Bharti Airtel Bids for Videocon’s 4G LTE 1800 Band Spectrum

Airtel 4G LTE Spectrum Bid on VideoconSunil Mittal led Bharti Airtel announced that it has entered into a definitive agreement to acquire right to use 2X5 MHz spectrum in the 1800 MHz 4G LTE band from Videocon. This deal, if concluded, will mark Videocon’s exit from the telecom market. This deal happened amidst the cancellation of earlier sale of Videocon’s spectrum to Idea Cellular. The acquired spectrum in all six circles (valid until December 18, 2032) is contiguous in nature and can be used to offer LTE data services. The acquisition will further strengthen Airtel’s 4G LTE footprint, with LTE (both FDD and TDD) spectrum covering 93% of its overall revenue or 19 out of a total 22 circles.

Airtel will acquire Videocon’s spectrum (2X5 MHz in the 1800 MHz band) in six circles namely Bihar, Gujarat, Haryana, Madhya Pradesh, (more…)

How Vodafone and Airtel are vulnerable to Jio’s Public launch ?

Vodafone IndiaAkash Ambai led Reliance Jio Infocomm is all set for public launch within the next couple of months. Before we dive into the details on how and why Airtel / Vodafone are the most vulnerable operators let us quickly look into data with ears on the ground.

Jio will launch with about 75,000 Cell Tower Locations and about 20,000 Small Sites / WiFi Spots. Target Locations of Launch – Metro Cities, Urban Centers and Semi-Urban Towns. Rural is excluded in the initial public launch and there are no Jio 4G signals in rural areas.

With such a Network Arrangement, Jio’s addressable market is 400 Mn Wireless Consumers in the above said geographical areas. How are these consumers stacked up ? (more…)

Airtel to Increase ARPU amidst Reliance Jio Launch

Airtel Vs Reliance JioBharti Airtel expects modest annual increases in blended ARPU in coming years led by data (assuming rationality on the part of Reliance Jio). Airtel admits voice ARPUs will continue to dip but does not think cannibalization of voice by high-speed data is a risk, likely underestimating this voice ARPU reduction risk. Airtel thinks that higher ARPU subs (post-paid or high-end pre-paid who would be early 4G adopters) hardly churn and that pricing per se is not a factor in churn at the high-end. Additionally, it is rapidly rolling out 4G on a large scale not giving its high-end 3G/4G subs reason to shift to competition. Data traffic will continue to grow at a robust pace driven by increases in penetration and per sub consumption growth. Better data network and newer technologies (such as 4G) itself allows higher consumption on a like-for-like basis.

Plain Vanilla 2G Voice
On the contrary, incrementally new subs are coming from low-ARPU rural areas, total voice ARPU will likely continue to trend down. Urban wireless penetration (more…)

Reliance Jio’s Contrarian Approach to Airtel – Adopts Asset Heavy Model

Reliance Jio Telecom AssetsContrary to the current trend, Reliance Jio prefers an asset-heavy model. The basic premise is that assets created at a large scale and competitive capital cost provides a long-term competitive advantage through business cycles. Cost-leadership is the core mantra of Reliance Group – this is achieved via capacity creation at a massive scale. For the telecom sector, spectrum and technology are viewed as the two factors of production – the former is scarce and finite whereas technology costs tend to decrease exponentially. So Jio would tradeoff in favour of cheaper spectrum with nascent ecosystem compared to a technology with good current ecosystem.

At launch we estimate Jio to have (more…)

Mobile Network Quality & 3G Data Helping Incumbents

Airtel 3G NetworkAirtel’s overall voice market share is a better way to analyze the impact of smaller players’ lower tariff strategy on incumbents’ market share (given it is an incumbents across all the circles). The data shows that Airtel has managed to hold on to its share (~30%) despite smaller players’ pricing minutes at a discount (for example, Telenor’s voice RPM is 20% lower v/s Bharti/Idea, adjusting for their ILD/NLD/roaming revenue). Telenor has a 6.5% revenue share in its six circles and managed to gain ~170bps in the last nine quarters. Even Idea has gained ~220bps in 14 of its newer circles despite overall good execution. These 14 circles contribute 60% of the industry revenues and Idea currently has ~10% revenue share in them.

3G volume pick-up has helped incumbents’ (more…)

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