USO Funds – Rural Wireline Broadband + Mobile Handsets, VAS for BPL Families
There are two different developments on the cash rich USO Fund A/C. BL reports that USO Administrator has launched a scheme to reach rural India by means of Wireline Broadband. USO has signed a deal with BSNL for providing 0.86 mn broadband lines in rural areas. Further, the administrator is keen on funding anybody with the license and optical fiber backbone. The notice said,
Providers with valid licence from DoT for basic services or unified access services are eligible to apply for the scheme. Such service providers shall have outdoor copper cable network from their existing serving exchange in the rural and remote areas with back-haul and backbone connectivity on optic fibre cable.
In another development, the Indian Cellular Association – ICA has come out with a proposal to finance and server below poverty line familes in the rural area with wireless service. ICA is lobbying for $1 bn of USO funds with which they will provide free handsets, VAS applications and ofcourse free usage for the first 2 years 
Not a bad idea at all as and once the folks get used to the convenience, they have to start paying Any other thoughts to link the rural diversity ?
Open Network Platform + Net Neutrality – Google joins Planet Lab
In an effort to maintain Net Neutrality and keep it as an FREE Open Platform, Google has joined the Planet labs initiative and have launched Measurement Lab. The goal of Measurement labs is,
The goal of M-Lab is to advance network research and empower the public with useful information about their broadband connections. By enhancing Internet transparency, M-Lab helps sustain a healthy, innovative Internet.
M-Lab is providing consumers with a set of tools to perform ISP / Broadband network related tests. Note that, analyzing your result set [using your IP ] they will get to know how the ISP is controlling the traffic – Blocking Torrents, P2P Traffic etc.
Since the news broke out, their servers have been too busy and thus, this post being delayed to accomodate your tests. Here are our results of Results of tests carried out on Airtel’s Broadband network – Torrent Traffic manipulation Test and Network Diagnostic Test. You can preform the following tests,
- Broadband Speedtest [You are probably familiar]
- Network Diagnostic Test – [This server is working]
- Test for Torrent Blocking or Choking [ Server overloaded, but try]
- Network Path and Application Diagnostic Test [ List of Servers ]
- Diffprobe – is the ISP prioritizing traffic ?
- Nano – degrading certain specified users or applications.
So far we didn’t see any problem with Airtel Broadband. Do let us know if you find any discrepancy with your ISP.
Bharti Airtel Vs Reliance Communications Vs Idea Cellular – Analysts Take
Now that we have results from all the 3 listed cellular companies and Research Reports pouring in from various brokerages, I wanted to compare what Research Analysts think of these 3 companies post Q3 FY 09 results and the Conference Call with the management.
Before we discuss the analyst ratings, you may read the entire discussion of results here – [Airtel, RCom and Idea Cellular].
Analysts Ratings and View on Bharti Airtel:
- J P Morgan – Good Quarter of Execution. Neutral on the Stock as Industry headed into tougher times.
- Citigroup – Wireless Delivers Strong Topline. BUY
- HSBC – Traffic growth to assume focus. Overweight
- Merrill / BOFA – Healthy Outlook. Best in Class. BUY
- ABN Amro – Balanced Scorecard. BUY
Analysts Ratings and Views on Reliance Communications:
- J P Morgan – Results below expectation. Expect consensus cut. NEUTRAL
- Citigroup – Balance sheet normalization will affect GSM upside. Downgrade to SELL from HOLD
- HSBC – Retail skeptics about GSM strategy. NEUTRAL
- Merrill / BOFA – Subscriber quality – focal issue. NEUTRAL
Analysts Ratings and Views on Idea Cellular:
- J P Morgan – Continued margin pressure. Underweight
- Citigroup – New circles to drag down EBITDA. HOLD
- HSBC – Expansion in a competative environment. NEUTRAL
- Merrill / BOFA – Slow profit growth. NEUTRAL
- ABN Amro – Margins slip. SELL
Report Courtesy: Dalal Street
Reliance GSM Mobile Customer Experience Launch beats Expectations
The Reliance Communications management including Anil Ambani himself had lot of self praise about the nationwide launch of Reliance GSM Mobile services in India. The nationwide GSM / EDGE services was launched on Dec-30th, 2008 thus taking the bouquet of GSM offering across PAN India. Here is an excerpt from Con Call with the management. [Our comments if any will appear in Italics]
- Mr. Anil Ambani thanked for the Pro Govt reforms which has set sight to make India the largest telecom market in the world. Once again RCom is re-writing the rules of the game with GSM roll out which has coverage across 11,000 towns and 400,000 villages with quality of service and value for money positioning. [We saw this coming in 2006]
- Ambani further added that this was the fastest network rollout in the world within a span of 11 months, 6 months ahead of its schedule. It took 15 years for other competitors to achieve the same coverage.
- Mr. Ambani has set the underlying tone without diving into deeper details that Reliance GSM Mobile Customer Experience program will beat several records.
- Mr. Ambani acknowledged that 8 out of the 10 new cellular customers in India are on the GSM platform, mainly because of the choice of handsets. [Miserable management decision at Qualcomm fo not opening up]
- Despite adding just 2 out of 10 new customers, RCom CDMA is able to maintain its leadership in the market as the Second Largest Wireless Service provider in India. [Ambani sets us thinking outside the box. With only CDMA, we could attract 51 mn subscribers, now we have the power of GSM too, so think what we can do ]
- Mr. Shukla, President RCom Wireless services had a lot to say as well. Reliance GSM coverage between launch and today has crossed 14,000 towns and the goal is to reach 24,000 towns and 600,000 villages across India linking the widest diversity of 1 bn people on the planet.
- Reliance GSM rollout leveraged on the existing CDMA infrastructure, retail outlets, distributors etc thus saving tremendous cost to the company.
- Reliance Mobile Customer Experience Programme - As I had already said while covering Bharti Airtel, RCom is bent upon pushing FREE minutes and the underlying tone of Mr. Shulka in the conference call confirms the same [But will turn into reality, only by March, when Freebies end] Here is Mr. Shukla’s strategy which he reiterated several times, Reliance Fixed Wireless Phone(FWP), CDMA and GSM all will constitute the On-Net calling which will be made FREE. [Currently CDMA +FWP On-net is available] RCom wants to create small mobile communities Youth, Families etc who can avail the On-net features. This is a viral marketing strategy spread by word of mouth. Rcom will step-in later with Advertising for brand building. Response to Reliance GSM at Retail outlets as well as Multi-Brand outlets has been encouraging and has exceeded management’s expectations. [Mr. Shukla wants to build a Mobile Social Community of Reliance Mobile Users who will subscribe to On-net calling
] - Mr. Shukla said that they are studying the profile of the customers logging on to Reliance GSM platform. If not many, at least some are existing customers of other service providers and thus Reliance is able to successfully churn them on to their platform. [But will they be able to Retain after the 90 day honeymoon period which folks at Airtel are skeptical about ? ]
- Reliance GSM also opens itself to the opportunity lying in the Roaming space. Until now, Reliance GSM customers in East India had to rely on other networks when they travelled outside their home calling region, but now they can stay on Reliance network] Reliance GSM which had partnership with 120 operators for operations in Reliance GSM has extended it to PAN India with this launch.
It will be interesting to see how things will unfold post-March-09. Way to go Mr. Ambani. Stay tuned for more updates on the great Indian wireless battle.
Reliance Communications – Lackluster Q3 – ARPUs Down 8% QoQ
Reliance Communications announced its Q3 FY09 results this evening had lackluster numbers to report.
Lets review the performance of Reliance Broadband and then run through the results. At the beginning of 2008, Reliance had wired up 787K building and providing 1 mn broadband access lines. At the end of 2008, the number is a dismal 892K buildings and 1.33 mn broadband access lines. Reliance Broadband has registered below average industry growth in 2008 – mere 33%. [74.12% as per TRAI, this means BSNL / MTNL have done an excellent job in 2008] Avg Revenue per Line has been stable at Rs 1,681.
Wireless Business continues to fill the company’s coffers despite the aggressive CAPEX in launching the Reliance GSM. ARPUs are down 8% QoQ to Rs 251 [Airtel has Rs 324] – Seriously Alarming and MOU is also down to 410 [Airtel reported 505]. Reliance will launch range of CDMA services in the next few weeks. CDMA churn rate is down to 1% indicating customer loyalty. 60% share of data card internet access market in India. There has been lot of updates on the Reliance GSM Mobile and we will write about it separately.
Reliance Globalcom has witnessed significant demand in the B2B bandwidth for Voice and Data. It boasts of customers like Vodafone, Idea Cellular, Spice, Tata Indicom and Shyam Tele to name a few. In the international arena, this segment has done well cutting deals with various Retail Chains and vendors to link their facilities across the World. One of them is an Italian chain with over 50,000 PoS systems linked processing over 6 mn transactions a day. Reliance Globalcall has 2 mn customers and is the market leader in NRI’s Calling Home country segment
Reliance Enterprise Services did witness some slowdown due the economy but the company is laving no stone unturned to encash on this. Reliance with its bouquet of offerings is finding it easier to win new customers. It has added Vishal Retail and Shoppers’ Stop to its clientele. It now plans to build a new data center in Delhi after the completion of one in Hyderabad.
Reliance Big TV managed to get 1 mn customers within 90 days of launch, which is a World Record. RCom also hopes to expand its Non-Voice Revenues from current 7% to 15-20% over the next couple of years.
Highlights from RCom Conference Call:
- No Revenue Guidance but margins are expected to be stable in future.
- To a question on discrepancies in reporting of numbers, the management is of the view that it was a campaign by rivals and it has handed over all the details requested by TRAI.
- CAPEX of Rs 15,000 crore for FY10. FY09 CAPEX revised downwards to Rs 25,000 crore from Rs 30,000 crore. [We feel RCom will be unable to meet even Rs 25,000 Cr target and may end the year with Rs 21,000 cr]
- RCom’s Optical fiber to inch closer to 200K Kms from the current 175K.
- Reliance to launch IPTV in association with Microsoft
- A question regarding the transfer of stake of Reliance Tower and Infrastructure Ltd and Reliance Globalcomm to a Reliance group company and back created some confusion as there was no clear answer. Hopefully management will come clean on this.
Stay tuned for more updates on Reliance GSM Mobile launch and its business model to lure customers
Bharti Airtel Downplays Reliance Mobile GSM Tariff War
Bharti Airtel’s management dismissed any threat from Reliance Mobile’s GSM Tariff war which includes Free minutes and Low Lifetime Pre-Paid validity cards. Significant number of questions in the Analyst call were related to the tariff war which was downplayed collectively by Akhil Gupta, Manoj Kohli and Sanjay Kapoor.
Mr. Sanjay Kapoor President, Mobile Services at Bharti Airtel said,
We will not have a knee jerk reaction. No free minutes models are sustainable. Reliance will eventually withdraw after sometime. Airtel will remain competitive with excellent QoS. Since Reliance GSM launch in the past few weeks, we have not seen any impact nor there is any such caution to be noticed.
I am not quite sure which of the above executives said this,
Free Minutes will see huge rise in traffic. There is a section of customers who are deal seekers and who churn from operator to operator. Once freebies stop, these customers move back or settle else where. We are not worried about this.
Coinciding with elimination of FREE Minutes and distinguishing itself as a Superior Wireless Company in India, Bharti Airtel did terminate some FREE minute schemes thus seeing lesser MOUs.
Mr. Sanjay Kapoor further came down heavily on Reliance Communications,
There is a cost differential in maintaining and expanding 900 MHz and 1800 MHz networks. Reliance currently has constant revenue stream and is thus offering FREE minutes to lure customer. However, this cannot go on as the company will start eating into its own revenues [60 CDMA mobile subscribers] and is self destructive. Market seeks Big Brands. The top 2 companies had 50% of the Revenue market share. Airtel has a huge loyal subscriber base.
Additional details from the Call,
- Airtel has seen an increase of less than 1% in Spectrum charges and is awaiting more spectrum in more circles.
- Addition of new users unlikely to drive the MOU / ARPUs. What this really means is as Airtel expands in rural areas, market expected customers to rise and MOU to fall, but looks like the company now has a solid strategy to preserve it from being eroded.
- Airtel declined to comment on WiMax bidding as the policies are still unclear and also for competitive reasons. [So this makes me thinking if Airtel now wants to bid for WiMax spectrum along with 3G ?]
- International Roaming revenues have been below expectations. [We really wish Mr. Maran was still in the HotSeat of IT & Communications ministry where we could have seen a drastic fall in International Roaming Rates]
Even with the launch of Reliance Mobile GSM discounted tariffs, Airtel clearly states that there is no shift from the sweet-spot to sub-optimal, at the moment It is really worth noticing that Reliance continues to offer FREE calling while Airtel is against it. What are you consumers for ? [Remember QoS, Customer Care etc]
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