Implications of Final norms for Unified Wireless Licence

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Mobile Revenues IndiaDoT published the final version of Unified License, which essentially de-links spectrum from a telecom permit/license and allows for all services (Mobile or Fixed Access/NLD/ILD/ISP etc.) to be provided in a single pan-India permit at a cost of Rs150mn.

At present, all telecom service providers except the recent (new) 2G spectrum [1800/800] winners have a mobile or fixed-line license (Unified Access Service License or UASL, which is service-area specific) that allows ICR arrangements involving addition of new subscribers (through sale of SIM cards) on spectrum/network not owned by the licensee. However, recent spectrum winners as well as existing UAS holders due for renewal in coming years

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SlowDown at the Top End of SmartPhone – iPhone / Galaxy

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Slowdown at Top End of SmartPhone SpectrumIn the past three years, high-end smartphone has been one of the biggest growth drivers for the semiconductor industry given robust unit growth and substantial semi content increase. However, a perceived lack of innovation (e.g. iPhone 5, Galaxy S4) and delays in purchases have resulted in a sharp slowdown of high-end smartphone demand in 2013. Both iPhone 5 and GS4 turned out to be major disappointments. Given Apple and Samsung together account for more than 3/4th of the total high-end smartphone market, it’s a clear sign that high-end demand is slowing down.

The biggest culprit is apparently Apple, as we expect Apple’s high-end smartphone shipments to decline Y/Y in 2013 (we defined Apple’s high-end model as all the iPhones except for iPhone 4, but we do

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Telecom Spectrum – Hot Topic for Rest of 2013

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The TRAI has invited Public Comments on the Auction of Telecom Spectrum in India. Incumbents led by Vodafone faces the expiry of its main 900 and 1800MHz licences in India late in 2014 along with the ongoing tax demand for CGT on its original acquisition which remains unresolved. Vodafone is arguing that the spectrum licences entitle the holders to renewal, a point it is making in court, but it is also engaging in government plans for an auction which could be held late this year. Currently the regulator is considering the reserve pricing of the spectrum and given failed auctions earlier in the year we expect a recognition that the pricing of the 3G auctions was not the right reference point and that reserve prices will be reduced.

Uncertainty remains over whether Vodafone, Airtel and Idea will be allowed to use each others’ spectrum for 3G intra-circle roaming which has

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Hotspot 2.0 – Threat of ubiquitous Wifi for Telcos

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Hostpost 2.0 WiFi CoverageResearch estimates that only 17-18% of wireless data is actually consumed while in transit. The majority of data is consumed at home, office or semi-stationary locales like restaurants, cafes, parks etc.

Smartphones and tablets are generally capable of accessing both networks – cellular and WiFi. With the proliferation of smartphones, the WiFi industry is developing a new network standard (Hotspot 2.0), which would alleviate much of the log-in and authentication

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Baidu Mobile Monetization Rising, TAC Cost Higher A Surprise

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Baidu Engineering TeamBaidu Management that mobile revs for the first time accounted for >10% of total revs in 2Q13. This would indeed mark a significant improvement from levels of 5-6% that we had earlier estimated. Mobile represents 20+% of total Baidu queries, and that mobile (incl. tablet) CPC’s are at least a 40~45% discount to desktop despite improving click-through. It thus seems clear that conversion on mobile significantly lags that of desktop.

Baidu’s Traffic Acquisition Cost [TAC]
We were quite surprised with the surge in TAC to RMB880m up 182bp QoQ to 12.2% of total revs, and well above 50-100bp sequential growth expected by many. While the co attributed most of the growth to increased

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JustDial Profit Growth SlowsDown

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Justdial SEarch Growth and ProfitsJustDial’s revenues increased 38.4% YoY in FY13 to Rs3.6bn (inline with our expectations). Search-related revenues increased 37.9% YoY owing to a 20.8% YoY growth in advertisement campaigns and a 14.2% YoY growth in realizations. Profit increased 26.7% YoY in FY13, 7% below consensus estimates, owing to other income of Rs135mn and exceptional cost of share issue expenses of Rs15mn.

Ad campaigns increased 20.8% YoY to 206,500 (vs 171,000 in FY12 and our expectation of 207,500). Realisations improved 14.2% YoY (vs 15.5% YoY expected by us) to Rs17,320.

JustDial received 364mn search requests in FY13 (up 43% YoY). Internet (182.6mn, up 47% YoY) and mobile-based (41.9mn, up 208% YoY) searches were the largest contributors. Voice-based searches increased 20% YoY to 139mn whilst SMS searches increased 47% YoY to 0.9mn.

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Google Gets Serious Wearable Computing with Glass – Funds HiMax

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Google Glass Means Serious BusinessGoogle and Himax have entered into an agreement to invest in Himax Display Inc. (“HDI”; Himax’s subsidiary company that manufactures LCOS chips/modules), in order to fund production upgrades and expand capacity for LCOS chips/modules used in applications such as Google Glass. While the deal would be completed by end-3Q13, Google will hold a 6.3% interest in HDI plus 8.5% preferred share options. Google will join the core group of HDI shareholders, including Intel Capital Corp, KPCB Holdings and Khosla Ventures.

Himax will also invest an additional amount in HDI to fund its

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Which Component Makers Benefit the Most from SmartPhone Boom ?

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Component Makers benefit from SmartPhone BoomWe believe smartphone makers cannot compromise on the display, processor and memory for high-end smartphones as they are critical components that affect user experience. There is also a limited supplier base for these components and tight supply issues (memory), which would make it difficult for smartphone makers to exert pricing pressure on these critical components.

Display makers and lens module makers set to benefit
The key to hardware upgrades will likely be the display, as a direct user interface, followed by camera. We expect the smartphone screen resolution to move up from HD (1280×720) in 2012 to FHD (1920×1080) in 2013 and QHD (2560×1440) in 2014. The larger and higher resolution display comes at a higher cost, as does

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Vodafone India’s Voice Profits Rise Subscribe Base at 155Mn

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Vodafone India Voice Profits RiseVodafone India’s 1QFY14 results appear to have benefited from a stable competitive environment in India, with revenues growing 7.8% QoQ and voice ARPMs rising. Indeed, the growth in voice realizations were the highlight, which is likely to increase gradually. Vodafone’s India revenues increased 7.8% QoQ to Rs94bn (excluding Indus revenues) underpinned by a strong growth in voice and data revenues in 1QFY14. Voice revenue growth (including messaging revenues; change in reporting by Vodafone) increased 7.4% QoQ whilst data revenues increased 17.6% QoQ.

Revenue growth during the quarter was led by both,

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Improving Voice Good for A-Vo-Id, Reliance Jio Challenge from Data in Medium Term

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Improving Voice Business India - Headwinds from DataWe expect sustained improvement in the Indian wireless industry’s fundamentals as basic scale economics of the business catch up and both the scope and intensity of competitive pressure reduce. The A-Vo-Id group is very well-positioned to benefit from this theme and expect sustained market share gains for these company over the next few years. We also believe that incremental regulatory developments should be in favor of the industry as spectrum pricing and allocation start falling in sync with

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