Is it a Good Idea to Merge Vodafone + Idea Cellular ?

Reliance Jio’s free pricing blitzkrieg has triggered the largest round of consolidation in the telecom industry. Vodafone and Idea Cellular are reportedly in talks for what could possibly be an all share merger deal; Vodafone indicated that its 42% stake in Indus is excluded from any potential transaction. Such an agreement would combine the 2nd and 3rd largest domestic telco operators, commanding ~40% revenue and 35% subscriber market share, ahead of Airtel’s 31% revenue and (more…)

Demonetization + Jio to impact Airtel, Vodafone Idea

jio-impact-on-airtel-vodafone-ideaDespite some respite from being allowed to accept old Rs 500 / 1,000 notes for a brief period, the two big events, i.e. demonetization and full quarter of Jio’s free services, are likely to result in a sharp sequential revenue decline. Pressure from Jio’s free launch offers is likely to be felt on three fronts – data volumes (as industry’s paid volumes take an expected knock), data pricing (as the incumbents try to hold on to data volumes) and voice pricing (initial impact of bundled offerings in line with Jio’s announced pricing construct + step-up in aggression on pure voice plans)

Jio’s free offers have resulted in a sharp (more…)

Mobile Consumers Satisfied with Incumbents; Jio Pressure Likely

jio-pressure-on-airtel-vodafone-ideaA survey was conducted by Telecom Research wing of Merrill Lynch after Jio launched its free voice / data offering on Sept 5. In the sample, 75% of these consumers who participated in the survey have monthly bills of Rs 250 or more. The main results of the survey are as follows,

  • Call drops are not a major issue, with only 15% complaining about it; bigger issues are slow data speeds (as per 25%) and a no value for money proposition.
  •  39% of consumers we surveyed have tried Jio’s free offering, with 27% happy with the service (which translates into 70% of actual Jio users) and rating the service better than their existing operator and the remainder believing Jio is at par or inferior to (more…)

Does Uninor has Business Case without Mobile Data Service ?

Uninor IndiaTelenor / Uninor India turned profitable in Q2FY15 with reported EBITDA of INR 192mn for the first time since starting operations in FY09, although revenue remains flat at INR 11bn QoQ. Traffic grew by 2.9% to 48.7mn minutes, led by healthy subscriber growth of 4.2% partly offset by a 1.3% MOU decline to 414 (unlike Idea’s 2.0% MOU improvement). Voice RPM fell by 1.8% to INR 0.226/minute, lower than Idea’ RPM fall of 2.9%. Management had said the company is a net payer of interconnect charges, due to its lower market share; the reduction in IUC gave a boost to EBITDA and has had a lower impact on RPM. RPM is still at one-third discount to Bharti Airtel & Idea Cellular, and is yet to reach profitability; this is contrary to Consensus view that low RPM may not allow Telenor to reach (more…)

Airtel Unveils – “Win Customers for Life” Strategy

Airtel Win Customers for life StrategyAt Analysts Conference, Bharti Airtel Management shared Color on its new Strategy – Win Customers for Life. This is developed on its underlying five-pronged strategy: 1) better go-to-market excellence; 2) voice pricing – no need to undercut; 3) data pricing in such a way that data ARPU grows; 4) focus on data and digital services (m-commerce); and 5) war on waste, i.e manage costs better. Subscriber growth has accelerated in the past one year, which is ahead of competition vs. previous years. However, ARPU increase will be led by subs taking 3G and 4G.

Airtel believes networks will be a key differentiator, especially on data. The (more…)

2015 Spectrum Auction Implications – Entry Cost Rises, Tariffs Look Up

Spectrum Auction ImplicationsThe mega 2015 spectrum auctions finally concluded after 19 days and 115 rounds of aggressive bidding. The Clearing Prices are as shown in this chart.

Entry Cost for Wireless Operators Rise Significantly in India
Even as most of the challengers (barring RCOM) did not face spectrum renewals in these auctions, their medium-term prospects of survival in the Indian wireless market just got bleaker, in our view. High spectrum prices are now a reality, for all operators, irrespective of their revenue market share. Spectrum pricing has now hit a level where even the most efficient operators (more…)

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