How telecom can enrich billion lives in next few years?

How telecom can enrich billion lives in next few years?

v  Bridging the digital connectivity gap

·         Overall telecom penetration gap – VLR (Active mobile customers)- 707.3m; If we exclude multiple connections[1] and ~325m population below age of 15[2], somewhere about 375m Indians do not have an active telecom connection yet.

·         Rural telecom penetration gap – Almost 500m rural population does not own a phone

·         The rural mobile subscriber base is anticipated to grow at a compound annual growth rate of 12% between 2012 and 2016, at nearly twice the expected growth rate of the saturated urban market. It is likely that 62% of the new mobile subscribers added in the next five years will be from the rural market.^[3] The National Telecom Policy (NTP) 2012 also envisages to increase rural teledensity from the current level of around 39 to 70 by the year 2017 and 100 by the year 2020.[4]

·         Internet access gap is likely to be bridged in next few years by mobile broadband. 3G subscribers are expected to reach 142 million by 2015, accounting for 12% of the total wireless subscriber base. Further, 3G subscribers are expected to be more than 300 million by 2020, accounting for 20% of the total wireless subscriber base.[5]

v  Financial Inclusion through Mobile Platform   

·         Primary attribute of inclusive growth is financial inclusion which requires  greater access to capital.

·         Out of approx 1200 million of Indian population, nearly 70 percent lives in rural locations and over 90 million rural households are on farming.

·         Approximately 27 percent are indebted to formal sources and 13 percent are availing loans from the banks in the annual income bracket of INR 50,000 or less.

·         Millions of people in rural India have little or no access to credit, even from non-institutional sources. Approximately 50 million farmer households in India have not taken any bank credit so far

·          Rural banking does not appear to be a financially viable activity for banks either.

·         Banks have ~7.4 lac point of sales, ~ 1 lac ATMs, ~94000 branches of scheduled commercial banks[6] , 18.3m credit cards and 302m debit cards[7]. Whereas Telecom Service Providers have ~150 Lac point of sales and cover 80% of Indian geography.

·         Mobile platform by creating a branchless banking system for the communities can be a  potential tool for financial inclusion. 

·          Low tariffs and low cost of handset provide a clear value proposition for driving financial inclusion through mobile platforms.

v  Efficient delivery of public services

·         By virtue of their ubiquitous nature, mobiles enable anytime, anywhere access to and delivery of services, bridging the last mile gap without huge upfront investments, even from rural and remote areas of the country, where computer and internet penetration is still low.

·         Department of IT  finalised the Mobile Governance Policy Framework in January 2012

·         The Framework  addresses  many essential issues that can help efficient delivery of public service through mobile

o    making government websites mobile-compliant,

o   developing mobile applications  in open standards to become interoperable across various operating systems and devices,

o   use of uniform/single pre-designed numbers in the form long/short codes for mobile services,

o   creation of Mobile Service Delivery Gateway (MSDG) as the core integrating infrastructure for multi-channel delivery

·          Department of Information Technology (DIT), Government of India, has created National e Governance Division (NeGD) as an autonomous business division within Media Lab Asia, under the Ministry of Communications and Information Technology, Government of India, for taking up the tasks being carried out by the Programme Management Unit National e-Governance Plan (PMU-NeGP) at DIT. NeGD through Centre for Development of Advanced Computing (C-DAC), has been developing the modularly-scalable Mobile Service Delivery Platform and Gateway (MSDP/ MSDG)

·         Strengthening this framework and bringing more and more government schemes and services under it in next few years can help to bring in inclusive growth

v  Effective transfer of benefits under govt. schemes

·         The service, based on mobile phones and biometric authentication, can form the core micro-payment platform for the transfer of benefits under various government schemes

v  Creating more jobs

·         Research conducted by ITU and several other entities have shown direct correlation of increased telecom penetration and broadband access to economic development

·         While the telecom industry in the rest of the world obtains 35-50% revenues from non-voice services, India derives only ~15% of sales from non-voice/ data services. Projections by UBS for major telecom players in India indicate that the non-voice revenues are going to be ~30% of total revenues for these players by 2020 With digitization of cable TV services, convergence encompassing TV, broadband and Telecom is possible. All this will shift the focus towards multi lingual content creation and VAS innovation.

·         More jobs expected in telecom related equipment and handset manufacturing, network expansions etc

What should be the policy focus?

·         Further improve percolation of internet/broadband

·         Improve impediments(like Right of Way and tower site clearances) for creating physical infrastructure

·         Further enhancement of network capabilities (esp. Optical fiber network) in rural areas

·         Improve resilience/robustness of  mobile infrastructure esp. for  remote areas

·         Bring down cost of entry level handsets to below Rs 500 & smart phones and tablets to below Rs 2500; Make available multi-lingual handsets

·         Foster innovation in local/rural content and VAS with a focus on regional languages

·         Promote R&D and indigenous manufacturing of telecom and related equipments

·         Complete integration of mobile delivery infrastructure with the core e-Government backbone infrastructure. 

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[1] GSMA report says on average every mobile users in India has 2.2 SIM, compared to worldwide average SIM per person of 1.85;  If we take world average of 1.85 it means of 921m subscriptions in India, the unique subscribers are about 497.8m

[2] http://www.nationmaster.com/country/in/Age_distribution

[3] Source – Evalueserve research estimates  www.evalueserve.com  

[4] http://www.dot.gov.in/ntp/NTP-06.06.2012-final.pdf

[5] Enabling the Next Wave of Growth in India : Ernst &Young  and FICCI

[6] excludes rural post offices -1.15 lac , co-operative banks, agricultural credit societies, self help groups etc

[7] http://www.rbi.org.in/scripts/ATMView.aspx

Indian mobile market to grow 11 percent in numbers and 8 percent in revenues in 2013

The analyst firm, Gartner, has published its new report on the Indian mobile services market. The highlights of the report are –

·     Indian mobile service market is expected to reach Rs.1.2 trillion (US$22.8 billion) in 2013, up 8 percent from 2012.

·         The mobile connections in India will grow to 770 million in 2013, an 11 percent increase from 712 million connections in 2012.

·         The mobile market in India will continue to face challenges if average revenue per unit (ARPU) does not grow significantly. India will account for 12 percent worldwide mobile connections, but just 2 percent of worldwide mobile services revenue (in constant USD) in 2013.

·    Two major challenges that India Telcos will face in near future - growing their profit margin in the face of intense competition and successfully competing with over the top service providers, such as Facebook and WhatsApp.

·      With the increased use of voice over IP (VoIP) and the probable termination of national roaming charges, mobile broadband is the area of opportunity for operators. Smaller mobile broadband plans using a sachet-style usage pattern appeal to Indian consumers.

·         Further rural expansion of mobile services will come at a cost.

·  In India, innovation in utility apps that help bring efficiencies in a consumer's life will bring in sustained revenue and will be relatively more difficult to replicate by new entrants.

·       While social and video apps are doing extremely well in India, it is time to look beyond these and deliver apps that can have a sustained business model. Operators need to insert themselves into the value chain of these new apps and services.

Growing appetite for mobile data and suggested approach for India

Growing appetite for mobile data globally

Juniper has published it’s latest report on Mobile data traffic forecasts. As per them, the total mobile data traffic will exceed 90,000 Petabytes by 2017. What is more interesting is that 60% of this data will be offloaded to Wi-Fi networks and only 40% of the data generated by mobile devices will be carried through the cellular network by 2017. The report also emphasizes the roll that the small cells are going to play going forward.

Mobile data growth – Indian scenario

India today is on the verge of data revolution and in the current decade, data will transform the Indian telecom industry the way voice did in the previous decade. Indications are that data contribution from 2G will continue to rise, and 3G and LTE adaption will augment this growth. while the telecom industry in the rest of the world obtains 35-50% revenues from non-voice services, India derives only ~15% of sales from non-voice/ data services. Projections by UBS for major telecom players in India indicate that the non-voice revenues are going to be ~30% of total revenues for these players by 2020. These projections may well be surpassed if India is able to achieve a good broadband penetration backed by the recent policy pronouncement on National Broadband Plan.  As against the current broadband subscriber base of 14.68 million, the National Broadband Plan envisages provision of 160 million broadband connections (22 million DSL, 78 million cable and 60 million wireless broadband) by the year 2014. It is likely that the share of wireless broadband may be much more than the expectations as, like other countries, in India also; the data revolutions will piggy back on wireless broadband. 3G and Broadband Wireless Access (BWA) are expected to aid the growth of economy by boosting broadband growth.

Nokia Siemens Networks (NSN) M-Bit report indicates that mobile data usage in India has grown at 54% growth in 7 months and is likely to double every 12-14 months. This report can be accessed at http://www.nokiasiemensnetworks.com/sites/default/files/document/india_mobile_data_-_mbit_index.pdf . Evolution of data services in China provides some insight for the potential for the data segment growth for India. Data service revenue constitutes 30.6% of total service revenue in China as compared with 12.6% in India in FY11, giving an indication for strong data services growth trajectory in India in coming years. Credit Suisse estimates that over the next three years, data could more than double in size to a US$14 bn industry in India, contributing over half the incremental industry revenue and add 500 bp CAGR to an otherwise slowing voice industry. They estimate 3G’s contribution to mobile EBITDA to rise to 9-13% (from less than 5%) by FY3/14

Wi-Fi offload – a solution to handle growing data volumes and speeds

No doubt more and more carriers are adapting to Wi-Fi. Recently AT&T had inked a pact with Boingo - one of the leading Wi-Fi service provider having more than 600000 Wi-Fi Spots around the globe. Going forward the carrier-Wi-Fi adoption will be gather speed mainly because of two developments –

a)   NGH (Next Generation Hotspot) and Hotspot 2.0 specifications along with 5GHz enabled devices.

b)   Carrier-grade small cells along with Wi-Fi will enable high levels of capacity and along with the macro network will provide commercial and financial success to the operator.

Now what’s there for India in all this? Ironically, there are not many Wi-Fi hotspots in India currently. Given that almost one-sixth of the world's mobile subscribers are in India and that the country is already spectrum starved, in future offloading the mobile traffic on Wi-Fi is the only feasible and practical solution to cater to the growing hunger for data services.

ITU studies and other major research firms have already pointed out that the data requirements of future can never be met by increased availability of spectrum even if spectrum efficiency improve considerably. India cannot rely on vacation of frequencies by Defense ministry as the chances of this happening are remote. And even if this happens it will be a slow process. Thus demand and supply of spectrum in India will always have wider gaps than in other countries.

India specific approach – A Public Wi-Fi hotspot network

In such a scenario, it becomes important for the India to have a large number of Wi-Fi hotspots in almost all major cities and towns. There are two ways of doing this. The first way of approaching the problem is that the market is left to itself and the telecom operators or third parties like Boingo creates a Wi-Fi hotspot network. However the problem in this solutions can be  -

·         - The commercial criteria and not the country/public good at large will drive the hotspot creation

·         - All operators will target the same places for hotspot creation like Airports, bus and railway stations, big malls etc. They will end up creating duplicate infrastructure and in process may not get the return on investment. India missed the bus while the mobile towers were being erected and this resulted in sheer waste of resources by way of creating redundant infrastructure. All operators invested in mobile towers at same time and at same spots.

·         - Such approach slows down the rural penetration as all operators are busy spending their money in big cities. At least for Wi-Fi, we can eliminate this approach.

This leads us to the second and more practical approach of policy intervention to ensure that a common Wi-Fi network is created across major cities that can be shared on payment basis by all operators. This will help in savings on one hand and better ROIs on other. An added advantage can be faster rollout even in tier II and tier III cities. The Bharat Broadband Nigam Limited (BBNL) had been created by Government of India to roll out a common optical fiber network that can be shared across telecom service providers. On similar lines, BBNL can also be entrusted to create a common Wi-Fi network funded through USO. However, the entity will be able to make money once the Wi-Fi network is used by telecom operators. A Wi-Fi hotspot requires back-end connectivity, preferably on fiber so as to ensure that large numbers of users are supported by the hotspot at higher speeds. Suggested approach will ensure that BBNL will identify Point of Presence (POPs) for optical fiber as per the hotspot requirements. If implemented, such a solution can not only help in solving the spectrum crunch, but will also help Indian citizens to get higher broadband speeds at affordable prices – an objective that the NTP 2012 envisages to meet.

Global mobile penetration and subscriber numbers

Wondering how many mobile subscribers are there on planet earth??? Well by end of December, 2012 global mobile subscriptions were around 6.3 billion, growing at about 9 per cent year-on-year - as per a report by European telecom equipment maker Ericsson. According to the Ericsson Mobility Report, total mobile subscription in China stood at 1.26 billion, while in India it was 713 million in 2012. The net additions in the fourth quarter of 2012 were 140 million.

So what is Global wireless tele-density. Well, Global mobile penetration reached 89 per cent in Q4 2012. However if you looking for unique users figures, the actual number of unique users were around 4.4 billion, thanks to people having several subscriptions. 

If you are wondering which countries are adding most subscriptions, then the report answers your query. China accounted for about 22 per cent of net additions, adding around 30 million subscriptions, followed by India (11 million), Bangladesh (9 million), Indonesia (8 million), and Nigeria (5 million).

As far as mobile broadband subscribers are concern, In Q4 of 2012, mobile broadband subscriptions grew 125 million to 1.5 billion, reflecting a 50 per cent year-on-year increase. GSM, GPRS and EDGE subscriptions grew 44 million and WCDMA and HSPA grew 70 million. Together these technologies represent 80 per cent of total net additions. That apart, LTE subscriptions grew from 14 million to 57 million in 2012

Phases of Policy reforms - Bucket Graph showing the Indian Telecom Story in last decade

LTE deployments in various countries

This is compiled from various sources. Readers may cross check for data consistencies.

Singapore - SingTel launched commercial  LTE service on December 22, 2011 in 1800 MHz and 2.6 GHz spectrum

StarHub has completed LTE testing in 2.6 GHz and 1800 MHz and an LTE1800 network in refarmed 1800 MHz  is being deployed for commercial launch in Q4 2012

Malaysia - Celcom is trialling LTE  in 1800 MHz and 2.6 GHz spectrum. DiGi plans to  launch LTE  in 2.6 GHz  by 2013. U 

Mobile announced on March 15, 2011 plans to launch a commercial LTE network in 2.6 GHz.

Japan - Softbank Mobile,  a member of the Global TD-LTE Initiative,  commercially launched  XGP/LTE TDD services  on February 24, 2012 following a  precommercial pilot service  which began  November 1, 2011. The network is deployed in 20 MHz of 2.5 GHz spectrum  bought from Willcom (PHS operator).

China - China Mobile HK launched commercial LTE FDD services in 2.6 GHz on April 25, 2012 and is evolving the network to also support LTE TDD this year. In  an announcement on December 29, 2011  OFCA launched a consultation on auctioning spectrum in the 2.5/2.6GHz range, offering five blocks of 2 x 5 MHz, by  auction  which would be held  in Q1 2013 at the earliest.

China Mobile plans to have  20,000  LTE TDD base sites  covering 500 million people by end 2012, increasing to 200,000 by end 2013. Commercial service launch is anticipated in 2013-2014. China Mobile has 1.9 GHz, 2.0 GHz,
2.3 GHz and 2.6 GHz bands (classified as  F, A, E and D bands). The trials use the D and F bands.

Honk Kong - 2 x 15 MHz blocks of 2.6 GHz spectrum  were obtained  via auction each by China Mobile  HK  (Peoples Phone), Genius Brand (Hutchison Telecom/PCCW JV) and CSL Limited.

Australia - ACMA announced the first formal steps toward a joint auction of new licences in 700 MHz DD and 2.6 GHz.

Mexico -Telefónica and Telcel have conducted tests of LTE. Telcel is preparing for commercial launch  to consumers  during April 2012.  Telefónica  plans to launch LTE by 2013.  The  government  plans to auction new spectrum in 700 MHz and 2.6 GHz. 

Brazil -Sky Brasil commercially launched LTE TDD services (2.6 GHz - Band 38) on December 13, 2011 in Brasilia. 

More cities will be covered in 2012.

Claro has been testing LTE in 2.6 GHz since Q4 2011

Canada -The 2.6 GHz trial  was enabled by  a development license from regulator Industry Canada. Industry Canada is preparing to auction 700 MHz and 2.6 GHz spectrum in 2012 and will hold a 6-hour  information session on May 30, 2012

Sri-Lanka Mobitel announced on May 6, 2011 completion of an LTE trial, which achieved 96 Mbps downlink speed in 

2.6 GHz. More trials are planned in other bands.

Taiwan -Chunghwa Telecom has been trialling LTE  in 2.6 GHz and 700 MHz spectrum.  The company  has 

completed LTE tests on the high-speed rail system in TDD  and FDD modes using 2.6 GHz. 

Vietnam -RusViet Telecom  (an Alltech company) trialled an LTE network in 2010 in Hanoi.  The company plans 

expanding coverage  of  its 2.6 GHz LTE network in 2012, including to Hi Chi Minh.

Armenia -VivaCell-MTS announced commercial launch of LTE services on December 28, 2011, initially in Yerevan, 

using 2.6 GHz spectrum.

Austria -Regulator  TKK completed the auction of 2.6 GHz spectrum on September 20, 2010, raising €39.5m from  A1  Telekom Austria, Hutchison 3, T-Mobile and Orange. 14 paired and 9 unpaired frequency blocks were  sold. License conditions require coverage of at least 25% of the population by 2013. A1  Telekom  commercially  launched LTE in Vienna and St. Pölten on November 5, 2010. T-Mobile Austria launched a 60-cell site pilot LTE network in Innsbruck in July 2009 and entered a soft launch phase on October 19, 2010. In May 2011, the first LTE base station in Vienna went live. On July 28 the company  commercially  launched LTE and its Internet All Inclusive LTE tariff. 

Orange Austria has tested LTE technology and acquired 2 x 10 MHz of 2.6 GHz spectrum in the 2010 auction.

Belgium -Regulator  BIPT  auctioned  4G licenses  for a total of US$ 103.7 million, comprising  45 MHz of  2.6 GHz 

TDD spectrum and 3 x 20 MHz paired blocks in 2.6 GHz for FDD systems.

Denmark -Telia  launched the first commercial LTE system in Denmark on December  9,  2010 in Copenhagen, 

Aarhus, Odense and Aalborg in the 2.6 GHz band (20 MHz). On October 10, 2011 LTE commercial service
was introduced using 10 MHz of 1800 MHz spectrum (LTE1800) as a complement to the 2.6 GHz service.
Tri-band (800/1800/2600)  LTE  dongles and routers have been available since the summer.

Finland -20-year 2.6 GHz licenses were auctioned by regulator FICORA on 23 November 2009: TeliaSonera launched the first commercial  LTE service in Finland on November 30, 2010  in Turku and Helsinki. LTE1800 was commercially launched as a complement to 2.6 GHz on August 31, 2011. Elisa commercially  launched its  2.6 GHz  LTE network  for corporate users on December 8, 2010, and announced its first client.

France -SFR trialled LTE in Marseille in 2011 and is deploying its commercial network  in 800 MHz and 2.6 GHz.

ARCEP  auctioned 2.6 GHz spectrum and confirmed the successful bidders and allocations:
 Bouygues: 2535-2550 MHz/2655-2670 MHz·
 Free Mobile: 2550-2570 MHz/2670-2690 MHz·
 FT/Orange: 2515-2535 MHz/2635-2655 MHz·
 SFR: 2500-2515 MHz/2620-2635 MHz·

Germany -A multiband spectrum auction was completed in May 2010, covering 360 MHz in 4 bands: 800 MHz (digital 

dividend), 1800 MHz, 2.1 GHz, 2.6 GHz.  All 4 incumbents acquired 2.6 GHz  to be used  for LTE.

Italy -3 Italia is deploying LTE1800 and from 2013 intends to offer multicarrier aggregation (an LTE-A feature) 

allowing LTE1800 and LTE2600 to be used together.

Netherlands -2.6 GHz FDD spectrum was auctioned in April 2010 and awarded to incumbents  KPN,  Vodafone,  TMobile, and newcomers Ziggo 4 (currently an MVNO on KPN’s network)  and  Tele2. The TDD spectrum 

was not bought. Ziggo launched its commercial LTE service on May 3, 2012 for its Internet Plus business customers in Breda, Oss and Zwolle.

Norway -Norway held Europe’s first 2.6 GHz auction in 2007 which  was awarded to incumbents TeleNor and 

TeliaSonera (NetCom); total allocation 2 x 90 MHz. TeliaSonera launched the world’s first LTE networks
in Oslo and Sweden in December 2009.

Russia -On February 2, 2012 MTS announced the company had been awarded the first license to provide  LTE 

services in Moscow and the Moscow region. The license granted is for  LTE TDD  deployment  in the 2595 – 2620 MHz range. 

Spain - In June 2010  Ministerio de Industria, Turismo Comercio (MITYC) launched a consultation on reallocation of  2.6 GHz  and  re-farming of 900/1800 MHz. An auction  began on  June 29, 2011  for 58 blocks of 800, 900 MHz and 2.6 GHz  frequencies, with licences valid to 2030. The auction  ended on July 29, 2011  raising  €1.65bn for 800 MHz and 2.6 GHz licenses. Spectrum  was  won by  Vodafone, Telefónica  and  FT-Orange. 

Sweden - Tele2 Sweden  and TeleNor Sweden deployed an LTE network  through a jointly-owned company 

(Net4Mobility), which  includes spectrum sharing in 900 MHz and 2.6 GHz. 

UK -O2 has tested LTE in 2.6 GHz spectrum  and  has trialled LTE800 in  Carlisle  since mid 2010. In November 2011 the company began  a large-scale LTE trial in central London, to run until June 2012. O2 has 20 MHz of test spectrum  in  the 2.6 GHz band. 

Saudi Arabia -Etisalat (Mobily)  commercially launched LTE TDD on September 14, 2011 via its Bayanat subsidiary, in 

Najran, Jazan, Al Kharj, Ras tanoura, Algurayat and Aldudam in band 38 (2.6 GHz).

South Africa -MTN  is  deploying LTE1800 as  2.6 GHz is not available.  In the longer term 2.6 GHz and 800 MHz are sought.

UAE - Etisalat launched commercial LTE  service on September 25, 2011. LTE USB modems were widely
introduced at Etisalat outlets on December 18, 2011. Etisalat uses 2.6 GHz spectrum indoors and 1800
MHz spectrum outdoors, and is seeking an allocation of  800 MHz for nationwide  coverage.

Romania 4G Auction Rusults:
Slice 2: Bands / Block Won (each block is of 15 Mhz)
800 - Cosmote (1), Orange (2), Vodaphone (2)
900 - Cosmote (2), Orange (2), RCS&RDS (1), Vodaphone (2)
1800 - Cosmote (5), Orange (4), Vodaphone (6)
2600 - Cosmote (2), Orange (4), 2K Telecom (2), Vodaphone (1)

Active Mobile subscriber base in India

Mobile phone market booming in India

According to a study by  market research group IDC, Mobile phone market in India grew  to 218 million units, a 16 per cent year-on-year growth from CY 2011. Smartphone in the country grew by 48 per cent to 16.3 million in 2012 against 11 million in 2011.

Local vendors have remained dominant in sub-$100 price band while they pose serious competition to the global vendors in the $100—200 price band. 

Android continues to be the dominant player in the Indian smartphone market. 

As per IDC. the mobile phone market is expected to continue its growth into 2013, driven by the stupendous growth of close to 70 per cent in the smartphone market.”

Etisalat yet to get an IDEA about Indian Telecom Market

There are lot of speculations in market about UAE telecom major Etisalat's India plans. Some says, like Telenor, it is planning to quit the Indian market while others say that it  plans to invest in India's Idea Cellular. Still others are talking about Etisalat striking a deal with India's Reliance Communications this year. While asserting that it is keeping its options open regarding investment in the fast-growing Indian telecom market, Etisalat is not responding to other speculations. It seems Etisalat is yet to get an IDEA on how to succeed in Indian Telecom Market

Etisalat already has a presence in the Indian market as Etilsalat DB Telecom India Pvt Ltd, which was earlier known as Swan Telecom. On June 3, Etisalat Chairman Mohammed Omran revealed that the telecom firm was evaluating several Indian telecom firms for a possible stake acquisition, but had not reached a final decision.  Etisalat is also waiting for the issuance of tender requirements by the Syrian government that will enable it to bid for Syria's third mobile license.

GSM subscriber figures for Feb 2010 in India

I have never believed in these figures. But for sake of those who follow this blog, here are latest GSM customer acquisition figures in India.

As per data provided by the GSM operators' lobby Cellular Operators Association of India, the GSM mobile user base in India touched a little over 400 million (407 million). The country's GSM mobile subscriber base has increased by 13 million to 407 million in February, with Vodafone Essar adding the maximum number of new customers in the past month. This is, however, less than the total addition of 14.4 million users in January.

The country's second largest GSM player Vodafone Essar added as many as three million customers in the past month, closely followed by Bharti Airtel. Vodafone Essar's touched an user-base of 97 million. Airtel added 2.9 million users last month against 2.85 million in January taking its total mobile user base to 124 million. Bharti has a market share of 30.55 per cent, while Vodafone Essar has 23.84 per cent. Aditya Birla's Idea Cellular added 2.25 million new users during the month, taking its total subscriber base to 62 million. It has a market share of 14.96 per cent.

State-run BSNL and private operator Aircel added 1.5 million and 1.8 million new users respectively in the month with their user base at 61 million and 34 million each. BSNL's market share reached 14.96 per cent. The major gainer in the month has been MTNL which added 86,706 new users in February from 45,067 in January.
(Note - Figures are courtesy TRAI reports and Economic Times news)

Fund raising will be the key concern for Indian Telecom service providers in 2010-11

As per Economic times - Nine cellphone companies have joined the fray for just three 3G spectrum slots while 11 companies, including Bharti Airtel, Vodafone Essar, Idea Cellular, Reliance Communications and Aircel, have bid for broadband wireless spectrum, which will allow them to provide wireless internet services.

One more interesting news was floating around. RCOM has said that it has crossed the 100-million mark in wireless customers and would explore both acquisition and expansion opportunities to strengthen its foothold in the domestic market. RCOM expects to add another 100 million customers within the next 1,000 days.

I think the time is ripe in Indian Telecom industry for consolidations. 3G auctions will be followed by M & A activity provided the auctions do not stretch the balance sheets too far. Amid ongoing price wars it would take serious efforts to raise funds for acquisitions. With interest rates moving north - the funds requirements for overseas acquisition , 3G auctions and M&A within India will be difficult to balance. The winners may emerge from those who will be able to balance fund requirements rather than balance the operations. Is Bharati listening?

Spectrum Status by Circles & Operators

I thought this was an interesting data published in Business standard - http://epaper.business-standard.com/bsepaper/svww_index1.php

3G bidding - Is this the third & Last round of telco competition in India?

The DoT (Department of Telecom) will release a detailed information memorandum (IM) this week on the upcoming 3G auctions. As reported by economic times, the IM (information memorandum) to be released is likely to contains details regarding the billing schedule, qualifications of bidders, terms and conditions, payment schedules and other technical and commercial specifications that are critical to enable bidders to plan their auction strategy.

The DoT clarified that global telecom operators who do not operate in India are welcome to participate, though they will have to acquire a Unified Access Service Licence (UASL) to be eligible to bid. This implies some uncertainty for potential foreign bidders. At present, a pan-India UASL costs Rs 1,658 crore and comes bundled with 4.4 MHz of 2G spectrum. However, recent proposals to unbundle the licence from spectrum and to change its cost are still pending and could remain unresolved at the time India conducts its 3G auctions. This change is owing to a severe 2G spectrum crunch being faced in India with over 300 applicants waiting in queue for 24 months or more to get new spectrum/licences. DoT officials believe that global operators will be willing to join this queue, but given the fact that there is a shortage, the uncertainties relating to the cost and 2G spectrum availability may prove to be a deterrent. Any proposal to change the terms and conditions of licence has to be referred to the Trai and this usually involves a detailed process, including several consultations and Open House sessions with all stakeholders.

Domestic operators Bharti, Vodafone, Reliance, Tatas and Idea are expected to be the main players in the 3G auction ring. Nordic telecom giant Telenor, which recently secured 67% equity in Unitech Wireless is reported not to opt for a pan-India 3G licence but bid for a select few 3G circles. Aircel, Loop, Swan and Datacom may also place bids in some strategic circles.

The reserve price for pan-India 3G spectrum is pegged at Rs 3,500 crore. It is believed that given the limited number of slots, the government may be able to receive a price in the range of Rs 6,000 crore plus for each of the slots giving an additional revenue of Rs 25,000 crore to the exchequer for the current fiscal. The auction of third generation spectrum or airwaves, is likely to start this November. The EGoM has recently approved placing four slots of 5 MHz each in the 2.1 GHz band for auctions in 3G. If the auction is held in December as scheduled, it is highly likely that India will see four new 3G operators before the end of 2010.

To me this seems to be last round of competition between telcos in India. What I foresee is that after aggressive bidding for 3G licences, some of the operators will make huge losses. Then the consolidation phase will follow. By 2012 some of the players will start handling the batten - not to new players but to the one running in adjacent lanes.

Strategy of the new kid on the block - Tata Communications

Tata Group subsidiary Tata Communications is looking for a managed-services company, possibly one located in the United States. It is also putting a minority interest in its tower operation up for sale, with an asking price rumored to be as high as $6 billion. And, as frosting on the cake, it has expanded its global virtual private network (VPN) service to China.

According to reports of Telecomweb, Tata Communications wants to buy small- and mid-size managed-services outfits with annual revenues in the range of $50 million and $200 million. It's said to be looking for companies in the United States, the U.K., and Asia as well as in India itself. Tata Communications is the new kid on the block or rather a 5,000-pound gorilla in the global telecom marketplace - born just last month as the unified global brand for VSNL, VSNL International, Teleglobe (the former Bell Canada subsidiary VSNL bought for $239 million , Tata Indicom Enterprise Business Unit and CIPRIS. The combination created the Number One global international wholesale voice operator and the Number One provider of international long-distance, enterprise-data and Internet services in India.

What Tata's looking for next really is more technology than a book of business. At $50 million to $200 million in revenues as a criterion, it would be picking up companies that aren't of global scale and probably don't have the resources to go global by themselves. Tata's plan would be to integrate the technology it gets from such companies, eventually putting together a global powerhouse that could challenge such market leaders as AT&T, BT and France Telecom's Orange Business Services. Tata's goal is said to be a 6-percent- to-7-percent market share within three years, in what it estimates will be a $50 billion cross-border global market in which managed services will play a role.

Meanwhile, within India itself, Tata is attempting to monetize part of its huge cellular-tower infrastructure it set up as a separate company called Wireless Tata Telecom Infrastructure Ltd. It currently owns 13,500 towers, with a growth plan to add about 3,000 per year for the foreseeable future; it's now negotiating to sell a minority stake of between 26 percent and 49 percent in the tower operation. Tata says it's received indications of interest from 30 potential bidders, and the company currently is in negotiations with half of that group, with hopes of cutting a deal by the end of May. Potential investors were understood to include international investment entities as well as local Indian investors. Analysts are guessing as high as $6 billion if a full 49-percent stake is sold.

In a final piece of Tata news, the company says it's expanding its Global VPN service to China through a network-to-network interface (NNI) agreement with China Enterprise Netcom Corporation Limited (China Entercom/CEC). China Entercom is a value-added telecommunication services and integrated IT solutions provider, and a subsidiary of China International Trust and Investment Corporation (CITIC).

Under the NNI, Tata Communications and China Entercom have interconnected their respective Multi-Protocol Label Switching (MPLS) infrastructures, giving Tata Communications' multi-national corporate customers VPN connectivity to 347 cities throughout China. The Tata VPN service so far has reached 120 cities in India and 19 major business centers across North America, Asia and Europe. It runs over Tata's IP network, which touches 195 countries.

Tata Communications' agreement with China Entercom allows them to serve many global and India MNC customers who require a single scalable and reliable global VPN with deep reach into both India and China, and broad reach around the world. China and India are the engines driving the globalizing information economy, and it is critical for MNC's to establish reliable infrastructure in these markets.