July 2009: 14.38M Mobile Connections Added In India; Landlines Sink; Broadband At 6.8M

From http://www.medianama.com/2009/08/223-july-2009-1438m-mobile-connections-added-in-india-landlines-sink-broadband-at-68m/ on August 24, 2009

By Preethi J

News of the reviving economy is reflected in the telecom sector in the month of July, which saw an addition of 14.38 million wireless connections compared to the 12.03 million in June, 2009. The total number of telephone connections in the country was 479.07 million at the end of July 2009.

• Teledensity rose from 39.86% in June to 41.08%.
• Wireless teledensity is up from 36.64% to 37.87%
• Total wireless connections rose 3.6% to 441.66 million
• Broadband connections swelled from 6.62 million in June 2009 to 6.8 million.

BSNL Loses 0.16M Landline Users; Bharti Adds 33,940

This segment continues to see churn with BSNL’s customers choosing the wireless route and disconnecting their landlines – the two oldest landline providers BSNL and MTNL lost a total of 0.17 million subscribers in July after losing 0.19 million in June 2009. MTNL lost 8181 to reach 3.54 million connections. BSNL lost 166,519 landline connections and now has 28.62 million; it accounts for 76.5% of the country’s landline userbase and will continue to be hit by negative growth even as private service providers such as Bharti Airtel and RCOM add users by bundling the landlines with other necessary services such as broadband and IPTV.

• Total landline connections in India – 37.41 million
• Wireline teledensity has reduced marginally to 3.21%

Downloads: TRAI Data (PDF)

Other operators offering landlines and their user base:

• Bharti Airtel – 2.86 million
• Reliance Communications – 1.13 million
• Tata Teleservices (Indicom) – 967,554
• HFCL Infotel – 163,399
• Sistema Shyam (MTS) – 111,069

Revenue, not user base, to set telecom pecking order

17 Jun 2009, 0305 hrs IST, Rashmi Pratap, ET Bureau

MUMBAI: Subscriber numbers in India’s wireless story are losing their relevance today as far as determining the industry position of a service provider is concerned. t will be revenues and not subscriber numbers that could decide the pecking order in the world’s fastest-growing telecom market.

This is reflected in the latest revenue figures released by the industry regulator, Trai. Going by this, the top three operators in India are Bharti Airtel, Vodafone Essar and Bharat Sanchar Nigam (BSNL).

Airtel’s adjusted gross revenue (AGR) from wireless and wireline operations was Rs 7,998 crore for the March quarter. Vodafone Essar, which offers only mobile services, had revenues of Rs 4,456 crore during January-March 2009 on a subscriber base of 68.7 million. Reliance Communications (RCOM), which has the second largest customer base, reported an AGR of only Rs 2,998 crore on 72.6 million users during the quarter, making it the fourth largest in terms of revenues.

The revenues for the state-owned BSNL stood at Rs 3,943 crore making it the third largest. BSNL offers mobile services on GSM apart from fixed line services. Besides showing the revenue capabilities of an operator, AGR is significant, as it is the basis on which service providers pay licence fee and spectrum charges. Operators pay a revenue share licence fee to the government ranging from 6% to 10% of their AGR. Increasingly, operators are targeting revenue growth instead of a larger user base.

According to Bharti Airtel’s vision statement, the company’s aim is 20% increase in revenue margin per subscriber in the next few years.

Analysts contend that with more and more low-end users signing up for services, it is becoming difficult for operators to maintain margins and improve ARPUs (average revenue per user per month). In such a scenario, those who continue to grow revenues along with subscriber base will be the clear winners.

“As the new subscriber base is primarily drawn from tier III towns and rural markets, the incremental subscriber addition is not leading to a commensurate revenue upside for telcos. The catchphrase to evaluate a telco’s performance will be quality of subscribers rather than the number of new subscribers,” Acsendia Consulting principal analyst, Alok Shende told ET.

A smaller player like Idea Cellular, which operates in 13 circles, had AGR of Rs 2,389 crore on a subscriber base of 39 million. This is just about Rs 600 crore less than RCOM on a base which is almost half of that company.

KPMG director (telecom) Romal Shetty said, “Initially, everyone was going after subscriber numbers. Now, they are looking at quality of subscribers. This explains the emphasis on value added services (VAS), which bring in higher revenues.” He pointed out that low-end pre-paid users are now bringing in monthly revenues of as low as Rs 70 per month.

Tata Teleservices reported revenues of Rs 1,889 crore during the quarter placing it at sixth followed by state-owned Mahanagar Telephone Nigam (MTNL). Aircel, a relatively new entrant, is at the eight position, which had AGR of Rs 721 crore during the quarter.

Telcos dial Africa for new pastures

Manoj Gairola, Hindustan Times on June 7, 2009

After tasting success in domestic markets, it’s ‘Dial Africa’ for Indian telecommunication companies. And it’s not the high-profile, twice-rejected MTN alone that’s attracting Indian firms.

While the government-owned Mahanagar Telephone Nigam Ltd (MTNL) is in advanced discussions for telecom licences in four countries, Bharat Sanchar Nigam Ltd (BSNL) is formulating its strategy to enter the continent.

Adding their bit are the Essar group, Tata Communications and Reliance Communications, all of which have licences for telecom services in African countries and are looking to expand their operations.

Bharti Airtel is negotiating with South Africa-based MTN for a “two way deal” that would allow it to own 49 per cent equity in South African giant MTN.

“We are evaluating a proposal to acquire a company that has licences in four to five countries,” said R.S.P. Sinha, chairman and managing director (CMD), MTNL. “Africa is a lucrative market and we would like to acquire a licence through auction if there is an opportunity.” However, in most countries, licences have been auctioned.

“Funding is not an issue for our Africa expansions,” Sinha said. “We have done all the ground work.” MTNL is presently a service provider in partnership with Tata Communications (formerly VSNL) and Telecommunications Consultants India Ltd (TCIL). “We will enter into Africa on our own,” said Sinha.

MTNL not the only government-owned company eyeing the African market. “We are looking at an expansion in Africa,” said Kuldeep Goyal, CMD, BSNL. “Whenever we find right opportunity we will grab it.”

Essar group has acquired a telecom licence in Uganda. “Africa is an important market for Essar’s telecom business and we are working towards building a strong brand in this market,” said Srinivas iyengar, CEO, Essar Telecom Kenya. “We would be looking at opportunities to establish a pan Africa footprint in future.”

The company plans to offer services in a joint venture with a local company, Kenya Telecom Uganda Ltd. It already has a licence in Kenya and plans to expand in other countries.

“We find African markets promising and have recently hiked our stake in Neotel (of South Africa) to 56 per cent from 26 per cent,” a senior Tata Communications official said. “We view this as a beach head to the rest of the African markets as and when right opportunities arise.”

Why Africa?

“African countries have just started moving on the development path,” said RK Upadhyay, CMD, TCIL. The company has been executing telecom infrastructure projects in Africa for past 20 years and is present in 30 countries. “There is expected to be enormous growth in telecommunications in next five years. Whenever, development takes place in a developing economy, the need for telecom services increases,” Upadhyay said.

“Africa has a low teledensity and high average revenue per user,” said Goyal. This explains why Indian providers want to go to. India has a teledensity (number of telephones for a population of 100) of about 40 per cent. In many African countries the teledensity is below 20 per cent (See table).

Besides, the continent’s average revenue per user is high. Against Rs 250 per month in India, the number in some African countries including is about three times as much.

Reliance has a licence in Uganda for offering mobile, fixed line, Internet, national and international long distance services, in addition to WiMax and Wifi services. It plans to acquire licences in other countries, a senior official said.

A Guide to India’s Telecom Market

April 19, 2009 Catherine Haslam on http://www.lightreading.com/

In March 2008, Light Reading published A Guide to India’s Telecom Operators. It proved to be one of the most popular articles on the site that year.

Now, little more than 12 months later, the Indian market has moved on considerably. Last year’s report noted that, at the end of 2007, the country’s mobile operators had a total of 233.6 million connections mong them. A year later, as 2008 ended, India’s mobile service providers boasted nearly 347 million connections, a year-on-year increase of nearly 50 percent. (See IndiaWatch: Mobile Nears 347M Subs.)

And there’s plenty of wireless growth still to come: In the first two months of 2009 alone, the mobile operators activated more than 28 million additional connections. (See India Adds 13M Subs in February and India Adds 15M Mobile Subs in January.) According to the Telecom Regulatory Authority of India (TRAI) , the total number of telecommunications services connections reached nearly 414 million at the end February 2009, of which more than 90 percent were wireless.

In stark contrast to the mind-boggling growth experienced in the mobile sector, fixed voice connections have suffered a gentle decline in recent years: At the end of February 2009, India, a country of nearly 1.2 billion inhabitants, had just 37.73 million fixed-line connections. India’s fixed-line sector is not dead, though: There’s potential growth in that market, too, as well as in the wireless world, though the big numbers and the immediate impact will continue to come in the mobile sector.

There are two obvious ways for the service providers to expand. The first is, quite simply, to connect more people. Teledensity is rising steadily but had only reached 35.65 percent at the end of February 2009, leaving significant potential for additional market expansion.

The majority of growth will now come from outside the metro circles and in the smaller cities, towns, and rural villages as teledensity in the major urban centers has reached 82 percent. It’s worth noting that 70 percent of the Indian population lives in rural areas, and, equally importantly, 64 percent of the nation’s expenditure and 56 percent of its income comes from these villages – yet India’s rural teledensity currently stands at less than 13 percent.

It’s the potential for rural area growth that drew five new players into the market in 2008, and it’s that same potential that prompted a number of international players, including Telenor ASA (Nasdaq: TELN) and Etisalat , to take major stakes in each of the five (see the Wireless Service Providers section for further details). This trend towards international ownership is now well embedded and is likely to become more prominent when India’s 3G spectrum auctions finally take place, which should be later this year.

The second growth driver is new services, such as broadband, IPTV, 3G mobile, and broadband wireless access (BWA), particularly using WiMax technology. Broadband connectivity is still very low, but state-owned operators Bharat Sanchar Nigam Ltd. (BSNL) and Mahanagar Telephone Nigam Ltd. (MTNL) , along with private carriers such as Bharti Airtel Ltd. (Mumbai: BHARTIARTL), are slowly increasing their DSL customer bases in urban centers (See the Fixed-Line Service Providers section for more details). Cable companies, such as Hathway Cable & Datacom Pvt. Ltd. and Sify Ltd. (Nasdaq: SIFY), are also developing broadband businesses, while Reliance Communications Ltd. has concentrated on building out WiMax capabilities to complement its high-speed Ethernet access rollout.

IPTV has struggled to gain traction as a popular service since its initial hype, but is now building, albeit slowly, with a number of service providers still planning to launch their services. With the incredible amount of content created by the Bollywood movie industry, and other local content developers, the potential flexibility offered by IPTV services could work well in the Indian environment, according to Jai Maroo, an industry executive interviewed by Light Reading TV (see below).

It’s not all growth and success in the Indian telecom market, though. Plans to promote rural connectivity have fallen short after getting bogged down in bureaucracy, while the Department of Telecommunications ‘s inability to agree on terms for the 3G and BWA spectrum auctions with other government departments has delayed deployment of mobile broadband solutions, leaving operators frustrated. They are also limited by a lack of spectrum, which, despite the size of the market, is in short supply: Indian operators have received far less than the world average of around 25 MHz apiece.

With so many developments going on, and with so many other markets around the world relatively stagnant in terms of subscriber growth, there’s never been a more important time to understand the Indian telecom sector, its service provider players, and its structure. And that’s what this report provides.

As well as a visual guide to the country’s service areas, known as “circles,” this report provides a roll call of the fixed-line and mobile operators, an explanation of the licensing environment, an overview of the many companies involved in the provision of mobile tower sites as India embraces passive infrastructure sharing on a massive scale, and an overview of the country’s approach to increasing rural teledensity.