So after years of debate, India is on the world 3G map. So what if it means that only high-end subscribers of state-owned Mahanagar Telephone Nigam Ltd (MTNL) in limited areas of Delhi have access to the service for now. Well, the Jadoo has begun.
Bharat Sanchar Nigam Ltd (BSNL) which was also provided spectrum with MTNL will officially launch services in Chennai hopefully on 14 January 2009. That also happens to be Pongal, the Tamil harvest festival. Initially subscribers are being offered video telephony and later mobile television. However, the big hope is that gaming will become a big driver for 3G in the coming months.
Auction of 3G spectrum
While MTNL and BSNL launch 3G services, private telecom operators are waiting to get into the act. That wait should end on 16 January when the for 3G spectrum starts. In 15 of the 22 telecom circles in India, private operators can bid for four blocks of spectrum of 2X5MHz. There is no spectrum available as of now in Rajasthan and the North-East. In Delhi and Gujarat private operators can bid for just two blocks of spectrum each, while there is just one block available in West Bengal. Once the 3G auctions are over, the bidding for BWA (broadband wireless access) auctions will begin.
The two-stage auction will be done over the internet. The Clock stagewill establish the bidders in each of the circles. It will consist of many rounds. This will happen simultaneously for all the 22 circles. It will stop once demand for lots in the service area is less than or equal to the available supply. This will be followed by an Assignment Stage. This will be a single round in which the winning bidders can bid for specific frequencies. However, the winning bidders need not participate in this round unless they are looking for a specific band to operate in.
All that is fine. But in the current state of the world market, how high the bids go remain to be seen. Over the next couple of years, the focus of the operators would be on subscribers in the Top 2o cities. That could mean that the battle for the Delhi spectrum could be long-drawn. After all, only two slots are available. But, expect moderate bidding in other circles. After all, in a low ARPU country, it is debatable how many subscribers will opt for 3G services.
A lot of that will become clear over the next five weeks. But, I see this as the opening for large global operators to get their foothold into India.
Friday, December 12, 2008
Sunday, July 27, 2008
How many 3G service providers does India need?
If one has to believe the communications ministry then we could have 12 providers of 3G services. Each of them will have 5 MHz of spectrum. Nowhere in the world are there so many 3G operators. While Australia has six, the UK has five. If this happens then all the big 2G operators will be in a position to get spectrum . Add to that international service providers who are looking to get a slice of the India action.
But in most other countries, operators get a minimum of 15 MHz at one go. It does not augur too well for 3G services. What is likely to happen is that once the global players get 3G spectrum, they will look to acquire operators who have 2G spectrum already. That way, they become full-scale operators. It is also a great way for some of the new licencees to exit. But for that to happen, the government must go ahead and amend the M&A guidelines that insist on a three-year moratorium. If that gets reduced, we could see a re-alignment of the Indian telecom space.
For now, it is still in the realm of speculation. But do not be too surprised if things change rapidly. After all the Left is out of contention. This is just the right time to push through a load of reforms in the sector.
But in most other countries, operators get a minimum of 15 MHz at one go. It does not augur too well for 3G services. What is likely to happen is that once the global players get 3G spectrum, they will look to acquire operators who have 2G spectrum already. That way, they become full-scale operators. It is also a great way for some of the new licencees to exit. But for that to happen, the government must go ahead and amend the M&A guidelines that insist on a three-year moratorium. If that gets reduced, we could see a re-alignment of the Indian telecom space.
For now, it is still in the realm of speculation. But do not be too surprised if things change rapidly. After all the Left is out of contention. This is just the right time to push through a load of reforms in the sector.
Friday, July 25, 2008
Mobile growth to taper off after 2010
Well, the June subscriber numbers are in--all of 8.94 million new mobile users. So in the first half of 2008, India has added 53.24 million new mobile subscribers. That leads to 286.86 million mobile subscribers. At this rate there should be 300 million mobile subscribers at the end of August.
Can we sustain this kind of growth? As things stand, we can do this through 2009 and into 2010. That is when things should start to slowdown. By then there will be 500 million plus mobile subscribers. It would mean a mobile penetration level of 45-50%. That's almost double of the current 24.94%. I do not think that India will overtake China in mobile subscribers.
China has three people per family as opposed to India's five. At two phone per family (for both parents) that works to a penetration level of 66.67%. India will settle at a penetration of 50%. Unless there is a sea change in the people's income it is unlikely to go much beyond that number.
But telecom industry officials argue that it is possible to touch a 75% penetration. For that to happen, we need income levels to rise sharply in the low income and poor India. That remains to be seen. But a 600 million subscriber base is quite achievable. Anything after that will be a bonus.
Can we sustain this kind of growth? As things stand, we can do this through 2009 and into 2010. That is when things should start to slowdown. By then there will be 500 million plus mobile subscribers. It would mean a mobile penetration level of 45-50%. That's almost double of the current 24.94%. I do not think that India will overtake China in mobile subscribers.
China has three people per family as opposed to India's five. At two phone per family (for both parents) that works to a penetration level of 66.67%. India will settle at a penetration of 50%. Unless there is a sea change in the people's income it is unlikely to go much beyond that number.
But telecom industry officials argue that it is possible to touch a 75% penetration. For that to happen, we need income levels to rise sharply in the low income and poor India. That remains to be seen. But a 600 million subscriber base is quite achievable. Anything after that will be a bonus.
Sunday, July 20, 2008
ASUS is already in India
The iPhone is now round the corner in India. Both Bharti and Vodafone will be marketing the phone. That's a clear difference from the United States where only AT&T subscribers can have an iphone. But, hey at Rs 8,000 for a phone, it comes much below the Nokia N series. So expect all and sundry to be carrying an iphone soon. So much for exclusivity.
But, while the iphone comes with a lot of big bang and advertising, Taiwan's ASUS has made a quiet entry with some print advertising to support it. The ASUS PDA phones have been around for a few months. According to Edward Wang, head, mobile communications ASUS Technology: "The Indian PDA market is huge and growing very fast." This year, India will purchase an estimated 350,000 PDA phones. that is expected to hit 600,000 in 2009.
While the current set of PDAs in India are targeted for the male user, ASUS will soon launch PDAs in pink and white for the women users. ASUS is estimated to invest close to Rs 20 crore in India over the next couple of years.
ASUS has seven models and five service centres in India. Wang points out that the real competition for ASUS comes from HTC and iMate. According to him, iphone is a threat but not a huge threat.
But, the real business for ASUS is motherboards. Soon once should hear more of ASUS in India.
But, while the iphone comes with a lot of big bang and advertising, Taiwan's ASUS has made a quiet entry with some print advertising to support it. The ASUS PDA phones have been around for a few months. According to Edward Wang, head, mobile communications ASUS Technology: "The Indian PDA market is huge and growing very fast." This year, India will purchase an estimated 350,000 PDA phones. that is expected to hit 600,000 in 2009.
While the current set of PDAs in India are targeted for the male user, ASUS will soon launch PDAs in pink and white for the women users. ASUS is estimated to invest close to Rs 20 crore in India over the next couple of years.
ASUS has seven models and five service centres in India. Wang points out that the real competition for ASUS comes from HTC and iMate. According to him, iphone is a threat but not a huge threat.
But, the real business for ASUS is motherboards. Soon once should hear more of ASUS in India.
The MTN saga
It's been a while since i have been around. In the meanwhile, there has been a lot of action over South African telecom operator MTN. First it was Bharti, who then decided against it. The we had Anil Ambani-led Reliance Communications trying to woo MTN. After almost two months, when it seemed to be happening, elder brother Mukesh Ambani threw in a googly.
But what i simply cannot fathom is why is MTN such a hot property? It is ironical that both Bharti and Reliance would have ended up being subsidiaries of MTN. Agreed it is present in 21 countries. But that also includes places like Sudan and Afghanistan.
But be prepared for more news on Indian operators looking to expand their footprint globally.
But what i simply cannot fathom is why is MTN such a hot property? It is ironical that both Bharti and Reliance would have ended up being subsidiaries of MTN. Agreed it is present in 21 countries. But that also includes places like Sudan and Afghanistan.
But be prepared for more news on Indian operators looking to expand their footprint globally.
Wednesday, April 2, 2008
Namashkar Moto
It calls itself 'The Indian Multinational'. Now Videocon, India's largest consumer durables company has evinced interest in acquiring the mobile handsets division of Motorola, the world's third largest handset maker after Finland's Nokia and South Korea's Samsung.
That Motorola's handset division was in trouble is old hat. Motorola's gross revenues have fallen from $ 42.8 billion in 2006 to $ 36.6 billion in 2007. That's largely due to slowing handset sales. The handset division clocked sales of $ 19 billion in 2007 against $ 28.4 billion in 2006. Handset sales slumped 27% from 217.4 million in 2006 to 159.1 million in 2007. It is claimed that Merrill Lynch has valued the handset division at $ 3.8 billion.
So does it make sense for Venugopal Dhoot to take the plunge?
For starters, Videocon is rolling out a pan-India mobile service network. The handsets could feed into that, but, there is no reason why a subscriber should opt for a Moto handset in a country where Nokia was and is still King. Nokia controls over 60% of the Indian mobile handset market, that is estimated to have picked up close to 100 million handsets in 2007.
Second, margins in the handset business are wafer thin. So that could be a difficult long-term bet for Dhoot. Lastly, this is a business where R&D budgets are huge. That is what hit the bunch of Chinese handset makers. Lastly, Motorola has not come with a great product after the Razr. That was too long back in history. It remains to be seen what Videocon can manage to overcome this problem. This is critical to ensure survival in a business where people change handsets in less than a year.
This could make or break Videocon.
That Motorola's handset division was in trouble is old hat. Motorola's gross revenues have fallen from $ 42.8 billion in 2006 to $ 36.6 billion in 2007. That's largely due to slowing handset sales. The handset division clocked sales of $ 19 billion in 2007 against $ 28.4 billion in 2006. Handset sales slumped 27% from 217.4 million in 2006 to 159.1 million in 2007. It is claimed that Merrill Lynch has valued the handset division at $ 3.8 billion.
So does it make sense for Venugopal Dhoot to take the plunge?
For starters, Videocon is rolling out a pan-India mobile service network. The handsets could feed into that, but, there is no reason why a subscriber should opt for a Moto handset in a country where Nokia was and is still King. Nokia controls over 60% of the Indian mobile handset market, that is estimated to have picked up close to 100 million handsets in 2007.
Second, margins in the handset business are wafer thin. So that could be a difficult long-term bet for Dhoot. Lastly, this is a business where R&D budgets are huge. That is what hit the bunch of Chinese handset makers. Lastly, Motorola has not come with a great product after the Razr. That was too long back in history. It remains to be seen what Videocon can manage to overcome this problem. This is critical to ensure survival in a business where people change handsets in less than a year.
This could make or break Videocon.
Monday, March 31, 2008
100 million handsets in a year
Nokia announced that it has made 125 million mobile handsets in India over the last two years. That by all means is a huge number. But what the Finnish major failed to mention was that during 2007 it made 100 million handsets at its plant at Sriperumbudur, near Chennai. That's because in 2007 Nokia had announced it made 25 million handsets in India during 2006.
That's already showing in the results. Earnings from the Indian operations have grown from Euro 2.71 billion (Rs 15,803 crore) to Euro 3.9 billion (Rs 24,968.7 crore). That's a cool 43.91% rise in revenues in Euro terms in just a year. I guess that's easy when you control more than half of the worlds fastest growing mobile market. After all, India has been adding over 8 million new mobile subscribers a month.
To do that it needs a lot more people. During 2007 the headcount at Nokia India has gone up from 3,800 to 8,000. By this time next year Nokia plans to have 13,000 employees in India. That's literally trebling the workforce in two years! All this needs additional investment, which will rise from the $ 210 million already committed to $ 285 million over the next year.
With 100 million handsets out of India, it is head and shoulders above the rest of the handset makers--Elcoteq, Samsung, LG, Motorola and Flextronics. Of these, the only one can that can match Nokia is Flextronics that has a huge facility with two plants down the road from the Nokia plant.
No wonder, Nokia is by far the biggest multinational in India. It remains to be seen how it will leverage Ovi (means "door" in Finnish) in India. That's when it will have to fight the entrenched service providers. It will be an interesting play. Stay tuned.
That's already showing in the results. Earnings from the Indian operations have grown from Euro 2.71 billion (Rs 15,803 crore) to Euro 3.9 billion (Rs 24,968.7 crore). That's a cool 43.91% rise in revenues in Euro terms in just a year. I guess that's easy when you control more than half of the worlds fastest growing mobile market. After all, India has been adding over 8 million new mobile subscribers a month.
To do that it needs a lot more people. During 2007 the headcount at Nokia India has gone up from 3,800 to 8,000. By this time next year Nokia plans to have 13,000 employees in India. That's literally trebling the workforce in two years! All this needs additional investment, which will rise from the $ 210 million already committed to $ 285 million over the next year.
With 100 million handsets out of India, it is head and shoulders above the rest of the handset makers--Elcoteq, Samsung, LG, Motorola and Flextronics. Of these, the only one can that can match Nokia is Flextronics that has a huge facility with two plants down the road from the Nokia plant.
No wonder, Nokia is by far the biggest multinational in India. It remains to be seen how it will leverage Ovi (means "door" in Finnish) in India. That's when it will have to fight the entrenched service providers. It will be an interesting play. Stay tuned.
Thursday, March 27, 2008
Finally, no more ADC
It’s finally happening. Starting 1 April, the Access Deficit Charges (ADC) on domestic calls has been phased out. For international calls it has been halved to 50 paise from the present Re 1. ADC is a charge that private operators have been paying state-owned BSNL to help roll-out telecom services in rural areas since May 2003. Till date BSNL should have received close to Rs 20,000 crore from ADC.
Already, the bigger private operators like Bharti Airtel and Vodafone Essar have agreed to pass on the benefits to the consumer.
But, does it help the subscribers. Not really. That’s because it makes a Re 1 call cheaper by—well—0.75%. That’s not something substantial that will show up in the bill. The real gainers are the operators. It is estimated that operators will save close to Rs 2,700 crore. That’s something to celebrate about.
The real loser in this will definitely be BSNL. However, the government has promised to allocate Rs 2,000 crore from the Universal Service Obligation Fund (USOF).
Will that mean the rural roll-out will get slowed down? Unlikely. As all operators have realised, the growth is happening only in the smaller towns. The metros and the big towns are close to saturation. So, ADC or not, the march to rural India by private telcos will continue unabated. After all that is where the gravy will come from.
Already, the bigger private operators like Bharti Airtel and Vodafone Essar have agreed to pass on the benefits to the consumer.
But, does it help the subscribers. Not really. That’s because it makes a Re 1 call cheaper by—well—0.75%. That’s not something substantial that will show up in the bill. The real gainers are the operators. It is estimated that operators will save close to Rs 2,700 crore. That’s something to celebrate about.
The real loser in this will definitely be BSNL. However, the government has promised to allocate Rs 2,000 crore from the Universal Service Obligation Fund (USOF).
Will that mean the rural roll-out will get slowed down? Unlikely. As all operators have realised, the growth is happening only in the smaller towns. The metros and the big towns are close to saturation. So, ADC or not, the march to rural India by private telcos will continue unabated. After all that is where the gravy will come from.
Sunday, March 16, 2008
Catering to senior citizens
Now maverick Richard Branson is here with Virgin Mobile. So the quite stodgy Tata Indicom is trying to cater to the needs of the youth. That's an interesting prospect. Going by Branson's track record, what it will offer to the youth remains to be seen!
So is this the beginning of the segmentation of the Indian mobile market? The BlackBerry already meets the needs of the busy executive. Virgin Mobile will go for the youth. But with affluence levels rising, there is a market for senior citizens too. A large chunk of the 60+ Indians today are quite well-to-do. Also with spare time on hand, they could be all set to download music and ringtones.
With children working in different parts of India and even abroad, these users will make long-distance calls too. So, are any operators looking to meet the needs of the senior citizens? That's a market ready for the picking.
However, a caveat. Obviously, the youth will use their phones for more years than their senior citizen counterparts. But then that is no reason to not focus on this market. Are operators listening?
So is this the beginning of the segmentation of the Indian mobile market? The BlackBerry already meets the needs of the busy executive. Virgin Mobile will go for the youth. But with affluence levels rising, there is a market for senior citizens too. A large chunk of the 60+ Indians today are quite well-to-do. Also with spare time on hand, they could be all set to download music and ringtones.
With children working in different parts of India and even abroad, these users will make long-distance calls too. So, are any operators looking to meet the needs of the senior citizens? That's a market ready for the picking.
However, a caveat. Obviously, the youth will use their phones for more years than their senior citizen counterparts. But then that is no reason to not focus on this market. Are operators listening?
Tuesday, March 11, 2008
Soul of the Indian Night
Over the last dozen-odd years, hundreds of mobile handsets have been launched in the country. But this time round, when Nokia launched the N82, it has come up with the unique Soul of the Night. It's a wireless adventure that is happening in Delhi, Mumbai and Bangalore. Over the past few months, Nokia has done similar events across the Asia Pacific region.
Over the past few weeks, several celebrities are blogging on the site with their N82 handsets. These celebrities are posting pictures of locations, restaurants, pubs and events in their cities. The celebrity list includes Manish Arora, Mandira Wirk, Murali Karthik in Delhi; Dino Morea, Niaha Jamwal and Shiamak Davar in Mumbai; Charu Sharma and Prasad Bidapa in Bangalore.
Well, the action is not restricted to these cities. There are postings from Bihar, Uttaranchal and Jharkhand too.
But then the N82 is not just a phone. I have been playing around with an N82 over the past fortnight. It has anything that anybody would want. Today all phones have cameras, video recorders etc. But the N82 also has music, a really superb camera, GPS, city maps, location finder and a huge, huge memory. The best feature is Nokia Maps that allows users to download maps of 150 countries. Also, it provides voice-activated navigation that allows the user to simply drive his car while the phone tells you how to get to your location. Plus downloading the maps is free. So no more stopping and asking directions in a strange city!!
So what more could you ask for on one device. Oh i forgot. You can surf the worldwide web and post on your blog with it. Simply cool.
Over the past few weeks, several celebrities are blogging on the site with their N82 handsets. These celebrities are posting pictures of locations, restaurants, pubs and events in their cities. The celebrity list includes Manish Arora, Mandira Wirk, Murali Karthik in Delhi; Dino Morea, Niaha Jamwal and Shiamak Davar in Mumbai; Charu Sharma and Prasad Bidapa in Bangalore.
Well, the action is not restricted to these cities. There are postings from Bihar, Uttaranchal and Jharkhand too.
But then the N82 is not just a phone. I have been playing around with an N82 over the past fortnight. It has anything that anybody would want. Today all phones have cameras, video recorders etc. But the N82 also has music, a really superb camera, GPS, city maps, location finder and a huge, huge memory. The best feature is Nokia Maps that allows users to download maps of 150 countries. Also, it provides voice-activated navigation that allows the user to simply drive his car while the phone tells you how to get to your location. Plus downloading the maps is free. So no more stopping and asking directions in a strange city!!
So what more could you ask for on one device. Oh i forgot. You can surf the worldwide web and post on your blog with it. Simply cool.
Thursday, March 6, 2008
Tata's Virgin gamble--Will it work this time?
Virgin Mobile is now in India, courtesy Tata Teleservices. That is an interesting combination--the maverick boss of a highly successful telecom service with the staid boss of India's slowest operating telecom company.
But, what is not clear is whether it is an MVNO or a franchisee operation. That is because the government has not given the green signal for starting MVNO services in India. So what exactly is this new animal?
That's what the Tatas should answer. After all, it has morphed its telecom operations so many times that one simply does not know aht they are up to. Yes, it seems to be the most confused mobile operator in the country.
A little bit of history here on the Tatas telecom business. It started life as Tata Cellular, a GSM service provider in Andhra Pradesh. Then it decided to join hands with Birla AT&T that provided GSM services in Maharashtra and Gujarat. That later morphed into IDEA Cellular.
Somewhere during this passage, the Tatas felt going CDMA was a better bargain. After all, the then Mukesh Ambani controlled Reliance Infocom was going the CDMA way. Then it sold its stake in IDEA to the Aditya Birla group. Now that the Anil Ambani controlled Reliance Communications is going the GSM way, the Tatas are as usual following them.
But going the MVNO way is a new path altogether. So when the Cellular Operators Association of India (COAI) raised objections, it has come up with a new complaint--the telecom policy did not allow outsourcing of networks.
But hello--what was the group doing for well over three years. After all, Bharti outsourced its network ages ago and has become a case study for mobile operators globally.
The confused thinking is clearly reflected in the subscriber base. It has just 22.5 million subscribers in 20 circles as opposed to IDEA which has 21.95 million subscribers while being present in only 11 circles. The only two circles where Tata is not present are North-East and J&K.
Maybe Richard Branson can pull this group's telecom business by the boot straps. That's what the group needs, if its telecom business has to last out.
But, what is not clear is whether it is an MVNO or a franchisee operation. That is because the government has not given the green signal for starting MVNO services in India. So what exactly is this new animal?
That's what the Tatas should answer. After all, it has morphed its telecom operations so many times that one simply does not know aht they are up to. Yes, it seems to be the most confused mobile operator in the country.
A little bit of history here on the Tatas telecom business. It started life as Tata Cellular, a GSM service provider in Andhra Pradesh. Then it decided to join hands with Birla AT&T that provided GSM services in Maharashtra and Gujarat. That later morphed into IDEA Cellular.
Somewhere during this passage, the Tatas felt going CDMA was a better bargain. After all, the then Mukesh Ambani controlled Reliance Infocom was going the CDMA way. Then it sold its stake in IDEA to the Aditya Birla group. Now that the Anil Ambani controlled Reliance Communications is going the GSM way, the Tatas are as usual following them.
But going the MVNO way is a new path altogether. So when the Cellular Operators Association of India (COAI) raised objections, it has come up with a new complaint--the telecom policy did not allow outsourcing of networks.
But hello--what was the group doing for well over three years. After all, Bharti outsourced its network ages ago and has become a case study for mobile operators globally.
The confused thinking is clearly reflected in the subscriber base. It has just 22.5 million subscribers in 20 circles as opposed to IDEA which has 21.95 million subscribers while being present in only 11 circles. The only two circles where Tata is not present are North-East and J&K.
Maybe Richard Branson can pull this group's telecom business by the boot straps. That's what the group needs, if its telecom business has to last out.
Tuesday, February 19, 2008
Getting back
I have been away for quite sometime. But, the action in India's telecom sector continues unabated. I shall be a lot more regular from now on.
Anyway a quick recap:
* The Department of Telecommunications (DoT) received 121 applications for starting mobile services from nine new players.
* It has allocated spectrum to Reliance Communications to start GSM services
* Bharti and Reliance Communications have spun out their tower companies as separate entities
* Among the new players in the mobile race are real estate major Unitech, electronics leader Videocon, Shyam Telelink in collaboration with Russia's Sistema
* However, there is no clarity on when these licence holders will be allocated spectrum
* There is no news on the auction of 3G spectrum
* Thanks to over 8 million new subscribers being added every month for the past three months, tele-density is within striking distance of 25%
Anyway a quick recap:
* The Department of Telecommunications (DoT) received 121 applications for starting mobile services from nine new players.
* It has allocated spectrum to Reliance Communications to start GSM services
* Bharti and Reliance Communications have spun out their tower companies as separate entities
* Among the new players in the mobile race are real estate major Unitech, electronics leader Videocon, Shyam Telelink in collaboration with Russia's Sistema
* However, there is no clarity on when these licence holders will be allocated spectrum
* There is no news on the auction of 3G spectrum
* Thanks to over 8 million new subscribers being added every month for the past three months, tele-density is within striking distance of 25%
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