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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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| Saturday, November 21, 2009 |
| Tariff War leads to Highest Ever Monthly Net Adds |
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 The ongoing Tariff war in the Indian Wireless industry has led to Wireless operators adding 16.6m new connections in Oct-09 vs. 14.8m in Sep, the highest ever in the History of Indian Cellular Services. The total mobile subscriber base now stands at a whopping 483 mn.
Tata Tele Services Ltd [Indicom / DoCoMo] TTSL reported 3.9m subs in Oct. vs. 4.0m in Sep. Excluding 0.5m netadds from two new GSM circles (Haryana, Kolkata), TTSL's net-adds actually declined by 15% mom, indicating that price retaliation by rivals is showing results.
Review of Price Matching in Tariff War:
TTSL net-adds in AP/MP circles dipped by >20% mom; Vodafone was first to launch per second billing in MP, which also explains the 4x mom jump in its net-adds in the circle. Similarly, the 5x increase in Idea Cellular's net-adds in AP is likely due to its 50p plan.
Simple Reliance Fails to Excite Customers:
Reliance Communications net-adds rose marginally to 2.1m from 2.0m in Sep, indicating no real gains from tariff cuts, as rivals were quick to react to 50p plan.
Bharti Airtel Bows Down and Starts Dropping Tariff:
Bharti Airtel recorded slower growth compared to its GSM peers – Idea, Vodafone and Aircel. Thus, as soon as the numbers were available, Airtel decided to drop Roaming charges yesterday.Labels: mobile-subscribers-india |
| Published on Saturday, November 21, 2009 at 1:08 PM |
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| Friday, November 20, 2009 |
| Average Call Duation 58 Seconds |
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 Reliance Wireless President, Mahesh Prasad has revealed the magic number sought after by all the Telecom Analysts in India - The Average Call Duration - 58 Seconds.
Now this means Pay Per Second Billing will not be suitable as customer ends up paying Rs 0.60 / call instead of Rs 0.50 or lower tariffs available in the Indian market. Thus the one paisa per second tariff proves to be expensive compared to Simple Reliance or Other Lower Tariffs.
Their are very few customers who talk less than 25 seconds to whom this 1 Paisa / Second Billing is suitable. However, you've got to admire the product manager at Tata DoCoMo who designed this as it became the platform for the entire Telecom industry within 3 months and has helped Tata DoCoMo gain small market share, mainly from rival Bharti Airtel.Labels: Airtel-1paise-per-second |
| Published on Friday, November 20, 2009 at 1:22 PM |
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| Wednesday, November 18, 2009 |
| Uninor Scales Back Rollout - New Operator Weakness Evident |
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 The first signs of Weakness in new Operators is now evident that Uninor [ a JV of Telenor and Unitech Ltd] has confirmed that it will have a focused rollout in majority of 22 circles, while meeting license obligations in all circles. Uninor also said that India capex plans have been scaled down from Rs155 billion earlier to Rs 120-125 billion.
Uninor has just 12,000 base stations installed, much lower than the base stations required for nationwide launch.
This development is an indication of new operators feeling the heat due to tariff wars in Indian
telecom industry. We wait for more such signs especially foreign players' bids for 3G spectrum - we believe that a quick consolidation would be positive for incumbents. |
| Published on Wednesday, November 18, 2009 at 10:34 AM |
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| Monday, November 09, 2009 |
| Complete 2G Spectrum Allocation Info GSM + CDMA |
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Wireless Spectrum is topic of controversy as successive governments have favored set of operator/s and have given away India's Natural Wealth [Spectrum] without determining the true price by means of auction, which has caused loss to none other than you and me. Here is the complete Spectrum Allocation Details Operator Wise, Circle Wise under both GSM and CDMA Segments.
We went a step ahead and compared the fees that operators pay for the spectrum they hold. Here is the finding of our study.
- We considered only the top PAN India operators who hold more than ~75% of the Wireless spectrum allotted till date and earn more than 90% of Wireless Revenues
- Airtel is paying the highest Spectrum fees - INR 315 cr for quarter ended Sept-09 and is holding 168 MHz of Spectrum in 900 and 1800 bands
- Reliance Communications and Tata Teleservices pay the least spectrum fees [by virtue of them being CDMA operators]
- BSNL hold the highest spectrum [ 212 MHz in GSM 900 and 1800 bands] and [60 MHz in CDMA 800 band], which is underutilized and is paying substantially lower fees compared to what has been allocated to it
The following chart shows the Total Spectrum Allocated to the Top 6 Telecom Operators in India and the Spectrum Fees they have paid [INR Crore] for Quarter Ending Sept-2009.
From the above chart, it is clear that collectively operators have paid 801 cr fees for Sept-09 quarter. Annualizing the same, they'll be paying about INR 4,000 cr fees / year [Include new operators]. Do you think this is justified ? |
| Published on Monday, November 09, 2009 at 3:06 PM |
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| Wednesday, November 04, 2009 |
| RCom Revenue Discrepancy Explained |
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goBroadband broke the news live from Reliance Analyst Call on the discrepancy in Wireless Revenues reported by Company to TRAI and to the shareholders was due to the fact that telcos were booking handset revenues as part of Wireless Revenues.
The industry practice of bundling CDMA handsets with service has been falling away due to increasingly easy availability of CDMA handsets in the open market as well as sales of CDMA service through SIM-based handsets. As a result, company has stopped accounting for handset sales (which form part of packaged airtime plans) as part of the wireless segment revenues. This explains around 40% of the decline in the reported wireless revenues in 2Q - Rs40.1bn down from Rs47.9bn in 1Q.
The following chart shows the Revenue Reported by RCom to TRAI and that Reported to Shareholders. The Gap is narrowing, good for shareholders, implies increase in transparency.
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| Published on Wednesday, November 04, 2009 at 11:22 AM |
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