Has the 3G adoption in India taken a back seat?

Is the 3G customer acquisition in India encouraging enough? Has the performance of Indian PSU Telecom companies in acquiring 3G customers been Good? 

Judge your self. This is how China's 3G customer acquisition has shaped up since 2009. As of the end of October 2010, China had reached 38.64 mln 3G mobile subscribers which is almost 3 times from last year. The number of 3G users of each of China’s top three telecommunication operators, China Telecom, China Mobile and China Unicom, exceeded 10 million by the end of October, the MIIT data showed. Out of total 39 miln user, 10 mln were China Telecom CDMA2000 EV-DO subscribers, 16.98 mln were China Mobile TD-SCDMA subscribers, and 11.66 mln were China Unicom WCDMA subscribers. Compare this to almost 10 million acquisition in India in one year. Not Bad? TD-SCDMA users accounted for 43.9% of total 3G subscribers, with the total number of new 3G users in 2010 to date reaching 25.38 mln.

Earlier this month, the ministry said that China aimed to have 150 million 3G mobile users by 2011, while investment in 3G development would hit RMB 400 billion (US$59 billion).

China’s telecommunication industry reported RMB 744.8 billion (US$109.53 billion) in revenues during the first ten months of 2010, up 6.6 percent year on year. Business revenue of mobile telecommunications made up 69.84 percent of the total, while fixed-line revenues accounted for 30.16 percent, dropping 3.2 percentage points year on year, the MIIT added.

Justifying tele-density in India ? Are the numbers reported by Indian Telcos inflated?

In some of my older posts, I have shown my concern on the numbers reported for users of mobile service in India. For example with entry of DoCoMo on Indian scene, the numbers Tata reported to have added last month was more than 3 million. Bharti & Vodafone continue to claim the same number of addition that they were claiming in new month. Strangely it means that with entry of new operators the existing will not loose market share. Somewhere fundamentals of economics have been defied. In other words the teledensity in India can reach 100% in ayear or so, if 10 more new operators join, as they will each add 2 to 3 million connection without decrease in the number of additions by existing operators. WoW! It seems the tele density figures in India need to be justified some how.

Recently in one of the articles published in ET,findings of a survey by online market research company JuxtConsult were reported. It says - One out of every three (57 million) urban mobile users in India now own two or more mobile connections. Believe it or not. After all this is a survey. JustConsult claims that it's the first time an estimation on the size of this segment has been attempted, as none of the industry associations––Cellular Operators Association of India (COAI) and Association of Unified Service Providers of India (AUSPI)––or sector regulator Telcom Regulatory Authority of India (Trai) have any estimation of the number of multiple connections per user.

Understanding the size, composition and motivations of this huge segment of mobile users is critical. It is needed by mobile operators in designing their marketing plans. It is also needed by handset makers and department of telecom (DoT), which is in a fix as to estimating the true teledensity of India. JuxtConsult's estimation of mobile connections in the country (till July) at 343-million is lower than TRAI's estimates of 441.6-million (August). JuxtConsult attributes the difference between its estimate and TRAI numbers to many inactive connections. Says Sanjay Tiwari of JuxtConsult: "The discrepancy is also because about 15% of reported additions by mobile operators and their associations are inflated." There are credible reasons behind operators inflating subscriber numbers. Market cap, valuation and spectrum allocation based on number of subscribers are key reasons along with the pressure to cut tariffs. It also helps attract subscribers to one's own network. A new user is likely to join a large operator as network calls come cheap.

ET also reported that the government suspected that all operators were inflating their customer figures by about 15-20% and that the DoT is planning to monitor the user base of all telecom operators to ensure that operators do not inflate subscriber numbers to grab additional spectrum. Well all this will be sorted out shortly - I hope! For the time being Justconsult deserves appreciation for trying to help in profiling the multiple user customer, whose average age largely falls between 25-35 years. According to the survey, Delhi and the national capital region account for over one in ten of all 57-million MCMU’s at 12% of the total base followed by Mumbai (8%), Bangalore (7%) and Chennai (6%). Most are actual genuine connections.

The survey, also for the first time, makes a distinction between a user and a connection, hitherto taken as one in reporting India’s teledensity and average revenue per user. As reported by ET - According to Rajat Mukherjee, chief corporate affair officer at Idea Cellular, about 20% of all telcos’ customers carry more than one SIM. The carried / thrown in dustbin SIMs remains to be distinguished

JuxtConsult’s India Mobile 2009 estimates are based on a very large sample data of around 285,000 urban and rural Indians, covering all states and union territories––574 districts, 3,175 towns and over 2,800 villages. With at least 30 plus sample each from 323 districts and 419 towns, and 100 plus sample each from 184 districts and 155 towns, the study is one of the most representative, independent enumeration of mobile phone usage in India.

With over two mobile connections per user (2.4) amongst multiple connection mobile users (MCMU), this segment account for a majority (59%) of all 235-million odd urban mobile connections. JuxtConsult’s survey did not estimate MCMU numbers for rural India. TOO MUCH TOO SOON !!

With increased urbanisation and migration from distant parts of the country to the cities, long distance calling has been on the rise across the country. ET reports that Airtel will also soon be launching a family plan where in three members of a family can buy Airtel postpaid connection but pay rental for only one. This plan is justified by the survey which shows that joint families have the highest ownership of mobile phones, with about 65% of their members owning more than one connection.

The socio economic class (SEC) A & C mobile users show higher tendency to have multiple connections, says the survey. Migrant workers and youth form a large part of the target audience. This push is also having an impact on more Mobile phone sales and launch of newer models. Sunil Dutt, country head, Samsung Mobile says he is seeing a rise in sales of Samsung’s dual mode GSM/GSM and GSM/CDMA handsets. While Nokia and Sony Ericsson don’t have such phones in the market, Spice Mobiles, has 50% of its portfolio as dual SIM phones. Such phones contribute a good 80% of the company’s revenues, says Kunal Ahooja, CEO, Spice Mobiles. The survey says that about 41% MCMUs need another spare handset for ease of use. But switching between GSM and CDMA handsets is cited as a reason by 30% buyers.

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)

LTE Network commercially launched even in Republic of Tatarstan. India still struggling to launch 3G services

Russian WiMAX to LTE network operator, Yota has announced the launch of an LTE network in Kazan, capital city of the Republic of Tatarstan - having installed the citywide network in just two months. Yota has invested $20 million in building the Kazan network, which covers the city's whole population of over one million people with 147 base stations. Kazan is Russia's third city and host to the Universiade (the world university games) in 2013.

Since commercial launch only 14 months ago, Yota already has almost 600,000 customers and recently reported 2010 half-year results of US$66 million. Yota runs successful operations in Russia and Nicaragua and will soon launch its services across Belarus and Peru.

Will MNP implementation deadline in India be deferred again

It is apprehended that the 31st Oct 2010 deadline for implementing MNP(mobile number portability) in India might be deferred again. It has already been delayed four times. Initially, MNP was to be implemented by December 31, 2009 in all the metros along with the states of Maharashtra, Gujarat, Andhra Pradesh, Karnataka and Tamil Nadu. 
The deadline was then changed to March 31, 2010 and then to June 30, 2010. The June 30 deadline was again deferred as operators were not ready with the infrastructure to provide the service. 

The latest hurdle could be US-based Telcordia Technologies which, ET reports said, could move court to protect its MNP business ambition through joint venture MNP Interconnection. The telecom department has served MNP Interconnection a show-cause notice, asking it why its licence should not be cancelled, after the Foreign Investment Promotion Board (FIPB) rejected its proposal citing security concerns. Besides MNP Interconnection, the other licencee is Syniverse Technologies India, which has got approvals to implement MNP in India. 

The country has been split into two number portability zones comprising 11 circles each and each zone is to be serviced by a separate MNP operator to avoid a monopoly scenario. Reports said the DoT is planning to tweak the MNP guidelines to allow a single company, Syniverse, to roll out its services nationally. I am not sure on the security issue, but it seems this will soon become the easiest way to counter business interests in India

Meanwhile, State-owned Bharat Sanchar Nigam Limited (BSNL) is said to be ready with the infrastructure to start  MNP by the scheduled Oct 31 deadline. MNP will allow users to retain their mobile telephone numbers even if they switch their operators. 

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.

Mobile Number Portability (MNP) to kick in from 31st Dec in India

Mobile number portability (MNP) — a facility that allows customers to switch operators but retain their numbers — will kick in from December 31 across the metros and category A circles, such as Tamil Nadu and Karnataka, while the rest of the country will have access to the facility from March 31, 2010.

TRAI, the telecom regulator in India, also issued a slew of guidelines for MNP implementation. - As per the norms, once a user switches operator, he must stay for at least three months (90 days) with the new service provider before moving to another operator.
- Besides, a user holding a mobile connection is eligible to make a porting request only after three months of the date of activation of his number.
- The subscribers, who wish to port their numbers must submit their requests in writing to their service providers. The new operator must mandatorily carry out all checks, including identity verification, before completing the process, the regulator said, adding that the entire process must be completed within four days.
- Pre-paid users must give an undertaking of being aware that balances on both talktime and minutes will not be carried over to the new operator they are switching to. Post-paid customers must furnish proof that all outstanding dues to their current operator have been cleared, TRAI added.
- The operators must inform the customer about the exact date and time for the process. The regulator has also made it clear that while the operator is porting the number, the customer may have to face a ‘no service period’ that can be extended for up to a few hours during which they will not be able to receive and make calls. But in a bid to address these concerns, TRAI has said the new operator must provide the customer with a list of missed calls and messages sent during the ‘no service period’.

Syniverse Technologies and MNP Interconnection Teleco Solutions, the two companies chosen to implement it in India, had projected to regulator that less than 3% of the country’s expected 550 million-plus mobile users will go in for MNP by 2010. The regulator, when issuing MNP norms, however, did not specify the charges that customers will have to pay for switching their operator. Syniverse and MNP Interconnection had proposed to charge customers between Rs 75 and Rs 200 for porting an operator, but the regulator is yet to take a final call on the pricing issue.

Airtel Mobile Wallet Service “Airtel Money” launched in India

Leading Telecom service provider Bharti Airtel today launched India’s 1st mobile wallet service “Airtel money”. The service will enable airtel mobile customers to use the power of the ubiquitous mobile platform to make payments the easier way – at anytime, sitting anywhere. The mobile wallet service of Airtel is now available in Gurgaon and soon will be launched across several other key cities in India in a phased manner.

Load cash: Load cash on your airtel mobile by visiting your nearest airtel retail outlet.Pay bills & recharge: You will be able to use this cash in your mobile for making bill payments (electricity, gas, financial services, etc.) and rechargeShop & make payments: Instead of cash, pay over-the-counter merchants such as your nearest kirana store, chemist, etc using your mobile phone. You can even sit at home and pay for services like booking movie tickets online

In 2010, Bharti airtel was granted the license to use the Semi Closed Wallet by the Reserve Bank of India. The company has designed a secure and robust backend system to offer India’s first mobile wallet service by a telecom operator - airtel money - as a safe, convenient and user friendly medium for customers to make payments.

In Gurgaon, airtel has already established partnerships with several merchants (including coffee shops, restaurants etc) to accept payments via airtel money – which will gradually be scaled up to over 3,000 merchants across the city. airtel money will subsequently be launched in Delhi NCR and several other key cities in India. Customers will also be able to avail airtel moneyexclusive discounts and attractive offers that will be offered at various merchant outlets in the market – and save money as they shop!

Register by filling in the application form and submitting KYC documents (2 photocopies of proof-of-identity, 1 copy of proof-of-address and a passport size photograph).After the above, your existing airtel SIM will be upgraded to the new 64K airtel SIM with airtel money.Activate your airtel money account by choosing your MPIN.Load cash into your airtel money account by visiting your nearest airtel retailerYou are now ready to send commands through the airtel money application on your phone and transact anytime, anywhere!

Airtel had recently announced a JV with State Bank of India to provide banking and financial services to millions of unbanked Indians using the mobile platform. With this launch of airtel money – airtel now offers a complete suite of financial products on mobile devices for the banked as well as unbanked population of the country.

To know more about airtel money, customers can dial 12121 (toll free) from their airtel mobile phones and get started. For more information, non-airtel mobile customers can dial 8800012121 or simply visit www.airtelmoney.in

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Vodafone rules MNP war – Exclusive All India MNP Data

It has been eleven days that Mobile Number Portability (MNP) became a reality across India and Vodafone continues to rule the MNP space across different circles just like Haryana circle. Idea Cellular, Aircel, Airtel and Tata GSM are other players which are performing fairly well. Vodafone , Airtel and Idea Cellular have got maximum port in customers but Airtel’s port out customers base is fairly high and matches with biggest loser BSNL’s port out numbers which should be a matter of worry for India leading telecom company. Apart from BSNL it is Reliance GSM which is witnessing major churn out. Another inference that can be drawn from this data is that CDMA as a category is now loosing its sheen and CDMA customers are now switching to GSM operators.