Archive for December, 2009
Innovative Plans Lead to Surge in Mobile Connections
India registered the highest-ever net adds of 17.6mn subs in November 2009, up 6% month over month (MoM) and 71% year over year (YoY). We attribute this surge against average net adds of 14mn YTD to all operators launching innovative plans, especially the pay per second plan started by Tata and later launched by most operators at the end of October.
Bharti’s net adds rose 4% MoM to 2.8mn with 22.9% wireless market share. RCOM’s wireless net adds rose 30% MoM to 2.8mn subs. Tata Teleservices, which earlier launched its GSM operations with pay-per-use and pay-per-second plans, added 3.3mn subs. Vodafone added strong net adds of 2.8mn in Nov09. For the second consecutive month, Idea’s net adds rose ~30% to a strong 1.9mn.
Revenue Market Share Is Key:Bharti further consolidated its leadership position, and we estimate the company improved its wireless revenue market share by 62bp to 30.3% while largely maintaining its wireless market share of 24%, thereby enhancing the gap between revenue and wireless market share to 5.7%. We estimate that Tata increased its revenue market share by 59bp to 7.2%, but this still lags its wireless market share of 18.6%.
Sistema Shyam (MTS) Strategy for India
Sistema Shyam (MTS) is one of the new operators at the forefront of the ongoing Telecom Tariff war. Recently the management interacted with the analysts and he is what they have to say about their strategy in India.
On the State of the Wireless Business in India, Management said,
Sistema Shyam has rolled out services in 8 circles. Network rollout is progressing according to plan and Mumbai and Maharashtra are the next launches. Overall, they acknowledge the double SIM phenomenon and believe a significant proportion of their subscribers fall into this category of users. While noting that the absolute fall in the overall market pricing levels is a concern, nevertheless, they are observing improvement in ARPUs.
We think ARPUs are ~Rs100.
Will the company be around in another 12 months, if they continue to burn cash at this rate ?
CEO stated that they have a 10-15 year plan for India; and not just 1-2 years. They continue to target EBITDA breakeven in 3 years and see this as achievable with 30-35mn subscribers. The company is of the view that consolidation should occur within the top 6.
Can Sistema Shyam (MTS) find a niche ?
Given the minimal differentiation afforded in voice, the company is trying to grow the data business (dongles). Their wireless broadband is priced at the same levels as other competitive offerings, however they have bundled free browsing for certain sites etc to offer better value.
Additionally, they are focusing more on rolling out EVDO based Wireless broadband [MBlaze] and has partnered with some portals as well. Reminds me of the Dot Com boom when ISPs were partnering with Portals like IndiaWorld, recall the nostalgia ?
Bandwidth – Backhaul + Submarine Cable Link – Do we have enough ?
With increasing broadband penetration and more enterprises [SMEs] being wired towards unified communications regime, Does India have enough backhaul to cater for data growth ? Yes, there are large trunk routes owned by BSNL, Bharti, Reliance, PowerGrid, RailTel, Tata, etc and the companies are constantly building more. Between the key cities, virtually every operator has their own pipes.
So it appears that most Indians will be connected and with the implementation of NIXI, internal data gets routed extremely efficiently. What about Global bandwidth connecting India ? Does India have enough submarine cable links? No, but this segment is growing. More and more cables are being laid at the moment and compression technologies are constantly improving.
Forecasting bandwidth growth has been a major challenege for everyone. At the Enterprise level, this is much easier to do, but at the consumer level, it is growing at a much faster rate than anticipate. And a 20% drop in bandwidth price YoY helps the end customers. However, the Intra-Asia rates remain high, an STM-1 pipe within US-Europe is around US$300-400k, vs US$2.5mn within Asia.
Chinese Vs European Equipment – Government Dilemma
There is political pressure against Chinese network equipment vendors which culminated this week in news of BSNL canceling an order to Huawei.
Huawei had at first won a contract from BSNL last year for the Northern region totalling nine million GSM lines. Afterwards, they had won a second contract for the Southern region for similar number of GSM lines. Since most most government communications occur over MTNL/BSNL networks, BSNL resisted giving out contracts to Chinese equipment manufacturers due to security concerns and have concomitantly preferred American and European vendors.
With the consolidation of the telecom equipment industry globally, there just 5 names – Nokia Siemens Network, Alcatel Lucent, Ericsson, Motorola and Nortel apart from the Chinese. Nortel and Motorola continue to have a presence in Southern India, however it is difficult for NSN and Ericsson to offer competitive prices in this region due to lack of scale.
The logic behind BSNL selecting Huawei in Southern region despite objections from Department of Telecom and Defense services on the grounds that there are no international boundaries in the South and it would be safe to use a Chinese vendor. And also Huawei was offering the lowest price.
It is High Time that India sets up a National Communications Security and Monitoring Agency headed by an able person such as Sam Pitroda to put an end to all the bias and also make the private Telecom operators comply with the new rules of this agency.
Understanding the IMEI Number Enforcement
In a bold and commendable move in the interest of National Security, we back the Government of India for strictly enforcing the IMEI Number compulsion on handsets making it easier for law enforcement agencies to investigate in crime situation.
What is IMEI Number ?
It is a 15 Digit Unique Number Known as International Mobile Equipment Identification (IMEI) number. It is internationally maintained by the GSM Association and updated every 15 days in network operators’ Equipment Identity Registers.
It is for the Consumer Safety – Lets say if a phone is lost or stolen that whatever it is used for in the future does not come back to haunt the victim. Once reporting a phone lost or stolen, the network operator can ban the device from its network and others as well so that no more fraudulent activity can happen, however as a practical matter who ever is in possession of the device can still manage to get data out of it. [We will get more details on the Regulations and Ease with which one can report loss of stolen mobile and how to get it blocked]
Which IMEI Numbers are Blocked ?
Channel checks with Telcos indicate bulk of the handsets had iMEI numbers with all 0s or all 1s and they have been blocked. Some with random numbers continue to be existent but for sure they will be blocked shortly.
There were around 20 mn handsets without IMEI number that got blocked. But we did a street check and the Government has really taken measures to allot IMEI numbers through vendors after getting sufficient proof from the consumer. Dual SIM Phones need two IMEI numbers and they were being allotted just one initially because of lack of numbering blocks with vendors.
IMEI helps Mobile Money / m-Commerce:
IMEI numbers facilitate new opportunities and new business models such as micropayments and micro-transactions because the IMEI as a digital identifier or signature is so very lightweight. It can also be used for digital rights management of Audio / Video to curb piracy, just like pre-loaded songs on your Nokia N SEries handset don’t work on any other set.
Yahoo Customized Homepage – IJW
We give a IJW – It Just Works rating for Customized home page of Yahoo. After having tried lots of ways to engage users on the Yahoo platform, finally they have found a way. Yahoo, neither had a browser nor killer Web 2.0 Applications / social network to keep its e-mail customers sticking to its platform. The new CEO had a complete change in strategy – getting rid of businesses where it is not possible to make money and focus on focus on embracing Web 2.0 and AJAX technologies and let users do what they want, but on Yahoo! platform.
They popped a window to me and asked if I wanted to add my favorite feeds to Yahoo! homepage and I did and that of GoBroadband and screen shot is as below.
The pane can be customized for you to view Text, Description, Images of your favorite feeds. What I really liked is, I didn’t give the correct feed address, but it was smart enough to pick it up 
Additionally, within the same pane, you can also read your e-mails and do whatever you like to do. Yahoo! just displays an Ad next to the area where you are working. In a way of speaking, the GUI appeal and ability to work is better than Google’s Customized homepage with gadgets etc. I am pretty sure this must have boosted page views as well as user engagement time on the Yahoo platform.
Review – Tata Photon+ TV on Demand
Earlier this month, Tata Photon+ Mobile Wireless Broadband service Provider in association with Apalya [MimoBiTV] launched Live Streaming of TV Channels over IP. So essentially, Tata Photon+ TV is a IPTV.
Requirements for Tata Photon+ TV:
- You need to have a Tata Photn+ Wireless Broadband [Post-Paid]
- You need to download and install this software [15 Megs]
The platform on which this TV works is Adobe Air and the underlying Wireless broadband infrastructure is 1x CDMA network deployed by Tata Indicom.
Here is the starting screen of Tata Photon TV+
The next screen that will appear for you is as shown – You can follow the screen shots and the description of each of it.
In our view, the TV works really nice for the small resolution and definitely comes handy for businessmen on the move. We found a slight delay between Tata Sky DTH and Tata Photon+ IPTV is 20 seconds with the latter lagging the former. We think this could be due to Apalya recording on their server and then streaming it. Every one minute of streaming will involve 1 to 2 MB of Data transfer.
How the VAS Market Stacks Up ?
Here is how the Mobile / Cellular Value Added Services Market Stacking up in India.
Delivery Platform is SMS:
- Entertainment – SMS, CallBackRingTone , Wallpapers, Quiz and Jokes
- Alerts and News – Cricket Alerts, News, Astrology, Banking Info and Travel alerts
- Commerce – Mobile banking, Ticketing, Travel bookings
- Social VAS – Advertising and Local search
- Enterprise- VAS – Push Advertising, Location based Service, Group Messaging and Enterprise IM
Delivery Platform – IVRs
- Entertainment- Religious Chant and Music on Demand
- Alerts – Astrology and Vastu
- Commerce – Mobile Banking and Ticketing
- Social VAS – Voice SMS
- Enterprise – IVR based call centers
Delivery Platform – WAP Portal
- Entertainment- Video Clips, Mobile Games, Radio and Themes
- Alerts – Movies, Stocks, News tickers
- Commerce – Banking and Ticketing
- Social VAS – Mail, Chatting, Greetings, Dating and Search
- Enterprise- Mobile e-mail
MVAS market is estimated around Rs 90 bn in 2009 which represents an 8-9% of total revenues for telecom operators. Going forward, higher revenue contribution from Non-SMS (64% currently) is expected. In the medium term SMS related entertainment services and Internet services are expected to drive VAS industry.