Messages

736

Technology / Internet of Things Graduates to Implementation Phase

« on: April 22, 2015, 12:01:44 PM »

IoT (internet of things) promises to be a key growth driver over the medium-to long term. IoT could be an integral technology element in developing analytic platforms. However, to develop capabilities in IoT, Indian vendors need to better develop and manage the eco-system and improve their analytic skills. The ecosystem includes niche solution providers, M2M (machine to machine) platform providers and engineering analytics players.  The technology has developed faster than expected. The product development space is likely to change materially due to IoT. Clients incrementally intend to develop platforms which their customers can control and customize.

This trend / viewpoint is likely to reverse in the coming years. In the third phase of evolution, software and IoT (Internet of Things) will likely dominate the engineering services space. The amount of software going into products (other than normal functional needs) is likely to increase considerably. Automotive, medical devices and ISVs are likely to be the key growth drivers for Engineering Services.

737

4G / LTE / Potential Impact of 4G Launch on Incumbents

« on: April 20, 2015, 12:24:36 PM »

Despite acquiring good quality 800 MHz spectrum there is not much clarity on potential 4G launch by new entrants. However if the current 800 MHz spectrum can be converted to contiguous blocks, and at later stage if 4G entrants can add more spectrum in the same band, we would view that as meaningful risk for incumbent telcos.

Given its premium pricing, Bharti could be more vulnerable to any potential pricing disruptions caused by 4G new entrants (assuming new entrants launch in metro markets to begin with). However we have seen that high end subscribers are more sticky and hence
such concerns may not entirely play out in our view. Furthermore with Bharti deploying 900 3G network in metro markets, the subscriber churn could be limited in our view. On other hand 4G launch by new entrants may accelerate the need for Idea to deploy 4G at least in the key circles and may put meaningful pressure on capex and network costs in our view( particularly Idea will need a
catch up on backhaul investments with 4G upgrade). To sum up both Bharti and Idea will have their own set of challenges as and when 4G new entrants launch 4G services.

If RJio decides to get aggressive on pricing in order to gain market share, it might cause pricing pressure for both voice and data after the company?s entry. The question is not whether RJio will be successful and has worked out its economics, but whether RJio can inflict enough damage on the incumbents over the medium to long term. We think RJio can inflict damage.

738

SmartPhones & Apps / Apple iPhones to have Dual Camera ?

« on: April 19, 2015, 04:18:36 PM »

Apple has acquired Israel?s LinX Computational Imaging Ltd. LinX develops and makes camera modules for smartphones and tablets. It has the technology to create 3D images, measuring depth via array cameras and software. There has been no press release from Apple
but if the report is accurate, we think it is possible that future iPhones and iPads will come equipped with dual cameras.

From the iPhone 7, which we expect to launch in 2016, iPhones will come with 3D dual cameras and that by 2017, 21% of smartphones will have shifted to dual cameras. With Sony having made a rapid string of image sensor capex announcements, we think there is a growing chance that dual cameras will spread in earnest from 2016.

739

Technology / How Much is iCloud's Contribution to Apple ?

« on: April 16, 2015, 11:39:04 PM »

iCloud is primarily a data storage service for documents, photos, and video. The service also includes backup and restore functions as well as "Find My iPhone." As of last July, Apple claimed 320mn users, which are granted up to 5GB of free data with pricing at $0.99/mo for 20GB up to $19.99/mo for 1TB.

 Last September Apple lowered its iCloud pricing 60% to align the service closer to Google Drive  pricing. With a number of competing services available to iOS users, we assume a high single-digit user attach rate and an annual ASP slightly above first-tier pricing.

740

SmartPhones & Apps / What is Apple's Revenue from AppStore ?

« on: April 16, 2015, 11:36:21 PM »

Apple App Store revenue is recorded on a net basis with Apple collecting a 30% agency fee for paid downloads, subscription services, and in-app purchases. In a recent analysis of the top 250 revenue generating apps, market research firm Distimo pointed out that more than 70% of sales are from in-app purchases, so the number of downloads is a less relevant measure of growth. In January Apple announced that it has paid more than $25bn to developers, implying total app store billings near $36bn assuming a 30% agency fee and $11bn in cumulative revenue for Apple.

741

SmartPhones & Apps / Apple Pay Vs Square Vs Paypal - Mobile / Online Payment

« on: April 15, 2015, 02:34:58 PM »

Results of 2015 Apple Pay and Mobile Payments Survey
Only 2% of survey respondents used mobile wallets online and in stores, while 11% used Paypal / Square etc. for online transactions. About one-third of respondents were comfortable being tracked in store in exchange for offers.

85-90% of mobile wallet users are willing to try it again. Size of transactions mainly small but 16% of Google Wallet users noted large transactions too. Significant disparity on usage frequency amongst Apple Pay and competing wallet users with just under 50% using Apple Pay 2-3x per month while majority of competing wallet users have only used it once. Apple Pay users more likely to use the service across physical stores while competing wallet users mainly online or in the Google Play store. Convenience and Security are key factors for usage of all mobile wallet users but Apple Pay users cite speed as another key factor while competing wallet users cite mobile deals as a reason for usage. Limited merchant locations was cited as an issue amongst Apple Pay users. Within concerns, credit card info security ranked higher amidst non Apple Pay users vs Apple Pay users.

742

SmartPhones & Apps / Can Reliance Jio Chat App Disrupt the Market ?

« on: April 15, 2015, 02:31:18 PM »

Reliance Jio has launched its integrated instant messaging application today, both on iOS and Android. The application has the following features 1) Free texting facility to Jio Chat users; App can also be used to SMS non-Jio (termination charge of Rs0.02 per SMS) 2) Video Calling 3) Voice conferencing 4) Jio Drive to store pictures/videos. We believe that this is unlikely to move the dial for the company given 1) Presence of a multitude of similar cross-platform OTT apps available such as Whatsapp, Viber, Hike, Wechat 2) Limited success of VoIP globally.

Though Jio chat is a one stop shop OTT, we do not see any differentiating feature on the app which could not be replicated by existing OTT players over time. In our view OTT like WhatsApp who enjoy the first mover advantage (and hence a network effect) could not be displaced by a new app. Jio chat could be add on OTT (i.e. apart from having WhatsApp, consumers may have Jio chat). We remain unsure how Jio could offer differentiating services to make this a sticky app.

743

Technology / Where is SingTel's Digital Life Initiaitive Now ?

« on: April 14, 2015, 09:50:37 PM »

Digital Life appears to be winding down. The relatively new CEO is moving to the US and being replaced by the Digital Enterprise MD, while the consumer services will be subsumed by the consumer business. That leaves Digital Life as focusing on digital marketing, big data and regional video (SingTel? OTT TV and VoD service HOOQ). We like the improved focus, and we like that this appears to indicate a contraction in the group?s interest in pushing into an area that has seen losses widen.

The trends were getting better, and the opportunity remains potentially large, so we do not bury the business yet. However the changes indicate that our belief in SingTel potentially developing a large-scale business may have been misfounded.

SingTel?s acquisition this week of online security Trustwave for US$850m was a further step in the digital direction. We agree that it appears a good asset, with a solid position in a growing market and an ability to sell its services to group companies to build scale. This represents a step by SingTel to strengthen its cloud services credentials. However, we fear that SOE/infrastructure firms are not the ideal owner of developing IP based services.

744

4G / LTE / Amabani's Plant Rumors of Global Telco Picking Stake in Reliance Jio ?

« on: April 10, 2015, 10:41:09 AM »

This is how Rumors are Planted in the media though the company could be negotiating but the management well known for Insider Trading neither accepts nor denies this in shady operations,

RIL could create value for its shareholders from a potential M&A in the telecom business, if it enters into a strategic partnership with a global telecom player who is willing to pay a ?premium? price to gain a strategic entry into the Indian market, notwithstanding the unfavorable business economics in the near term. A global telecom player could find the Indian telecom business attractive in the long run due to (1) significant growth prospects given limited data penetration, (2) likely consolidation of the industry and (3) its own low cost of capital.

745

3G / HSPA / EVDO / TRAI cuts roaming tariffs, negative for telcos

« on: April 10, 2015, 10:24:39 AM »

The Telecom Regulatory Authority of India (TRAI) has issued a tariff order revising national roaming tariffs, wherein it has cut voice tariffs by up to 40% and SMS tariffs by 75%. We estimate that revenues from national roaming contribute anywhere between 4%-7% of mobile revenues and the above cut could impact roaming revenues of telcos by 20%-30%. Consequently, we lower our FY16-17 EPS estimates and 12m TPs by 1-3%.

We also expect further clarity on the TRAI?s policy on OTT applications and network neutrality following the release of the consultation paper on the topic. At present >90% of India?s internet users access the internet though mobile operators and voice revenues contribute to 77% of mobile revenues (Bharti + Idea). Consequently unrestricted use of free VOIP services could have a significant impact on
operator profitability.

746

3G / HSPA / EVDO / Airtel to Gain as it Abandons 3G Intra-Circle Roaming Agreements

« on: April 08, 2015, 12:16:49 PM »

An important fallout of 3G spectrum wins in the recent auctions is the change in dependence on the current 3G intra-circle roaming (ICR) arrangements. Telcos that won fresh 3G spectrum would no longer be users of 3G ICR in such circles (and save on ICR payouts) whereas telcos that did not win 3G spectrum would continue to rely on ICR.

Before the March 2015 auction, Bharti had own 3G spectrum in 13 circles and relied on 3G ICR agreements with Vodafone and Idea in eight circles. None of the three had 3G spectrum in Orissa. Following this auction, Bharti has own 3G spectrum in 21 circles (all circles except Kerala). Consequently, when 3G spectrum is awarded and when 3G services are rolled out (3-4 months after spectrum award), Bharti would save on 3G ICR payouts in 7 circles. It would also start receiving 3G ICR pay-in in Orissa from Vodafone and Idea.

747

4G / LTE / How Bharti Airtel has Best Spectrum for Voice & Data ?

« on: April 08, 2015, 09:56:54 AM »

We find that in its 12 largest circles, Bharti Airtel (at avg 20.6MHz) has 40%/50% more spectrum than Vodafone/Idea, even if we exclude Bharti?s 2300MHz spectrum. Even in its 10 smallest circles, Bharti has narrowed the gap with Vodafone and has overtaken Idea. Further, with its average spectrum holdings having gone up by 50% from the last 2 auctions, Bharti should be able to offer data capacity with much better Ebitda margins.

In its 12 largest circles, Bharti has the highest 900 spectrum at 5.1MHz. It also has the highest 2100 spectrum at 5.3MHz (5MHz in
11 circles and 10MHz in TN) In these 12 circles, Bharti increased its total spectrum (after 30% higher weights to 800 and 900) by 7.3MHz in these two auctions, which is the highest among all telcos.

In these circles, Bharti has 25.2MHz including 2300MHz, which is almost 50% higher than that of its nearest competitor. Even if we
exclude 2300 considering its in-building coverage limitations, Bharti?s holding is 20.6MHz vs. 14.6MHz for Vodafone and 13.8MHz
for Idea. In its 10 smallest circles, Bharti had added 6.2MHz in the last two auctions, which is second only to Jio (6.9MHz).

To summarise, Bharti, which already had a healthy lead over others in its 12 largest circles, has further increased this gap. In our view, this would provide it adequate capacity for years to come. High spectrum holding would also result in lower terminal BTS count than earlier, leading to capex and opex saving. In its smaller circles too, Bharti won adequate spectrum, which would help reverse some of its RMS losses and result in improved profitability. Hence, Bharti?s healthy Ebitda growth should continue.

748

4G / LTE / RCom to Liberalize Existing 800 Spectrum to Offer LTE

« on: April 07, 2015, 04:45:30 PM »

Reliance Communications' auction strategy was well planned financially prudent strategy and company has future proofed its portfolio by acquiring 850 MHz. The company chose not to renews its 900 MHz in some circles as pricing got expensive. RCOM
wants to be dominant LTE operator in India.

RCOM will liberalize its 850 MHz on circle by circle basis and is estimated to pay Rs 72 bn for 6 circles. RCOM expects strong eco-system support for 850 MHz LTE and expects many devices to come up in coming years. RCOM thinks that in future adequate opportunities for spectrum trading/leasing which gives it new arenas to explore if it could not renew its 850 MHz spectrum in 2021.

749

4G / LTE / 4G LTE Handsets Which Support Reliance Jio's 800 MHz Spectrum

« on: April 07, 2015, 04:37:20 PM »

Reliance Jio Infocomm has just a while ago released a list of Phones with LTE support on 850MHz band

Less than Rs 10,000
Motorola Moto E 6,999
Samsung Galaxy Core Prime 9,700
Samsung Core Prime 9,700

Upto Rs 20,000 LTE Phones in India
Blackberry Q5 12,871
Samsung Galaxy Avant 12,999
Blackberry Q10 14,000
Samsung Grand Max 15,276
Samsung Galaxy Grand Prime 15,499
HTC Desire 510 16,000
Samsung Galaxy S4 Mini 16,170
Samsung S4 Mini 16,170
Blackberry Leap 17,000
Samsung Galaxy A3 20,500
Samsung S5 Mini 20,999

Upto Rs 30,000 4G LTE Phones Compatible with Reliance Jio in India
LG G2 21,292
Samsung Galaxy Grand 2 22,999
Samsung Galaxy E7 23,000
HTC Desire 610 23,000
LG Nexus 5 23,500
Samsung Galaxy A5 25,500
HTC One Mini 25,500
Apple iPhone 5C 27,890
Samsung Galaxy Note 4 27,960
Samsung Note 3 Neo 27,960
HTC Desire Eye 28,799
Samsung Galaxy S5 28,999
Apple iPhone 5 30,000

4G LTE Phones with Prices Greater than Rs 30,000
Samsung Galaxy A7 30,499
Samsung Note 3 31,110
Blackberry Classic 31,500
HTC One 32,500
LG G3 33,000
LG Flex 34,000
Apple iPhone 5S 34,252
Samsung Galaxy Alpha 39,990
HTC One M9 40,195
HTC M8 41,000
Motorola Nexus 6 41,399
Samsung Galaxy Note Edge 42,500
Blackberry Passport 43,653
Apple iPhone 6+ 44,000
Apple iPhone 6+ 53,000

750

5G / Wi-Fi / Reliance Jio + Reliance Communications Merger Gets Closer

« on: April 07, 2015, 04:31:52 PM »

Reliance Jio's idea is to build a compelling product which can provide the requisite reach and fall back for its 4G offering on mobility. In case of RCOM-RJio 800MHz asset merger, the footprint with 15 number of circles is rivaled only by Bharti Airtel with 21 circles. However, RJio might have to seed handsets as low end handsets do not offer this band compatibility.

RCOM has given up spectrum in Assam, Bihar, Odisha and NE circles and bought 800MHz in critical circles like Gujarat where it does not have 5MHz contiguous spectrum. RJio has bought 800MHz in 10 circles out of which it has 5MHz contiguous spectrum in 4 circles and 6 circle overlap with that of RCOM?s winning circle in the current auction. According to TRAI recommendations on spectrum trading norms trading of spectrum will be allowed within the same band. RCOM will have to liberalise the existing 800MHz holding by paying the market price to be allowed to for spectrum trading but the price to paid will be remaining life which is 6 years.