In its FY13 annual report Reliance Communications expects data and broadband services to be the new driver after multi years of voice leadership. While voice penetration of >70% has been achieved, that for broadband remains abysmally low at <1%. According to various market estimates, data & broadband services can grow ~7x from current Rs50bn to Rs350bn over the next 4‐5 years.
The biggest deterrents to 3G adoption stem from high handset and data pricing in our view but situation could be changing in the past few months. Device prices have declined, according to the company due to rising competition between handset players while at the same time content ecosystem (applications targeting specific user segment) are being generated.
Reliance Communications claims it has the largest base of 3G users among the three frontline telcos and who account for ~25% of its total data base. In terms of data usage too, Rcom leads the other two telcos with per customer usage of 342MB.
DoT raised a demand of Rs17.6bn as one time spectrum charge for holding CDMA spectrum beyond 2.5MHz for the period from January 01, 2013 till expiry of initial terms of respective licenses; additionally, DoT has also demanded retrospective charge of Rs50mn for GSM spectrum beyond 6.2MHz for the period July 1, 2008 to December 31, 2012 and prospective charge of ~Rs1.7bn for holding GSM spectrum beyond 4.4MHz from January 01, 2013 till expiry of respective licenses; Kolkata HC has stayed the operation of above demand and based on legal advice, company has made no provision for the same.