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| Monday, July 27, 2009 |
| 1 paise / second Mobile Billing Gaining Traction |
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Tata DoCoMo, the GSM Mobile servics from Tata Teleservices and DoCoMo introduced the new concept of 1 paise / second pulse billing in the Indian market to cannibalize the revenue cream of arrogant incumbent operators like Airtel and Vodafone India.
MTS India - the new CDMA operator is also offering similar Tariff [1 paise /second billing] for Lifetime. This means the Tariff is here to stay and will make the incumbent operators respond to the same or lose customers :-) MTS launched its mobile services in Tamilnadu circle and is offering Local calls on per second pulse, and STD call at 2 paise for one second pulse to any network across India for life time.
State owned BSNL is known for offering 15 seconds pulse and they should respond quickly to the challenge offered by Tata DoCoMo and MTS. What do you think will Airtel and Vodafone move towards the era of 1 paise /sec billing or wait until they see subscribers shift to new operators with the implementation of Mobile Number Portability ? |
Published on Monday, July 27, 2009 at 11:50 AM  |
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| Tuesday, July 21, 2009 |
| Reliance GSM Mobile Coverage Par with CDMA |
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Reliance Communications' GSM coverage is almost at par with CDMA coverage - currently, RCOM is offering GSM services in ~22k towns and ~400k villages (CDMA presence in ~23k towns and ~500k villages). Reliance Infratel the Tower company had a tower portfolio of ~48k towers in March 2009.
Management indicated that post the phase-out of initial promotional schemes, customers are increasing usage and recharging beyond the free minutes. ARPU is thus gradually normalizing; further scale-up in usage is expected over the next few quarters.
Overall ARPU is expected to downtrend with greater rural penetration and competition. 3G is expected to drive growth of VAS and over the long term, uptake of VAS could help to stabilise or even improve ARPU.
RCom's Take on 3G:
Incremental capex for 3G is not expected to be substantial since it will be an overlay on the existing 2G infrastructure; management indicated most cell sites are 3G ready. We understand, the auction price will, therefore, be the key to determining returns; the risk of over-bidding remains in the metro/tier 1 locations, if spectrum availability is limited.
3G is expected to provide a fillip to VAS, which could help to stabilise/improve ARPU
over the long term. |
| Published on Tuesday, July 21, 2009 at 11:46 AM |
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| Tuesday, July 14, 2009 |
| GSM operators add 8.9m in June |
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GSM wireless operators reported 9.3m (estimate) net-adds in Jun vs. 8.7m in May; our June est. assumes RCOM added 0.4m subs (same as in May) in its 'existing' GSM (RTL) circles. Increase in overall net-adds was driven by BSNL (net-adds up 0.6m; 98% mom) and Idea (0.3m;24%). Vodafone's net-adds (down 6.7%) continue to moderate after hitting a peak in Mar-09. Bharti's net-adds were unchanged mom.
Aircel crossed the 1m mark for the fourth straight month. The strength in its net-adds is driven by launch in 7 new circles over the last five months. Aircel had a focused launch in Maharashtra circle in the month of June.
Idea reported 1.6m net-adds in June - highest since the January peak of 2.0m. The surge in monthly additions was driven by both new circles (Bihar, Mumbai and TN) and established circles (AP, Gujarat).
At the current rate of net-adds (2.8m in June), Bharti would exceed our Mar-10 Dalal Street forecast (122m) by 5%.
Vodafone India managed to add only 2.37m after hitting a peak of 2.86m in March. Total GSM Mobile Subscriber base stands at 316.21 mn assuming RCom GSM net adds of 0.4 mn. We will update them as other companies report their numbers. |
| Published on Tuesday, July 14, 2009 at 7:05 AM |
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| Tuesday, July 07, 2009 |
| Higher MAT will Impact Cash Flow |
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The Finance Minister, as part of the Union budget 2009-10, announced an increase in MAT to ~16.8% (incl. surcharge/cess) from 11.2% though extending time line for using MAT credit to 10 years (7 years).
This will Result in higher cash outflow, it will be EPS neutral given: both Idea and RCOM will likely claim higher corresponding MAT credit; and in case of Bharti Airtel, our FY10 effective tax rate assumption currently stands at 16%.
The budget estimates includes Rs350bn as expected revenue from auction of 3G spectrum. This estimate likely assumes: 1) a higher reserve price (Rs40bn for pan-India spectrum as per media reports); and 2) more number of available slots for auction (~5 earlier). We however believe that this figure is optimistic given the likely reduced intensity in 3G bidding if higher number of slots does become available. |
| Published on Tuesday, July 07, 2009 at 6:40 AM |
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| Monday, July 06, 2009 |
| Tariff War Not Yet Intense - 3G be big Dent |
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Following GSM (global system for mobile) launches by Aircel, Vodafone, RCOM and Idea in the first quarter of calendar 2009, net adds have stabilized at 11.5-12mn in the last two months, down from 15-16mn in the previous quarter.
Initial launches, especially by RCOM, offered ARPM as low as Rs0.1/min for a three month period. RCOM has discontinued this practice and has gradually inched up tariffs to Rs0.4 0.5 / min.
In response to introductory offers by new operators in the Mumbai circle, recently both Bharti and Vodafone have introduced tariffs that offer the user a cheaper tariff for higher usage. We believe such tariffs will reduce ARPMs by Rs0.05-0.06. However, since they provide an incentive for consumers to talk more, overall ARPU should remain stable.
The Indian government may complete the 3G auction process in F2010. We believe each operator will invest US$1 bn for a pan-India footprint, producing US$5 billion income for the government. However we estimate the payback will range from 10-15 years, assuming the 3G auction does not exceed US$1bn. |
| Published on Monday, July 06, 2009 at 9:47 AM |
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