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

Deutsche Telekom Eyes Indian ISP Space; Devas Multimedia Looks To Raise Funds

From http://www.medianama.com/2009/08/223-deutsche-telekom-eyes-indian-isp-space-devas-multimedia-looks-to-raise-funds/ on August 24, 2009

By Preethi J

German telecom conglomerate Deutsche Telekom, which owns T-Mobile in USA, is planning to join the Internet Service Provider arena in India. According to a MarketWatch report, the telco is planning to set up a high-capacity radio network for quick Internet connections in metropolitan areas of India come next year.

I wonder if we need yet another ISP in India, with already a number of incumbent players – Reliance, Tata Indicom, MTNL, BSNL, Hathaway, Tikona, Sify and Bharti Airtel, and France Telecom, Vodafone and DEN Networks also planning ISPs. With the last mile still closed, wireless is being seen as the way to go; which is where Devas Multimedia comes in.

Devas MultiMedia:Looking To Raise Funds

Deutsche Telekom received permission from India’s Foreign Investment Promotion Board (FIPB) last year to invest Rs. 317.85 crore into Devas Multimedia, a little known Bangalore-based wireless services company, which was working on a long term Mobile TV (DMB) project with Indian Space Research Organisation (ISRO). DT has acquired 17% stake in Devas.

Interestingly enough, Devas is looking to raise funds. The company, which already has Telecom Ventures and Columbia Capital as investors, apart from Deutsche Telekom, has a proposal pending with the FIPB for permission to “induct fresh foreign equity participation with the induction of a new foreign collaborator.”

Devas is a curious case: little is known about it, and it still appears to be in stealth mode:  there’s no website and there is little information on it except of it’s work with ISRO and its backers.

India desperately needs a catalyst to boost Internet penetration: Internet growth in July 2009 in India has actually fallen to 2.7% from 3.4% in June and 6.3% in May 2009. Besides the well known issues of delinking last mile access and ISP licensing which are throttling growth, other issues Deutsche Telekom will need to grapple with are low PC adoption and lack of Indic language content.

Companies Eying ISP Space In India

Earlier this year, France Telecom also entered India through Equant Network Services, its joint venture with Emery Technologies with the intention of launching Internet services;  Vodafone too announced its entry. The latest to announce plans of becoming an Internet service provider is DEN Networks, a cable TV company which is planning to go public to raise funds.

The Wireline Alternative: Broadband Over Power

Research and experiments on Broadband over Power Lines have been on for years – news about it pops up every few months. Indian Express has the latest: about Bengal Engineering and Science University professors and CESC have implemented Broadband over Power in two housing estates in Kolkata. The copper wires that supply electricity to double as broadband connections and installing a customer premise equipment that decodes the signals and brings them to your computer. But if it’s that simple, why is it taking so long to materialise? The government recently deferred an application by Powermax Communications, a provider of power transmission  and distribution management systems and broadband over power services, to increase foreign equity participation.

Indian mobile users to hit 771 mn by 2013: Gartner – The Financial Express

via Indian mobile users to hit 771 mn by 2013: Gartner – The Financial Express on June 18, 2009

Bangalore: Indian mobile users will jump more than 90 per cent to 771 million by 2013 as companies expand networks to rural areas in the world’s fastest growing wireless market, research firm Gartner said.

India had 403.66 million wireless users at the end of April, Telecom Regulatory Authority of India figures showed earlier this month, second only to China that has more than 600 million wireless subscribers.

Cheap call tariffs and handsets are driving demand in India, where operators such as Bharti Airtel and Reliance Communications are now building telecom towers and networks to cover smaller towns and villages to hook new users.

Gartner, the world’s biggest technology research firm, sees mobile subscriber base growing at a compound annual growth rate of 14.3 per cent in the four years to 2013, up from an estimated 452 million by the end of 2009.

Revenues of Indian mobile phone companies will exceed $30 billion in 2013, rising at a compound annual growth rate of 12.5 per cent over the same period, it said.

“The Indian mobile industry has now moved out of its hyper growth mode, but it will continue to grow at double-digit rates … as operators focus on rural parts of the country, said Madhusudan Gupta, senior research analyst at Gartner.

Gartner, however, predicted a “significant drop” in average revenue per user (ARPU) — a key gauge of performance — as the bulk of new subscribers from the hinterland usually talk less on phones and some use mobiles just to answer calls.

Bharti, which is in talks with South Africa’s telecoms firm MTN Group to create the world’s No.3 wireless group, saw a drop of 15 per cent in its March quarter ARPU as it won more new users in rural areas. The research firm said voice tariffs would fall substantially in 2009 as new operators join the market.

The telecoms unit of Indian developer Unitech Ltd will launch mobile services with Norway’s Telenor in the December quarter this year, a top company official said on Tuesday.

Bharti’s rivals such as Reliance Communications, Vodafone Essar and Idea Cellular are also rapidly expanding their services across the country.

Related stories at

• http://www.ciol.com/technology/mobility/news-reports/indian-mobile-users-to-hit-771-mln-by-2013-gartner/18609121197/0/
• http://efytimes.com/efytimes/fullnewsxml.asp?edid=35243
• http://economictimes.indiatimes.com/Indian-mobile-users-to-hit-771-mln-by-2013-Gartner-/articleshow/4671022.cms

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’ wait for airwaves gets longer

17 Jun 2009, 0702 hrs IST, Joji Thomas Philip & Sandeep Gurumurthi, ET Now

The wait for additional airwaves, key for mobile operators to expand their customer base, has just got longer, with the telecom ministry deciding to make any decision on this only after the upcoming auction of third-generation spectrum, according to a top official in the department of telecom (DoT).

Communications minister A Raja and Finance Minister Pranab Mukherjee met twice on Tuesday, but were unable to reach a consensus on key issues related to 3G auctions such as the base price for these radio frequencies as well as the number of players to be allowed to offer these high-end services.

“No consensus as of now on the base price. We discussed various suggestions — whether we should go for uniform base price or opt for differential pricing, according to circle, depending upon commercial viability of that area,” Mr Raja told reporters after his second meeting with Mr Mukherjee.

As a fallout, the telecom ministry has decided that it will take a call on all issues related with second-generation spectrum, the airwaves on which all mobile services are offered at present, including the methodology for future allocations, the pricing for this scarce resource and the usage charges for utilising these airwaves only after the upcoming auctions of third generation spectrum, the official said on condition of anonymity.

The ministries are divided over the base price for the 3G auctions with DoT proposing a reserve price of Rs 2,020 crore for pan-India 3G spectrum and the finance ministry wanting it to be doubled. DoT has said it is open to hiking the reserve price to Rs 3,540 crore as a compromise.

The two ministers said for the first time that they were willing to look at a differential pricing formula to arrive at a base price for 3G auctions, vital for high-end services such as video conferencing and high-speed internet on the mobiles.

Industry analysts, however, say using a new formula to arrive at differential pricing for each circle will be a time-consuming process that will further delay the 3G auctions.

The development implies that existing telcos will not get 2G spectrum till the issue is settled. Now, they will have to invest heavily on infrastructure to ensure that the quality of services do not deteriorate.

At present, all telecom services are offered on 2G spectrum and these airwaves have been given to telcos based on their subscriber numbers. Put simply, additional radio frequencies are dished out as telcos as they add more subscribers. Currently, India follows a controversial practice of allocating spectrum based on companies’ subscriber base, and is the only country in the world that follows this method.

There are two key factors that have led to the communications ministry deciding to stop all 2G allocations until the completion of 3G auctions.

First, the spectrum panel in its report submitted last month had said the country should adopt the internationally-accepted auction system for issuing additional 2G airwaves to telcos. This committee, consisting of academicians, industry representatives, government officers and industry representatives, had suggested that the 2G pricing be market-linked and be related to the auction price of 3G spectrum.

Second, the committee had also suggested that all telcos who hold radio frequencies beyond the 6.2 MHz mark be charged a one-time fee for all the extra radio frequencies they hold, while adding that this one-time fee be calculated based on the 3G auction price.

The communications ministry can act on these recommendations only after the 3G auctions take place.

The larger implication is that all telcos will have to shell out huge amounts, both for the excess 2G radio frequencies they hold as well as for all additional allocations in the future.

Additionally, DoT’s move to freeze all 2G allocations is also set to impact all telcos. For instance, India’s largest telco, Bharti Airtel, is awaiting additional spectrum allotment of 1 MHz each in five circles.

Reliance Communications, which has start-up spectrum in all 22 circles in the country, is now eligible for the next tranche in six circles as it has reached the prescribed subscriber numbers in these areas. Other telcos such as Vodafone Essar and Idea Cellular too are awaiting additional spectrum in several circles.

With no airwaves allotments over the next couple of months, these operators will have to spend significant amounts in setting up new cellsites. Analysts say for most operators, it is, therefore, a tradeoff between increased capex and allowing the quality of services to deteriorate on account of the spectrum crunch.

This is because it is technically possible to have increased number of subscribers using the same amount of radio frequencies, provided operators spend significant amounts in building more base stations and subscribing to the latest technological innovations.

It is not just the large players that are impacted by the latest policy logjam. The government’s move to put all allocations on hold will also pinch small players and new entrants like Datacom, Unitech Wireless

and Swan Telecom, who are awaiting start-up spectrum in many regions.

Nokia Tops List of India’s Most Trusted Brands – BusinessWeek

From Economic Times of India June 17, 2009, 9:50AM EST

via Nokia Tops List of India’s Most Trusted Brands – BusinessWeek.

Nokia’s tagline of ‘connecting people’ certainly seems to have struck a chord with the Indian consumer. For a second year running, the handset maker has topped the prestigious, ‘Brand Equity Most Trusted Brands (MTB) Survey’. In second and third places are the two venerable consumer brands, Colgate, a four-time winner, and Lux, respectively.

The survey was unveiled last night at a glittering ceremony, which saw the who’s who of India’s brandsphere making their way to Mumbai from all parts of the country to be in attendance. The marque names included HUL MD Nitin Paranjpe, Nokia MD D Shivakumar, P&G MD Shantanu Khosla, Britannia MD Vinita Bali, BCG India MD Janmejaya Sinha, JWT CEO Colvyn Harris, Madison chairman Sam Balsara, Ogilvy India executive chairman & NCD Piyush Pandey and McCann Erickson India executive chairman Prasoon Joshi.

A clear indication that today the Brand Equity MTB Survey is the one study that marketers put their faith in. In this, the sixth year of the MTB survey, there are two new entrants into the top 10. Coming in at No. 6 is one of the oldest brands in India, Horlicks.

The brand, which has perennially been in the top 20, has finally managed to leapfrog into the coveted top 10. However, it is Reliance Mobile which is the star of this year’s edition, considering that it had failed to crack the top 20 in 2008. Telecom, as a category, is clearly on the ascendant. Airtel, BSNL and Vodafone have all surged up the charts to finish in the top 30, ranking 12, 19 and 30, respectively.

Hindustan Unilever, as has always been the case, continues to dominate the overall rankings with three brands (Lifebuoy, Lux and Pepsodent) in the top 10 and seven in the top 20. However, Pond’s, a brand from the HUL stable, also happens to be the biggest loser in the top 10, falling from No. 5 last year to No. 16 this year.

In the listing of the top 50 service brands, three out of the five brands are public sector brands namely SBI (13), LIC (17) and BSNL (19), perhaps an indication that public sector brands are perfectly capable of holding their own against their private counterparts.

The Brand Equity MTB survey is the largest, most diverse and most prestigious survey of its kind, with over 8,000 respondents nation-wide and is conducted by The Nielsen Company on behalf of Brand Equity. The detailed survey findings are available in today’s 12-page special edition of Brand Equity.

Also, watch out for all the action from the launch party and interviews with winners and India’s premier marketers on ET NOW, the soon-to-be launched cutting-edge channel for business news.

Vodafone approaches FIPB for NLD, ISP licences

From http://www.economictimes.com on June 16, 2009

NEW DELHI: Mobile services company Vodafone Essar has applied for Internet Service Provider

and national long distance licence and has approached the Foreign Investment Promotion Board (FIPB) for approval.

The company officials confirmed that the operator has applied for these two licences and aims to become a full-fledged communication service provider

in the country.

FIPB, on June 19, may take up the proposal, sources said. If Vodafone Essar, in which the UK-based mobile firm Vodafone holds majority stake, gets the national long distance licence (NLD) it will help the company save operating expenses for carrying STD traffic, instead of hiring other mobile company’s network for the purpose.

All the top mobile operators like Reliance Communications, Bharti, BSNL and MTNL have their own NLD infrastructure.

The company is also planning to enter the internet service segment in which all other major mobile operators like BSNL, Reliance Communications and MTNL has a presence.

Airtel allowed to ‘unlock’ Apple’s iPhone

From www.ciol.com on June 16, 2009

MUMBAI, INDIA: According to Apple’s global support site, Bharti Airtel has been authorised to legally unlock the iconic 3G iPhone handsets in the country.

Thus enabling the Indian company to sell it to any user, not necessarily only an Airtel subscriber. The companys may also charge an additional fee for the unlocking, the website said.

This is in contrast to the existing practice of Apple in offering the iPhones — launched in two versions, 8 GB and 16 GB — bundled with the services of only two operators, Bharti Airtel and Vodafone-Essar.

In India, the 8 GB model costs around Rs 31,000, while the 16 GB is priced at Rs 36,000. Apple is also set to launch the latest version, iPhone 3GS, billed as the “fastest, most powerful iPhone yet”, on August 9.

Related stories at

• http://www.business-standard.com/india/news/airtel-allowed-to-%5Cunlock%5C-apple%5Cs-iphone/361195/

Bharti, Vodafone to bring iPhone 3GS to India in Aug

12 Jun 2009, 0740 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: India’s leading GSM telecom operators — Bharti Airtel and Vodafone Essar — are set to bring Apple’s latest iPhone, called iPhone 3G S, to India in August. The new iPhone 3G S, which offers faster data speeds, a new camera, video recording, compass and voice control, was unveiled in US earlier this week.

In India, Apple has exclusive tie-ups with Bharti and Vodafone and this is one of the few markets where the US-based technology firm has a tie-up with two operators. Bharti and Vodafone jointly account for over 170 million of the over 400 million cellphone users in the country.

Apple had issued a guidance, saying the iPhone 3G S would make its debut in India in August, but refused to specify the date and the pricing for the country. The guidance also added that the handset would be launched in 31 other countries in August. Additionally, as per information made public by Apple, the iPhone 3G S will go on sale in 10 countries, including the US on June 19, and another 32 countries in the month of July.

Both Bharti Airtel and Vodafone Essar did not offer comments to a detailed query sent by ET.

In India, the new iPhone from Apple is set to face competition from smartphones such as Nokia’s N97 and similar offerings from BlackBerry and Samsung. Another handset that can be a potential threat to Apple’s new product is the Palm’s Pre which has just hit the US market, but is currently not available in India.

But, unlike handsets such as Nokia’s N97, the new iPhone 3G S will have a unique advantage as it has over 100,000 applications and also enjoys the support of the most vibrant and innovative developer community in this space. This implies, Apple’s product is more than just a technically superior handset, but more of a software platform with thousands of custom-made applications.

However, the catch is that the earlier model of the iPhone’s India entry has been a huge failure both in terms of sales (due to an unviable distribution model) coupled with a steep price tag and poor advertising which resulted in the brand failing to connect with customers here.

Also, customers in India who had followed Apple’s pricing globally during in other countries and believed that the iPhone would sport a similar price tag of $199 here were put off by the fact that they would have to shell out more than three time the amount to buy the product. Worse still, market watchers say that neither Apple nor Bharti and Vodafone Essar put in the efforts to explain the difference in market dynamics in India which led to the higher pricing here which left customers confused.

Market watchers and analysts also say that Apple’s decision to go in with only Bharti and Vodafone Essar in India was flawed, especially considering that GSM operators here are not major players in the handset retail space. This is because, GSM players rarely bundle handsets and restrict such offering to the lower-end phones in non-urban and rural markets.

For consumers, some of the new features that come with the iPhone 3G S include its ability to remember text that has been entered once, thereby eliminating the need to retype e-mail addresses, postal addresses or usernames, the digital compass which aids in navigation and a host of features that make it friendly for the disabled. Besides, it also comes with Apple’s own earphones along with a multi-button remote, but with a single control key and a mic.

Related stories at

• http://economictimes.indiatimes.com/India-to-ring-in-new-iPhone-in-August/articleshow/4647452.cms
• http://economictimes.indiatimes.com/Apple-hopes-to-fare-well-with-iPhone-3G-S-this-time/articleshow/4651934.cms

Vodafone’s towering plans stuck

9 Jun 2009, 0019 hrs IST, Joji Thomas Philip, ET Bureau

NEW DELHI: Vodafone Essar’s plan to hive off its signal towers and telecom network-related infrastructure arm to companies in Mauritius has run into rough weather for the second time after a government agency flagged the vexed issue of using a tax haven for such deals.

The Department of International Taxation (DIT) in Mumbai, the government agency that examines cross-border deals, has said in its interim report that the Vodafone Essar plan seeks to route funds in a way to take advantage of the India–Mauritius Double Taxation  Avoidance Agreement (DTAA).

According to the provisions of DTAA, Mauritius-based entities are exempt from paying capital gains tax in both countries.

After DIT’s interim report, the Foreign Investment Promotion Board (FIPB) has yet again deferred Vodafone Essar’s proposal on Ortus Infratel and Holdings.

This is the second time a government agency has opposed Vodafone Essar’s plan. In April, the revenue department under the finance ministry had said the proposed investment in the new company through Mauritius would result in ‘round tripping’.

The revenue department had referred the matter to DIT, which has again stated in its interim report that ‘the possibility of round tripping cannot be eliminated’.

In response to a detailed query sent by ET, Vodafone said the company cannot comment on the observations of either DIT or the revenue department.

In its interim report to FIPB, DIT has said the two Mauritius entities were mere holding companies with a share capital of just $100. It added that the telco has not furnished the source of funds for both Vodafone Tower and Essar Infratel despite repeated reminders. But a person close to Vodafone Essar, who wished to remain anonymous, said the source of funds for both these companies have been provided to DIT.

Hutch warns of tax outgo in Vodafone deal

8 Jun 2009, 0004 hrs IST, PTI on www.economictimes.com

 

NEW YORK: Nearly two years after it sold its Indian telecom business to British giant Vodafone, Hong Kong-based Hutchison Telecom International has warned of possible tax and other obligatory payments in connection

with the deal.

“We may be subject to claims or have to make payments as a result of warranty, indemnity or other obligations assumed in connection with the sale of interests relating to CGP investments holdings to a subsidiary of Vodafone Group, or Vodafone, in May 2007,” the US-listed HTIL said in a regulatory filing here.

Under the deal, HTIL had sold its majority 52% stake, held through Cayman Island-based CGP Investments Holdings, in Indian telecom venture Hutch-Essar to Vodafone for over $11 billion. Hutch-Essar was later renamed as Vodafone Essar. HTIL, in its annual report filing with the Securities and Exchange Commission (SEC), further said that ”the Indian tax authorities may consider the gain arising from this sale to be taxable in India. “The Indian tax authorities have initiated an investigation into Vodafone’s obligations to withhold tax from the acquisition proceeds.”

The Hong Kong-based firm, which is part of billionaire Li Ka-shing-led Hutchison Group, said that it has “received legal advice and believe that the sale is not taxable in India, and therefore, no Indian tax is payable by us.”

“Accordingly, we have not provided for any claims or Indian tax liabilities in connection with the sale. However, there can be no assurance what the final outcome will be. If we eventually make any such payments or suffer any Indian tax on this sale, it may have a material adverse effect on our financial position and results of operations,” it noted.

Htil completed the sale in May 2007 to Vodafone for cash consideration of $11,074 million before costs, expenses and interest payable by Vodafone, plus the assumption of $2 billion of net debt.