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Messages - wiredlife

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1
FTTH Broadband / Broadband Subscribers in India at 422 Mn
« on: July 31, 2017, 11:26:55 AM »
The Minister for Communications informed that based on information provided by TRAI, as on March 31, 2017 there were 422.2 mn broadband users in India and internet penetration was at 32.9%.

The National Telecom Policy 2012 aims to have 600 mn broadband connections by 2020. Under the BharatNet project, the government aims to provide 100 Mbps broadband connectivity to 0.25 mn village administrations (Gram Panchayat) by March 2019. As on July 23, 2017, optical fiber cables has been laid in 0.1 mn gram panchayats and broadband connectivity has been provided in 25, 426 gram panchayats

2
4G / LTE / Idea VoLTE Launch in 2018
« on: July 31, 2017, 11:23:27 AM »
Idea Cellular got it completely wrong on the 4G front. They started late on the CAPEX with Network cost increased qoq due to higher electricity charges and general expansion. Access charges increased due to higher adoption of unlimited plans which lead to higher IUC cost.

Idea has no intention to subsidise handset cost but will partner with handset vendors to bring down the cost of material and match JIO's price point. VoLTE should be launched by early CY18.

As per management data rates have bottomed out but realisation will fall further due to higher adoption of unlimited plans which currently stands at high single digit; data price to stabilise at Rs 30-40/GB. With current capex outlook, Idea can support more than 10x increase in data traffic.  Management indicated that data subscribers have started growing from the month of June and this trend is likely to sustain as the company has significantly augmented its data network.

3
4G / LTE / Jio New Plans Still Cheaper than Airtel / Vodafone
« on: July 13, 2017, 02:00:42 PM »
Jio's Subscriber ARPU per month in the recently announced plans works out to Rs166/Rs143, which is higher than ARPU of Rs110 implied for the Dhan Dhana Dhan plan. This may seem a relief for A-Vo-Id Operators, and it brings relief to smaller telcos that were getting priced out by JIO, though they seem to have thrown in the towel. Having said that, JIO remains cheaper than A-Vo-Id Operators  on data pricing.

The Summer Surprise (SS) offer of most of JIO’s 72m paid subscribers as of end-March will expire in early August. Hence, it is
surprising that JIO chose to raise pricing ahead of this lumpy renewal, which we interpret as a sign of increasing confidence (it is
unlikely that JIO missed this consideration, or it was probably exhausting budgets or reacting to adverse publicity relating to
"unprecedented disruption from a new entrant"). JIO currently has ~87m subscribers. We expected a smaller increase followed by
another increase a couple of months later.


4
TRAI allows a period of 12 months post-merger to comply with the 50% RMS threshold rule. So, if the merger is effective Jun-18 (i.e. all approvals obtained within one year from now), then Idea/Vodafone has time till Jun-19 (two years from now) to make the adjustment. During this 2-year period, RJio will register revenues taking share, largely against the smaller players, which should not impact the combine too much by way of needing to cede excess revenues. Sure, if the India telco market gets back to a robust growth trajectory, revenue dis-synergy is not as big a concern as the current Math (worryingly) suggests – it means that the combine wouldn’t need to cede much absolute revenues in Jun-19 as it will have had a lower % (closing the gap to 50% threshold) of a larger industry revenue base.

But what if the market does not grow nearly as much as the combine expects and has estimated in the merger model? In a stagnant market, even if we assume that RJio will take share substantially against the smaller players, Idea + Vodafone’s high RMS will require the combine to cede revenues. To the extent that RJio takes more revenue share from Idea + Vodafone in a stagnant market, the combine has ceded the excess revenues upfront ahead of TRAI-deadline taking effect, in any case.

5
Airtel one of the Leading Broadband Service Providers in India took a whopping 15 years to actually care for its customers by putting some innovation.

Due to Monsoon, it is quite customary in India that the voltage will fluctuate and burn your Broadband modem. Protect your Modem is something Airtel has come up with now.

STEP 1
Keep the device connected to the UPS.

STEP 2
Switch off the modem when not in use.

STEP 3
Keep the device in the centre of your house for better connectivity.

STEP 4
To troubleshoot, switch off the device and turn it back on after 2 minutes.

STEP 5
Protect the device from dust to ensure better  performance.

But a lot needs to be done yet not sure which fuc**ing product managers has Sunil Mittal hired for designing customer care at Airtel.

6
Technology and the Internet of Things are eroding pricing of nearly everything to zero, yielding a world of zero marginal costs and one of almost unlimited scale. While destruction started in retail and services, it is now impacting manufacturing supply chains. At the same time, attempts to keep conventional private sectors alive (via aggressive financialization) leads to ‘zombie companies’ and persistence of overcapacity.

In our view, these two forces (technology and over financialization) eradicate corporate pricing power and destroy conventional labour markets, unleashing deflationary pressures while depressing productivity. It also explains a spate of M&A and lack of conventional fixed-asset investment.

7
SmartPhones & Apps / Size of Digital Payments Market - US$350-400bn
« on: June 29, 2017, 07:21:58 AM »
In India, Trailing 12-month ATM withdrawals have hovered around US$350-400bn in the last 2 years. In comparison, the total value of card transactions at POS (trailing 12 months) was US$100bn in April-17 (vs US$50bn 2 years ago), while mobile wallet transactions were US$9bn (in April-17) (vs US$1bn 2 years ago).

We believe greater adoption of digital payment tools (like mobile wallet, IMPS/UPI, card transactions at POS, mobile banking) could affect the share of ATM withdrawals.

The Indian consumer payments market could be segmented as:
a) a segment that earns digitally (ie income straight into the bank or income earned in cash but then deposited into a bank) and then spent either via a card swipe at a POS terminal or withdrawal from an ATM and then spent in cash; and
b) a segment that earns and spends in cash (hence not part of formal banking channels).

We only look at the first point here, where individuals could pay digitally rather than withdrawing cash from an ATM.

8
"The pricing is unsustainable. 1GB a day (of data) for that price (Rs 309) is pretty low. It is better than zero (free services)" – Sunil Mittal, Chairman, Bharti Enterprises

How Airtel and Idea differ with Jio on Promotional Offers and  Predatory Pricing ?

Airtel - Promotions shouldn't exceed 90 days. IUC compliance should be seen as a driving factor. Offers below IUC cost must be
considered as instances of predatory pricing.

Idea Cellular - Promotions should comply with TRAI's principles of IUC and must cover the same. No promotions should be allowed at rates lower than IUC cost.

Jio - For effective competition promotional offers must be permitted. This is also crucial to drive adoption of new technologies. Adoption of newer technologies, convergence of networks and services mean that there are many services that can be offered free of cost. The regulator doesn't need to scrutinise the industry on this matter. Price forbearance is the best option.

9
Airtel - In a 'calling party pays' regime, IUC compliance is vital as telcos can use competitors' networks and resort to predatory/below-IUC pricing.

Idea - Tariff review incomplete without reviewing the issue of IUC compliance 4G customers must be treated as a separate class from 2G/3G customers as 4G is more efficient than 2G/3G and allows operators to provide much more benefits than 2G/3G. Incentivisation of 4G handset upgrades should be seen positively.
 
Jio - More transparency is needed. No custom offers should be permitted.

10
Web 2.0 / Why Public Cloud is Critical for Microsoft ?
« on: June 27, 2017, 12:16:15 PM »
Microsoft's portfolio of public cloud products is critical to its success, and we are impressed with early inroads, in particular in Office 365, which we believe enables enterprises and SMBs to cut back on email administrator costs. The natural outcome of public cloud competition is public cloud commoditization; therefore we feel Microsoft will need to differentiate itself from Amazon’s AWS by moving up the stack and  providing value-add cloud software applications.

Microsoft's potential opportunities in the public cloud space with Office 365 and Azure, and note an improved capital allocation policy

SaaS Bundle with LinkedIn
Given the acquisition of LinkedIn in June of 2016, Microsoft may need to invest in incremental products to round out its application portfolio of Dynamics products that are cloud-enabled, or do smaller tuck-in acquisitions to strengthen its enterprise apps portfolio, which outside of Office has failed to meaningfully grow organically in a highly competitive end market. However, we view the move into  the SaaS application layer as a long-term positive trend, which is supportive of stickier customers and ultimately higher margins.



11
EVDO / Wi-Fi / Broadband Subscriber Base at 284 Mn
« on: June 27, 2017, 12:12:16 PM »
TRAI reported 284mn broadband subscribers (speed of 512kbps and above) end of April-2017. The breakup is as follows.

Reliance Jio 40%
Airtel 18%
Vodafone 14%
Idea 8%
BSNL 8%
Others 12%



12
4G / LTE / Will Jio Move Disruption to Voice Market ?
« on: June 21, 2017, 08:12:56 AM »
The key question facing the sector will be pick up in sector revenue growth, which in our view is likely once Jio stabilizes with c110-120m paying subscribers. We add that at present Jio’s market share is constrained by a limited 4G ecosystem and it is possible that Jio may try to address this by launching a 4G feature phone. Such a launch would likely see some tariff pressure, as such stability in 1Q revenues may not help, and we may not get a better picture of sector revenue growth prospects in FY18 until 2QFY18e.

We note that one more driver for sector revenue is likely to be an upgrade by pure voice subscribers to bundled plans, however any upside may be capped if Jio's 4G feature phone launch is combined with more disruptive pricing action.

13
As smartphone screen size increases, a greater percentage of people start engaging more fully in varied online activities. Survey evidence showed that a higher proportion of users with >5" screen sizes performed more varied online activities than those with phone screens smaller than 5". The activities that showed the greatest upturn were gaming, payments, shopping, and music/video downloads.

Survey evidence also showed that an increase of at least 20%-50ppt in the percentage of people who were spending over 30 minutes on various online activities using smartphones with screen size >5" vs. those who were using smartphones with screen size of 4-5 inches.
This shows not only that greater percentage of people use smartphones for performing various activities but also that a greater percentage of people spend more time with smartphones having larger screens.

In 2016, shipments of phones with >5" screen size constituted 67% of total smartphone shipments in India

14
For Idea Cellular, 3G / 4G Data fared much worse than voice with data revenue declining 15% Q/Q and 22% Y/Y) and voice declining to a lesser extent (3.2% decline Q/Q, 10.2% Y/Y). Surprisingly, data ARPU did not decline Q/Q despite such a sharp data revenue decline (possibly, because Idea suffered a significant decline in its data sub base)

Consumption-related metrics jumped sequentially for both voice and data, especially for data (with data volumes up 16.7% and per user data usage jumping 36.7% Q/Q). But given the sharp data pricing fall (27.7% Q/Q) and halving Y/Y, it did not help revenue performance. This is the main point we’ve been highlighting for some time – pointing to significant volume (consumption) jumps as proof of positive elasticity does not make sense when this is accompanied by sharp pricing cuts.

Ultimately, we focus on data ARPU, data revenues, data revenue added and data revenue growth. It is very much possible to show volume expansion and robust data sub-adds in data taking steep price cuts.

15
EVDO / Wi-Fi / How Jio is dependent on Reliance Communications ?
« on: June 19, 2017, 10:44:22 PM »
RCOM's current operating challenges could impact Jio in the medium term.

In addition to leasing towers and fiber from RCOM, Jio has a spectrum-sharing deal in the high-value 800MHz band. Our analysis of spectrum holdings suggests that the sharing deal is crucial in six high-value markets where Jio holds less than the 5MHz spectrum which is the minimum required bandwidth of its LTE network. These markets collectively account of c.45% of industry revenues.

Furthermore, RCOM's 43K towers account for c.40% of Jio network sites. RCOM's fiber network also provides the significant backhaul capacity which has been a key competitive lever as it has allowed Jio to provide large data bundles to attract subscribers.

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