Month: February 2014

1800MHz Spectrum Frenzy – Operators Betting Big on Data

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4G LTE IndiaDespite ample supply at the 14 February auction, prices in 1,800 MHz reached INR 22.7bn/MHz, 29% over the reserve price. Prices for 900 MHz in Mumbai/Delhi Kolkata rose an average 2.3x the 1,800 MHz price. Both prices were higher than we anticipated. Demand shot up mainly because of (1) incumbents’ eagerness to corner 1,800 MHz for 4G / LTE and de-risk their 900 MHz holdings; (2) Reliance Jio’s demand for 5.0-6.6 MHz across 14 Metro / A-category circles. Reliance Jio Infocomm’s entry is not worrisome, but the industry may have overpaid for data potential.

Idea Cellular’s Love for 900Mhz Spectrum
Though Idea’s acquisition of 5 MHz in the 900 MHz band in Delhi makes it slightly better positioned for 3G data, the company is still short of data spectrum, in our view, despite aggressive participation in the 1,800 MHz band auctions. We also think that Idea has tried to de-risk the upcoming 900 MHz auctions in its key

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Telecom Mergers & Acquistions – Rationality Returns to Sector

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India Telecom Mergers AcquistionsThe Telecom Ministry released M&A norms which had been approved by the Empowered Group of Ministers (EGoM) in December 2013. The ministry has retained most of the guidelines and reduced the equity lock-in period of the new entity (in case of M&A) to one year from three years earlier.

Key highlights of Indian Telecom M&A guidelines
If an acquired company holds spectrum which had been assigned against the entry fee paid (not acquired through auction), the resultant company at the time of merger will have to pay the government the differential between the entry fee and the market determined price of spectrum from the date of approval of such arrangement on a pro-rata basis for the balance period of validity of the licence. No separate

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Airtel’s First 100 Mn Subscribers in 15 Years Next 100 Mn in 5 Years

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Airtel IndiaIndia’s leading Integrated Telecommunications company has reached 200 Mn Mobile Subscribers and continues to be the Numero Uno in India. Airtel which started operations in 1994 took 15 years to get 100 Mn subscribers [2009] to its platform and just 5 years for the next 100 Mn subscribers [2014].

Gopal Vittal, Joint MD& CEO (India), Bharti Airtel told us

We are delighted to have reached this major milestone. It is gratifying to see the trust our customers have reposed in our brand and it will be our endeavor to continue

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Idea + Vodafone Go OverBoard to Acquire 900Mhz Spectrum in Metros

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idea cellularThe 1800MHz and 900Mz auctions finally concluded yesterday with incumbents stealing the show with mega spectrum wins across the country. Airtel, Idea and Vodafone that have immensely strengthened their data arsenal. While the bidding seems to be stressing the valuation for the telecom companies but we believe the auctions have clearly demonstrated the direction for further consolidation in the industry. We strongly believe that the significant acquisition

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Reliance Jio Infocomm 1800MHz Spectrum Win Confirms Takeover of Videocon Telecom

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Breaing NewsThe 1800Mhz Spectrum Auction comes to an end with Reliance Jio Infocomm winning 14 out of the 22 Circles. R-Jio has won 5MHz-7MHz of 1800MHz spectrum in 14 circles for a total investment of ~Rs111bn. We believe it would look to complete the pan-India footprint in 1800MHz (to be used for 2G voice) through acquisition Videocon Telecom.

The Circles where Reliance Jio has bid and won the Spectrum complement the circles where Mukesh Ambani backed Videocon Telecom has already secured

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Vodafone ARPU at Rs 193, Gets 5 Million Active 3G Customers

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Vodafone India Voice Profits RiseVodafone India reported a 2.9% QoQ increase in revenues – inline with Bharti India mobile’s 2.6% QoQ increase. MoU decline of 1.4% QoQ was lower than that of Bharti India (4% QoQ). Vodafone’s in-line result indicates continued improvement in business environment in India particularly with voice RPM hardening and churn reduction. Although data prices corrected sharply this does not signal a price war as price corrections are necessary to evangelise demand

Vodafone India Results Highlights
Subscribers Vodafone’s subscriber base grew 3.1% QoQ to 160.4mn during the quarter. Churn declined to 3.8% from 4.6% in 2QFY14.

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Telecom Spectrum auction is getting competitive

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The ongoing spectrum auction has become competitive for the 900Mhz band spectrum, which is on offer in the three metros (Mumbai, Delhi, Kolkatta). The incumbents currently hold spectrum primarily in 900Mhz band and would lose access in Nov 2014 if they fail to win it back in the auction.

In the 900MHz band, cumulatively Mumbai has witnessed the highest price escalation of ~72% over the reserve price. Delhi/ Kolkata have recorded 59%/ 54% appreciation in bid price over the three days. 900MHz price for all three metros are in the range of 2.6-2.7x 1800MHz prices for these circles.

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How New Google PLA Adding to Google’s Bottomline ?

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Product Listing Ads (PLAs) are Google’s search ads that include richer product information, such as an image of the product, price and merchant info, without requiring additional text or keywords. When users search for an item, Google will automatically show the most relevant products along with the image, price, and product name. These PLAs now form the backbone of a user’s Google Shopping experience.

The Following Picture Shows Google’s New PLA laid out on the search result page which is contributing to Google’s Bottom line heavily, even in the Mobile Ads Format.

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