Ambani hints end of CDMA + Tech Reliance subsidiary of RCom + Towers Infratel Business
In a conference call concluded just minutes ago, Reliance Communications [RCom] Chairman, Anil Ambani said that by March-08 all CAPEX investments on the CDMA front would be done. Mr. Ambani hopes to end the year FY08 with a CAPEX of $5.2 bn and has a guidance of $6 bn CAPEX for FY2009, of which $2bn will go into Passive Infrastructure [mostly for GSM], ~$1 bn for GSM rollout and the rest split amongst DTH, Broadband, IPTV, Global Voice and Data [Long Distance + Data].
To a question on how many years is the management looking for towards roll out of GSM services in 14 new circles, Mr. Ambani said, RCom doesn’t have the luxury of time and it has to be less than 12 months and not years 
Mr. Ambani further added that RCom will receive a refund of Rs 112 crore of the Rs 1,651 GSM license fees.
Mr. Ambani also said that the newly created entity, Tech Reliance will be a 100% subsidiary of Rcom focused on building Intellectual Capital. It will serve to the IT needs of all the ADA group companies.
RCom will leverage the passive infrastructure [Reliance Towers / Infratel] between GSM and CDMA operations. The company has been approached by number of investors for investments in this subsidiary. RCom is open for external tenancy for sharing passive infrastructure and is in talks with new entrants who already hold LoI.
RCom now has wired up 727,000 building in the upscale localities of Tier-I cities with Optical Fiber network who are serviced with Broadband, Home Wi-Fi, Video Surveillance service, Multiplay Gaming and fully interactive IPTV. Most of RCom’s business in Bandwidth is from Enterprise customers where they are seeing fat margins.
RCom will list Flag Telecom separately only after the integration if Yipes Communications. No time frame was given.
Disclaimer: Through various means I hold RCom shares for my clients and have asked them to aggressively BUY the stock lately.
Tags: Reliance, CDMA GSM, Qualcomm, Telecom India
Bharti Airtel Q3 FY2008 Results Insight
Just a while ago I received Bharti Airtel’s results for Q3 FY2008 and here is an excerpt, [ subscriber nos at the end of Dec-2007]
- It has 55.16 mn Wireless subscribers and 2.1 million Telemedia subscribers [Wireline and Broadband division will henceforth be known as Telemedia because it will also include IPTV and DTH operations].
- 91% of Mobile subscribers are in pre-paid segment. ARPU is down from Rs 366 / month to Rs 358 / month on a QoQ basis. No of minutes usage / customer is 474.
- Value added services including SMS, Airtel Live, Hellotunes etc contributed 9.3% to the total revenues of Wireless segment
- Bharti Airtel has 751,000 broadband subscribers, which is 34.5% of its wireline subscribers. ARPU is consistent at Rs 1140.
Falling ARPUs in mobile voice segment without any increase in usage is a cause of concern as we go into FY09 when Bharti Airtel will take on Reliance GSM Mobile services in all the lucrative circles. More after the conference call.
India’s new wireless spectrum policy
After TRAI’s objections to DoT’s stand on spectrum, DoT has quickly changed its stance and quietly adopted TRAI’s recommendations. The following graphs show how GSM mobile operators can claim incremental spectrum, which is linked to subscriber addition in various Telecom circles.
Metro Circles:
Circle A:
Circle B:
CDMA operators are eligible for maximum spectrum of 7.5 MHz. Kindly refer to DoT order No J-14025/200(17)/2004-NT.
New entrants like Reliance GSM are desperate to offer services as soon as possible and are even willing to accept lesser than 4 Mhz of startup spectrum. In a separate development, the CVC has questioned DoT on why 2G spectrum in addition to 6.2 MHz wasn’t auctioned ?
TRAI bashes Telecom Minsiter – A. Raja
TRAI chief, Mr. Misra has now come up openly against A. Raja, on whose behest the DoT operates. Mr. Misra alleges that DoT has not accepted TRAI’s recommendations on Spectrum allocation in its entirety and has modified to favor CDMA operators [ Reliance Communications ]. Mr. Misra raised his voice as DoT informed the Telecom tribunal that it was going by the recommendations of TRAI, which is untrue. Mr. Misra, said,
Though for CDMA technology, subscriber base criteria recommended by TRAI for getting 5 MHz (of spectrum) has been accepted in totality, however, in the case of GSM spectrum, a new slab of 7.2 MHz has been created. Thus the DoT’s decision is not as per the authority’s recommendation. Therefore, the authority is of the opinion that the DoT’s averment that TRAI’s recommendation on allotment of spectrum has been accepted will not be correct.
Mr. Misra further pointed out that how state owned BSNL was favored against the interests of everybody.
The recent order where subscriber-linked criteria for spectrum up to 7.2 MHz in GSM technology…. will create an atmosphere of uncertainty and non-level playing field in this sector… It is noted that DoT has separately allotted spectrum to BSNL and MTNL recently beyond 10 MHz.
This is for the second time in the past two months that Mr. A.Raja has acted as a representative of Reliance Communications in the Government of India. Earlier he accepted Mobile Number Portability recommendations in part facing criticism from TRAI.
Spectrum for RCom: Where is the Indian Mobile Industry headed ?
Reliance Communications has been granted 4.4Mhz spectrum in all the 14 circles where it wanted to start GSM operations. From various reports it looks like the DoT and the government has favored Reliance Communications, especially no transparency in accepting the recommendations on spectrum and issuing LoI to other incumbents. Vodafone India, Maxis Aircel will also start PAN-India GSM operations as they have been granted spectrum in the remaining circles they had sought for. Reliance GSM services should be operational within the next 6-9 months, which will also tell the corporate India how good Anil Ambani is at executing projects
Reliance Communications entry into GSM means,
- Eventual decline and fall of CDMA operations of Rcom. This is a severe blow to arrogant Qualcomm which declined to fulfill many of Rcom’s demands and technical advisers to Ambani advised him to opt for GSM operations.
- Ambani may further divest stake in Reliance Telecom Tower and Infrastructure to meet CAPEX requirements.
- Every Telecom circle in India will now have atleast 8 different service providers. [Airtel, Aircel, BSNL, Idea, Reliance GSM, Reliance CDMA, Tata Indicom [CDMA] and Vodafone]
- Airtel + existing GSM operators will reduce Tariffs aggressively. Have to spend heavily on CAPEX because of non availability of additional spectrum.
- Spice Telecom should sell out to Idea Cellular or RCom or will eventually face bankruptcy. According to me, this is the worst telecom company in India.
In a separate development, Wipro bagged a $600 million deal from Aircel. Similarly, Anil Ambani’s privately held company Tech Reliance likely contender for mega IT outsourcing deals from Reliance CDMA and GSM operations. Though deals may not have happened in absolute transparent manner, it is good for the health of the economy as Telcos look forward to spending consumers money to offer better services, creating direct and indirect jobs and further scope for SMEs.
Tags: Mobile India, Telecom India , Qualcomm, Reliance Communications
Wireless Subscriber Numbers in India – Dec 2007
The year 2007 was another remarkable year for Bharti Airtel. The company retained its Numero Uno slot in the Indian Wireless market. At the end of Dec-2007, the company had 55.16 mn subscribers up by 72.5% YoY. Vodafone Essar India ended the year with 39.86 mn subscribers. BSNL which gained spectrum by virtue of being a government company and facing criticism from private operators, managed to grow at a slower pace and ended the year with 32.71 mn subscribers. Idea Cellular had an impressive performance and ended the year with 21.05 mn subscribers. Aircel was the fastest growing cellular operator with subscriber base doubling in 2007 to 9.43 mn. [As usual CDMA operators are late and haven't reported their numbers yet]
Bharti Airtel now holds the highest share in the GSM segment. However, with the entry of RCom’s GSM service the equation may not remain the same in late 2008 and 2009. [Currently, we discount the entry of Real Estate developers like Unitech, Parsvnath etc who don't understand the capital intensive business of Telecom]
As I have already said in my previous post, the unofficial lobby of GSM operators will continue to reduce rates and offer incentives and make the entry for new operators so tough, that these new operators will only see RED on their balance sheet and be forced to rethink about Telecom ventures [I also know that some of them are being backed by Global Telcos, but still think its an uphill task]
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