [Tata DoCoMo, Aircel etc] have chosen to initially expand operations from the South.
Bharti Airtel relies heavily on the South, with three states accounting for 32% of company revenues. These circles will likely see the greatest incremental competition in the near term.
The following Graph [Click to Enlarge] shows the distribution of ARPUs Vs Penetration across all circles in India.
Despite new entrants, the top two operators in each circle in terms of revenue and market share have remained fairly constant over the past two years, with leaders widening the gap. We believe this is largely because initial entrants typically get the cream of the population in each circle. The implementation of mobile number portability could cause churn to increase in this high-value base, which is the biggest risk to the current market leaders.
3G Auction Bidding Hints ?
Based on revenue potential and ARPUs, we expect the metros and southern circles to see the highest interest from bidders in the upcoming 3G auction, followed by Punjab, Maharashtra and Gujarat. |
Published on Tuesday, June 30, 2009 at 11:04 AM  |
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| Thursday, June 25, 2009 |
| Reliance MobiTV service for GSM users |
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Telecom services major Reliance Communications (RCom) will launch 35 television channels for its GSM consumers in the near future. The company will introduce MobiTV service by using Mimobi - a technological platform developed by Apalya Technologies.
For playing video, Mimobi technology uses progressive download technique that initially downloads some part of video and later starts playing the same. RCom is in advanced talks with Apalya Technologies to increase its width of the usage.
Presently RCom offers 13 news and other TV channels to its CDMA users by using real-time streaming technology. |
| Published on Thursday, June 25, 2009 at 10:53 AM |
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| Friday, June 12, 2009 |
| 3G Spectrum to Get Pricey + More Players |
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The tussle between the Department of Telecommunications (DoT) and the finance ministry on pricing of the third generation (3G) spectrum may result in both the ministries taking a middle path.
According to the 3G policy released by the DoT prior to the elections, the reserve price for pan-India 3G spectrum was set at Rs 2,020 crore and a maximum of five players were to be accommodated per circle. However, the finance ministry had objected to both the price of spectrum and number of players to be accommodated.
The finance ministry, at that time, wanted DoT to double the reserve price for 3G auction and accommodate 10 players in each circle. The proposals of finance ministry were aimed at raising the revenue from the auction. However, the issue could not be resolved then and the auction was postponed.
The DoT is now understood to be agreeing for a middle approach and is likely to convey to the Union Cabinet that it was ready to hike the reserve price of spectrum to Rs 3,540 crore and auction up to eight slots of 3G spectrum in each circle. This stance of DoT would be kind of a compromise position between its earlier stand and that of finance ministry and the Cabinet may therefore approve the same.
The finance ministry may not also push the issue further as some of the concerns raised by the finance ministry have been addressed by changing economic situation. The view of the finance ministry early in the year was that due to economic slowdown, enough number of players may not be available in the auction, resulting in poor pricing of the scarce spectrum. However, the economic recovery witnessed over last quarter or so and the robust performance of the telecom industry despite slowdown have to a large extent addressed concerns of finance ministry. |
| Published on Friday, June 12, 2009 at 10:31 AM |
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| Monday, June 08, 2009 |
| RCom GSM Strategy + MNP Impact |
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Reliance Communications will soon enter into the postpaid GSM business, for which they have started mass media advertising for the first time. The company has plans of launching corporate offerings and utilizing its cross leveraging with its data card business.
New offer launches in the roaming business, strong brand positioning, selling its own equipments and handsets will add to RCOM's advantage. Taking this discussion further, we believe the company is well poised for the launch of 3G, as wireless business of RCOM functions on EDGE platform and the cost required for converting an EDGE network to 3G is estimated to be lesser than the cost required for other companies to convert their 2G network to 3G. In this fashion, RCOM is expected to save a lot in 3G deployment.
We also believe the impact of MNP will be felt lesser on RCOM, as the company has a huge chunk of low end GSM customers, who may switch to another operator even before MNP is implemented. As far as CDMA business is concerned, the management believes that MNP will require changing of handsets if a CDMA customer wants to switch to GSM. This will make customers reluctant to change their networks. Nevertheless, we believe the cost of retention per subscriber will increase post MNP, which may impact margins up to some extent. |
| Published on Monday, June 08, 2009 at 11:09 AM |
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