Showing posts with label TRAI. Show all posts
Showing posts with label TRAI. Show all posts

Friday, January 11, 2013

Subscriber no. 74,000,001

arun sarin pulled off what some called a seat-of-the-pants strategy, when he entered india as a suspected knee-jerk reaction to vodafone’s japanese exit. b&e does a run-on with current vodafone head of marketing, cmo harit nagpal on the whys and more...

We’re sure Arun Sarin would have read this, if he had still been in Vodafone. February 11, 2007, Vodafone Plc. announced its decision to pick up a 52% stake in Hutchison Essar Ltd. (the fourth largest telecom company in India) to get its footing in one of the fastest growing telecom markets of the world. There seemed to be an immense potential for any new player to come in and try to grab a sizeable chunk in India. But critics had put forward, and with much basis, that this India-entry was just a seat of the pants strategy for Arun Sarin, who wanted to somehow cut the flak that he had received after exiting the Japanese market. Especially when he already had an idea that he himself was on his way out from Vodafone global. And at that juncture, he didn’t want to be, in a stakeholder’s term, “Welched!” (referring to how GE’s top shareholders crucified Welch after he’d exited GE). But this is not to say that Arun was playing truant. He had his numbers well prepared while selling the idea to his board. At that time, India was adding almost 5.5 to 6.5 million customers every month; and the penetration level was well under 20%, showing massive potential in future growth. Well said, well bought. What happened thereon?

Like we mentioned, Arun would have loved to be here and now! 2009, only two years post the acquisition, Vodafone Essar Ltd. is already one step better than when they entered; they’re the third largest telecom company in India in terms of subscribers with 74 million subscribers, (as on May 2009 Source: TRAI). Though the godzillasque Bharti Airtel is not ‘overtakeable’ in the next three years (Sunil Mittal, whom we interviewed two issues ago, has 99.55 million subscribers in his company), the second in ranking figures, Reliance Communications, is more a possibility, as it has only 77.22 subscribers, a figure that can be overtaken in a year with tactical marketing. But that’s not all. Vodafone is already the second largest in terms of revenues by clocking Rs.203 billion in FY09 (growing by 35.4% in the last year) and trailing only Airtel that got in revenues to the tune of Rs.261 billion in the same period.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles.
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Friday, October 05, 2012

TTSL: 3G SERVICES LAUNCH

TTSL has become the first private operator in the Country to launch the premium 3G services. Now comes the hard part. Leaving aside our normal critique itch, we give one mite credit to TTSL for the spirit of risk taking.

Irrespective of Deepak’s confidence, it is a fact that the investment in 3G has taken a huge swipe off their balance sheet with around Rs.45 billion taken through debt (rest through internal accruals); and analysts haven’t exactly been bullish on prospects for 3G. A competing Reliance telecom official forwards B&E a Goldman Sachs report that predicts, “With no single operator winning a pan-India 3G license, we believe operators would struggle to extract scale benefits in 3G rollout.” Evidently, it would be tougher once the competition sets in. Also, TTSL has been bullish in Circle B during bidding, which is a low value circle. Its major loss in the bidding process was Mumbai, which is one of its key markets. Analysts speculate that operators could face customer churn in the markets where they operate and haven’t won licenses; losing them to the ones who can offer 3G in that circle. High value customers are the ones no player can afford to lose at the moment.

But criticism aside (as we promised earlier), the good news for TTSL, and even other mobile operators, is that Indian consumers have started showing signs of richer data services consumption. As per the Telecom Regulatory Authority of India (TRAI), a little more than 15% of the revenue is coming from VAS. SMS, which was contributing around 70-80% of the VAS revenue, has come down significantly to 40%. The revenue contribution for voice has also come down to 58%. So data services are improving in value. Neeraj Jain, Director KPMG Advisory tells B&E that 3G would be a 80-90 million subscriber and Rs.600-700 billion opportunity by 2015. He adds, “We expect private players to contribute aggressively to the creation of the 3G eco-system both from the perspective of the applications eco-system as well as handsets through bundling.”

However, it would not be a cakewalk on the VAS front. TTSL’s ARPU has also touched rock bottom after the introduction of per second billing. Improving that would be a difficult challenge, considering India remains a price sensitive market. Moreover, half of the TTSL’s subscriber base is still on the CDMA platform. Ironically, CDMA users have low ARPU of around Rs.75. Such users are least likely to use premium 3G services. Adding to the woes, most CDMA phones are basic handsets and are incompatible with next generation services. Thus, it would keep a large number of subscribers at bay from 3G. A little over 21% of TTSL’s subscriber base lives in rural India. They are low ARPU customers, so 3G could be a long shot.

TTSL would be considered successful if it manages to bring 10% of its high end user base on the 3G network in the next few periods. Japan’s NTT DoCoMo’s partnership with TTSL would be an invaluable advantage over competition. And why? While the company has 26% stake in TTSL and was globally to launch 3G services in October 2001, with almost 98% of Docomo’s subscriber base in Japan on 3G, it’ll be hard for competitors to match the learning curve. Also, Tata DOCOMO will have access to NTT DOCOMO’s differentiated products such as i-mode, m-wallet and many similar products for Indian customers. But per capita income of Japan is much higher in comparison. On an average, a Japanese earns $39,727 every year, while his counterpart in India earns around $1,134.

As TTSL goes about its 3G launch, these will be a few key points to ponder. They would get a reprieve from spectrum issues in their chosen circles, but returns on 3G investment would require them to outdo competition in both value and price. Besides, they will have to use it as a source of competitive advantage to gain high value customers in the 9 circles. Volume is the name of the game at present, which will have to reflect in bottomlines sooner rather than later. That’s the nature of the damned race!


Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
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Wednesday, July 11, 2012

Naresh Chandra continues to perform a key role within the Indian government

Surprisingly, Chandra is not an isolated case. A number of high profile bureaucrats are allegedly making a fortune from their current/past presence in the bureaucracy/ministry and affiliation with regulators and policy makers. V. K. Shunglu, who is now serving PwC, had served as the comptroller and auditor general of India, the apex body having sole constitutional rights to audit independently. The same goes with B. B. Tandon, once chief election commissioner, secretary of the Ministry of Mines and the Ministry of Personnel, additional secretary of the Ministry of Corporate Affairs and also a member of the SEBI board. He is now on the advisory board of PwC.

Pradip Baijal, former Chairman, Telecom Regulatory Authority of India (TRAI) set up Noesis Strategic Consulting Company post his retirement for providing ‘advisory’ services. Ex-Indian Oil Chief M. S. Ramachandran is now chairman of Cals Refineries. R. V. Shahi, a former bureaucrat, is now chairman of total power solutions firm Energo. S. K. Roongta, former Chairman, Steel Authority of India Ltd., joined as MD of Vedanta Aluminium in April this year. These are crying examples of bureaucrats and PSU heads who are getting themselves into such positions where private companies can use them for unfair advantage. In fact, dozens of ex-bureaucrats and PSU executives become lobbyists and advisors in India. Similar is the case in the US too – as per estimates, around 43% of ex-Congressmen since 1998 are registered lobbyists. President Barack Obama tried to reduce the influence of ex-Congressmen on the Senate, a phenomenon called ‘revolving door’ – but was strongly contradicted by bellicose donors of the Democrats. He was worried about ex-Congressmen; while in India, people like Naresh Chandra don both hats with aplomb!

The government needs to monitor existing and previous bureaucrats with affiliations outside and take action. In the case of Naresh Chandra, he should not be in a position where there is a conflict of interest between his roles in private and public domains. He should take a cue from Nandan Nilekani, who ensured that he gave up his position at Infosys before taking over UID. It always pays for the greater good to lead by example.



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