Showing posts with label Airtel. Show all posts
Showing posts with label Airtel. Show all posts

Monday, November 05, 2012

RCom is in a position to ring in a new convergent future

With access to content, infrastructure and mobile platform, RCom is in a position to ring in a new convergent future, believes DEVDEEP SINGH

Tactic No 2: Go grassroots

After conquering Version 1.0 in the telecom battle (affordability), RCom focused on Version 2.0 (reach). Anil Ambani confidently asserted, “Our network expansion will give us the power to drive the market and stay ahead of the curve.” And RCom has expanded aggressively. While the company’s wireless network extends to over 10,000 towns today, it plans to take the count to 23,000 by 2007-08, covering 90% of India’s population. To achieve this, RCom plans to invest a massive Rs.200 billion in the coming year.

“The company’s network is undoubtedly amongst the vastest in the country and it has proven its execution skills. In fact, in seven months of the full-fledged CDMA launch, it became the top mobile operator in India,” says Harit Shah, Telecom Analyst, Angel Broking. And it also boasts of an extraordinary distribution channel. As Shukla comments, “We have the largest chain of exclusives Reliance showrooms under two brands - Reliance World and Reliance Express. No other operator has a phenomenal reach of 2,000 exclusive outlets where both sales and services are offered.”

RCom’s rural strategy has paved the path for its overall growth. “When we went rural, everybody contradicted our move. However, a few months later, all the other service providers were talking about going to the rural sector,” explains Shukla. In fact, it was RCom, which envisioned the approaching maturity levels in the metros, and targetted mass markets in India’s small towns and villages. It rightly predicted the rise of the rural middle class.

Tactic No 3: Be a value-added player

RCom became the telecom disrupter in value-added services. When GSM players like Airtel and Hutch were betting on GPRS and EDGE services, Anil entered with a slew of other services like integrated wire-line and wireless services, and convergent voice, data and video services, which took the mobile content market by storm. Interestingly, the competition failed to recognise that Anil was planning something bigger.

This turned out to be the ultimate weapon of convergence, aimed at redefining the scope and limits of the traditional telecom business. “Today telecom is no longer about voice or data; it is about communication in the widest possible sense of the term,” said Anil Ambani. Adds Subrato Das, Head (GSM - IT and Special Projects), RCom, “Reliance has established a pan-India, next generation, integrated (wireless & wireline), convergent (voice, data & video) digital network capable of supporting best-of-class services spanning the entire information-communication value chain.” Adding vigour to his convergence dreams, Anil recently managed to partner with Microsoft for his IPTV foray. “Until now, TV has been a broadcast, ‘one-size-fits-all’ experience. IPTV promises to offer subscribers more choices, control and convenience and a unique and more satisfying user experience,” he said. In the meantime, he has already purchased strategic stakes in firms, or finalised other financial alliances, that will allow him to access news, entertainment, music, gaming and other content that can be accessed on a Reliance mobile phone.

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Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face

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Monday, July 09, 2012

Painful but cathartic verdict

By terminating all 122 licences issued by former telecom Minister A. Raja, the Supreme Court has shown its utter disgust and contempt for policies that smack of bias and are rigged to serve partisan interests. Will the government now come up with a transparent policy for allocating licences?

Much muck and dust has been flying around ever since the 2G scandal prised open yet another egregious instance of the unholy nexus between our crooked politicans, complicit bureaucrats and compromised businessmen. The landmark Supreme Court judgement early this month, cancelling all 122 2G licences issued by former telecom minister A Raja, brings to an end the kerfuffle that had been reverberating in the nation’s corridors of power and business. The SC verdict marks the opening of a new chapter in an otherwise so far sordid saga that has dogged India’s telecom sector in recent years. Immediately, following the verdict, telecom minister Kapil Sibal announced at a hurriedly called press conference that his government welcomed the SC ruling, which would help “remove the uncertainties clouding the telecom sector.”

Meanwhile, in the aftermath of the apex court ruling, several telecom operations seem to be in a state of funk. Many of them snapped up licences thinking they were buying into India’s telecom success story. But the SC ruling, some people say, seems to have thrown out the baby with the bath water. Copping the blame on the telecom players for obtaining a licence given out by the government on the basis of a policy that the Supreme Court has now repudiated seems a tad rich. Unfortunately, in light of the cancellation of telecom licences, these operators now look like having become dupes of the con played out by Raja and his underlings. The court’s ruling also comes as a stinging excoriation of the UPA government which, despite being alerted by various quarters to the flimflam orchestrated and pulled off by Raja and his minions, chose to string along with the first-come-first-serve policy for granting 2G licences.

Some players are certain to bear the brunt of the SC judgement more than the others. Already, Bahrain Telecommunications Co (Batelco) has announced that it is pulling out of its joint venture with STel and exiting India. The C. Sivasankaran-owned STel was among the beneficiaries of Raja’s 2G spectrum allocation. United Arab Emirates operator Etisalat, Norway’s Telenor and Russian company Sistema are the other foreign firms affected most as they had bought shares in the Indian companies whose licences have been scrapped. The court has given these companies four months’ time to shut shop. With the cancellation of all its 22 licences, Uninor (Telenor’s JV with Unitech) is the worst affected by the judgement. Though the company has one of the lowest average revenue per user of Rs 98, Uninor has the highest number of subscribers (36 million) amongst the greenfield operators. It has a workforce of around 17,500 and is operational in 13 circles. Uninor has also made substantial investments of around Rs.140 billion in the market.

Not everybody stands to lose though. Older incumbents such as Airtel, Vodafone and Idea stand to gain a lot since they are the ones who have been in operation well before 2008 when Raja gave out the new 2G licences. Idea has not done too well in the new circles it had won and hence its loss of nine circles does not amount to much. These players will most likely bid for maximum circles when fresh auctions are held so as to expand their reach further. “The court has said the government must now get the market value of these licences,” said a visibly elated Subramanyam Swamy, who was one of the parties that challenged the 2G licence allocations in the court.

While the angst of players adversely affected by the judgement is understandable, the SC has, in one deft stroke, dispelled the fog and murkiness surrounding Raja’s 2G licence allocations. The court’s verdict has ensured that the law of the land prevails. It has sent out a strong message to both the industry and government that crony capitalism will not be tolerated and that corrupt business deals facilitated by a collusive government will be subjected to judicial scrutiny. Says Member of Parliament Rajeev Chandrashekhar, “This is the first time that there has been such a detailed judicial scrutiny of the licence issuing process. This judgment signals that the sector is finally open to only those investors and stakeholders who wish to invest, build and succeed by following the laid down rules and laws.” He adds that the judgement clarifies many policy confusions and also lays down the mammoth task of cleaning up and reorganising the sector over the next year or so. “This scrutiny and the judgement establishes the unambiguous basis for licence grants through auctions or market-based mechanism by the government today and in the future.”

In order to prepare the ground for a fresh round of 2G spectrum auction, the Telecom Regulatory Authority of India (TRAI) has come out with a pre-consultation paper. The regulator has also sought to allay fears of existing subscribers in circles where telecom licences of operators have been cancelled. According to TRAI, subscribers need not fear about their connections as they can port to other service providers in their respective circles. While the modalities for holding the auction are being worked out, the government expects the auction to fetch a revenue of about Rs 750 billion. However, following the cancellation of licences there is likely to be an overabundance of spectrum in the Indian market, which will ensure that prices remain low. Besides, incumbent operators have already paid through their noses for 3G and Broadband Wireless Access (BWA). These investments will take a long time to turn profitable. In such a scenario, it seems doubtful whether these service providers will warm up to participating in another round of auction. Moreover, the incumbents (whose licences have not been cancelled) have enough 3G spectrum which can be used to accommodate new subscribers. Says Rajan Mathews, Director General of the Cellular Operators Association of India (COAI), “I don’t think that kind of money is available with domestic players. That is why the government itself indicated that it will raise the FDI limit to 74%.” Just to ensure that his reasoning comes across more convincing, Mathews draws your attention to 12th Five Year Plan proposals for the telecom sector. “The preliminary numbers put out by the Planning Commission suggest Rs 6,500 billion as the outlay for rolling out various initiatives by government. They themselves admit that 80% of that would have to come from international sources.”



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