Archive for May, 2012
What are the Implications of Initial Telecom Commission Recommendations ?
Telecom Commission did not make any decision on spectrum pricing but has asked the TRAI to clarify on the basis of High Reserve price for spectrum as well look into the Economics of operation rather than just maximizing revenues for the state.
Telecom Commission has initially made the following recommendations and is about to leave the Spectrum Pricing to the Ministerial Panel headed by the Prime Minister of India. Here is our take on the initial recommendations of the Telecom Commission,
- Auctioning of 2 or more slots/circle would not lead to any artificial scarcity of demand (which could have been created by TRAI’s recommendations of auctioning 1 slot / circle.
Voice to Lead Recovery of Telecom Sector
The aftermath of 2G Spectrum Scam, everybody knows that there are regulatory overhangs, risks and uncertainties in the Indian Telecom industry. We believe there are three critical metrics essential for a healthy growth – 1) Traffic growth 2) Revenue / minute and 3) Wireless margins.
Traffic Growth – In the Indian Wireless industry, the Customers Age on Network is one of the most important factor which shows his loyalty. Usage pattern of the vintage subs (more than two years in the system) shows that they are relatively less sensitive to changes in rev/min (read tariffs). In addition, it is also less susceptible to the vagaries of seasonality (Sep quarter sees muted usage trend). The monthly budget spend is sustaining well and even rising. We also see the fickle traffic trend of the relatively new subscribers who are focused on taking advantage of the price arbitrage
We see 6-18% volume growth over FY13-14E for Airtel, Vodafone and Idea given that the highest value lies with the already matured portfolio of customers where a natural volume expansion occurs. Dependence on newer subscribers is low Read the rest of this entry »
Vodafone India Revenues up 20% Lead by Strong Wireless Recovery
Vodafone India declared Indian results separately and the company has recorded a Topline growth of 20% in one one of the most difficult years of Indian Telecom industry. This is very much in line with what Vodafone India CEO Marten had told Analysts about his growth projections.
Vodafone India FY 2012 Service revenues were INR 32,184 crores in FY12 compared to INR 26,937 crores in FY11, a growth of 19.5%. What is more important is the Strong cash flow conversion with Operating Free Cash Flow (OFCF) at INR 4,241 crores in FY12 compared to INR 3,256 crores in FY11. Read the rest of this entry »
Why is TRAI Pushing for Spectrum Refarming ? What are the Implications ?
We have already seen what is Spectrum Refarming and How it can benefit and the drawbacks of doing the same. Now we’d like to analyze the scenario in the context of Indian Telecom Industry.
Why is the Regulator Pushing for Spectrum Refarming ? Apart from discovering the TRUE Value of Natural Resource after A. Raja engineered 2G Spectrum Scam in India, Regulator’s view are as follows,
- Proper distribution of spectrum between operators (over one or two operators owning a particular spectrum band);
- Enforces migration towards future technologies especially when operators are reluctant to refarm
- Efficiently allocate the available spectrum to right technologies
Regulator ensures that Refarming be carried very carefully to prevent any service degradation of existing 2G/3G offerings. The cost of refarming is mainly borne by operators (and usually passed on to consumers).
TRAI recommended that all 900MHz available with incumbents be auctioned at least 18 months in advance of renewal and stated that the spectrum available in the 900 MHz band should be replaced by spectrum in the 1800 MHz band. Furthermore the regulator intends to charge 2X Read the rest of this entry »
What is Spectrum Refarming ? Benefits + Drawbacks of Spectrum Refarming
Many have asked what is Spectrum Re-farming ? What is the Significance and benefits of the Same ? Today we’ll try to answer as much as possible in the context of Indian Wireless Industry.
In plain language, Spectrum refarming is nothing but reallocation of existing telecom spectrum. It is defined as a basic change in conditions of frequency usage, which may be driven by:
- Change of technical conditions for frequency assignments (sometimes to follow an international standard)
- Change of applications deployedo n wireless spetrum
- Change of allocation to a different service. Some regulators define refarming as allocation of spectrum from one operator to another.
What is the Significance of Spectrum Re-Farming ? With advances in the Telecom industry, 900MHz spectrum which was earlier used for 2G Voice is now ideal for 3G data Services. Operators/regulators are keen to use the band to rollout 3G (currently used for 2G) over the traditional 2.1 GHz band as it will help the operators reduce OPEX & CAPEX.
Benefits of Spectrum Refarming
By reusing its existing spectrum, the demand for new spectrum Read the rest of this entry »
4G-LTE – 3 Years Away to be Mass Market in India
Now that Airtel has been selectively launching 4G LTE Wireless Broadband services, we thought of an ears on the ground survey by talking to vendors, resellers and service providers.
India has traditionally been a late adopter of technology, as it has less purchasing power than other countries. With voice taking 7 years to achieve mass penetration and 3G failing to achieve critical levels mass even after a year. We believe that the market is not yet ready for 4G LTE.
Eco-system TD-LTE Vs FDD-LTE – US have adopted FDD-LTE, China Mobile has every incentive to rapidly migrate to TD-LTE. Indian operators are set to adopt TD-LTE. LTE handsets don’t support voice[seamless voice like 2G, VoIP is a different story] today which will be essential in the Indian context. Led by Qualcomm their are some technology advances that will be inducted into the high end smartphones which is not relevant in the context of India.
Telecom Customers in India are very sensitive to affordability and the slow pick-up in 3G is a reflection of the challenges the operators face to drive data take-up in an environment with no handset subsidies. Mass production of LTE handsets – wherein there are economies of scale to produce phones at a cheaper price – is not happening anytime soon. Moreover, not all operators are in a hurry to develop the technology to support voice in the LTE ecosystem. The primary intention of scaling up 4G is to support the burgeoning data traffic.
We feel that India is an unusual market Read the rest of this entry »
What DoT clarifications from TRAI on 1800 / 800 MHz Spectrum Auction Mean ?
The DoT (Department of Telecommunication) appears to be moving in a clear direction with respect to spectrum auctions. TRAI should respond to the DoT’s request for clarifications on its recommendations within the next couple of weeks after which the Telecom Commission and the eGoM will take a decision on the pricing of the Spectrum.
What are the Key Issues that DoT has raised in TRAI Recommendations on Spectrum ?
- Clarification on the basis for recommending auction of one slot of 5 MHz in the initial auction, even when additional slots are available after making provision for re-farming and when there is demand for such spectrum.
- Rationale behind recommending a reserve price Read the rest of this entry »
All Touch + Windows 8 SmartPhones – Last 2 Options for Nokia from going Bankrupt
Beleaguered SmartPhone giant is at the mercy of Microsoft now. The last two options for the Handset giant are – All Touch SmartPhones and Windows 8 Phones launching in October this year. We do not expect WP7.5 to drive significant sales of Nokia’s Lumia range.
Nokia – All-touch feature phone Strategy
Nokia’s success in all touch feature phone platform which will be determined by the following three factors,
Clean User Interface: Nokia needs to deliver an easy to use and compelling user interface.
Price: a discount of perhaps 25% to 33% seems necessary to differentiate from low end Android
Ecosystem: broad application availability that matches comparable Android phones
Nokia appear to have abandoned their internal efforts on the UI front in November 2011 by buying Smartphone – a small company specialized in all touch feature phone UIs Channel checks in Taiwan and China with component vendors that indicate that Nokia is transitioning to a new hardware platform this quarter.
Comparable devices (1GHz phones with multi touch support) in the market seem priced at $150 or more. Given this, we believe Read the rest of this entry »
