2G GSM / CDMA

Telenor / Uninor India Positions as Low Cost Operator, Circlewise Operations

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Telenor - Uninor India Operations After the Supreme Court’s Feb 2012 decision to quash all of company’s licenses, Telenor bought back spectrum in six circles (AP, Bihar, Gujarat, Maharashtra, UP (E), and UP (W)), shutting down its commercial operations in seven others. Telenor’s Indian Operations Uninor has taken a different strategy for 2G Voice operations in India positioning itself as a Low Cost Operator.

Instead of going for pan-circle network coverage to begin with, Telenor focuses on bringing its network quality at par with the leaders in the market in select clusters in a

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Airtel, Vodafone, Idea Consolidate at Top Position at the cost of CDMA Operators in 2013

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GSM incumbents led by Airtel, Vodafone and Idea Cellular have regained the market share after seasonal weakness – in line with historical trends. On a structural basis CDMA / PSU operators have found it difficult to defend their market share despite 10-11% industry growth. Healthy execution and strong brand positioning, we believe, would drive market share gains for top 3 operators (Airtel, Vodafone and Idea). We believe Idea Cellular – as a pure-play wireless operator – will be the biggest

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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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Delhi will witness heated Auction of Spectrum from Airtel, Vodafone, Idea, Uninor & Videocon

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Spectrum Auction IndiaA steep cut in Delhi Circle’s reserve price makes it an attractive circle for new licensees. Our framework for new licensees suggests NPV remains positive till 50% higher spectrum prices. IDEA without 3G spectrum could be an aggressive bidder in Delhi. Spectrum prices may rise more than 50%, if incumbents want to deny IDEA 3G spectrum in Delhi.

A significantly lower reserve price compared to the market size, indicated by the high industry revenue / reserve price for the 1,800MHz and 900MHz bands.

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800MHz Spectrum Auction Imminent

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2G 3G 4G Spectrum Auction IndiaTRAI has issued a consultation paper on setting the reserve price for auction of spectrum in the 800MHz band. This is after the DoT expressed its intention to auction this spectrum along with 900MHz and 1,800MHz, given the government’s focus on fiscal consolidation and revenue loss in case of non-auction of 800MHz spectrum.

TRAI had earlier suggested to DoT to explore alternate usage of this spectrum band and to consider adoption of E-GSM (Extended-Global System for Mobile), given the falling popularity of CDMA (Code Division Multiple Access) technology (800MHz is used by CDMA operators) and the fact that the CDMA subscriber base

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Troubles Mount at Maxis, Can Aircel Weather The Storm ?

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Maxis Trouble - Aircel FutureMalaysian Telecom Giant also Maxis hosted a group luncheon forum for investors to meet the new CEO, Morten Lundal. One of the key initiatives pushed by its new CEO is to narrow excess mgmt layers by 40% and existing operational silos which he believes have served to dilute the company’s agility and competitiveness. Headcount will be reduced further from current c3,200 level to c3,000 by year-end, mostly with reduction from management layers.

Maxis noted its intention to claw back some market share, particularly on prepaid segment. Key areas of focus lies on fixing its distribution network which had fallen in prominence vs. peers and branding. Distribution points

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Implications of 800 / 900 / 1800 MHz Spectrum Auction

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Spectrum Auction IndiaThe Empowered Group of Ministers (EGoM) on telecom accepted Telecom Commission (TC) recommendations on reserve prices for 1800Mhz and 900Mhz band spectrum auctions. This would mean that pricing for 1800Mhz and 900Mhz spectrum would come down by ~27% and ~50%, respectively (vs. Mar-13 price)

Do Telecom Operators Have A strong in Case of Spectrum Renewal ?
Telecom minister stated that 900Mhz spectrum will not have reservations for any operator. We do not rule out the possibility of affected incumbent telcos opposing a potential 900 MHz auction, as they may believe that they have the right to extend

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Airtel, Idea, Vodafone Lead Mobile Subscriber Addition in Oct

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Mobile Subscribers in IndiaThe Cellular Operators Association of India (COAI), the GSM operators lobby, reported net additions of 4.3mn to the GSM subscriber base in October 2013 vs 4.4mn in the previous month. Airtel, Vodafone and Idea added 1.5mn, 1.2mn and 1.1mn subscribers respectively, followed by Aircel (0.5mn additions) and Videocon (0.2mn). Uninor had a flat subscriber growth (MoM).

The incumbents again represented the bulk of the additions, in line with their recent performance. The three operators combined represented 88% of the additions in the previous six months amongst the operators represented by COAI. Bulk of Bharti’s additions came

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New Telecom Policy – M&A in India to be Liberal ?

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M&A in Indian Telecom SpaceAs per the reported proposed norms, the merged entity would be allowed to have market share (in terms of subscriber base & adjusted gross revenues [AGR]) of up to 50% in a particular circle (up from current guidelines of 35%). The new entity could own up to 25% of the total spectrum allocated in a particular telecom circle and up to 50% of spectrum allocated in a specific band (and 10 MHz in 800 MHz band).

According to the report, the DoT also proposes to allow the merged entity to own two blocks of 3G and/or BWA spectrum (vs one currently) in a specific circle. However, the acquiring company would need to pay market-determined price (to the govt) for GSM

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OTT Apps Lead to Massive Decline in SMS Usage

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number of smsOver-the-Top (OTT) services are web-based (potentially cheaper) ways of communicating that bypass traditional voice & SMS services. TRAI data shows that SMS has already started to feel the impact from online messaging apps such as WhatsApp, and SMS’ contribution to industry rev has already declined (3%; Jun13). The expected further reduction, however, should be more than offset by data pickup (~10% of rev for Bharti/Idea), while voice revenue should remain relatively immune.

TRAI data highlights that SMS as % of rev (GSM)

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