Data is India's Next Tariff Battlefield

India's voice service tariff war, which sent per-minute prices crashing to rock-bottom levels last year, is set to be repeated in the emerging data services market as the country's mobile operators launch their 3G offerings, according to Tata Teleservices Ltd.
The operator has just launched its 3G services, having won 3G spectrum in nine circles (service areas) earlier this year. (See Tata Docomo Unveils 3G Packages and India's Tata Ready for 3G Launch.)
However, it's soon set to be joined by many of its key 3G rivals. (See Bharti Gets a Makeover Before 3G Launch, Aircel Earmarks $500M for 3G, India's Vodafone Essar Names 3G Suppliers, and India's 3G Players Ready for Swift Launch.)
"We believe that the data space is going to be more competitive as... other operators launch 3G services," said Lloyd Mathias, president of the corporate monitoring group at Tata Teleservices, speaking to Light Reading Asia on the sidelines of a recent press conference.
That spells good news for consumers, who, as tariffs drop and device makers launch ever-cheaper 3G handsets, will find 3G increasingly affordable.
But a mobile data price war won't be such good news for the operators or their investors, as the service providers need to find ways of generating a profitable return on their 3G license and infrastructure investments. (See India's 3G Auction Ends, Raises $14.6B and India's 3G Equipment Market a 'Bloodbath'.)
CDMA dominates mobile data landscape
Currently there are just three prominent players in India's mobile data services market -- Tata Teleservices, Sistema Shyam TeleServices Ltd. , and Reliance Communications Ltd. -- and, not surprisingly, all of them are CDMA operators that have upgraded their networks with EV-DO technology.
Tata, in fact, has just started to promote a netbook that hooks up to its CDMA EV-DO network, offering downstream mobile broadband speeds of up to 3.1 Mbit/s. (See TTSL, Acer Offer Connected Netbook.)
Tata and Reliance have an additional string to their mobile data bows, though, as both operate CDMA and GSM networks, and both hold 3G licenses that have enabled them to upgrade their GSM networks with 3G/HSPA technology. Sistema Shyam, which trades under the brand MTS India, has only its CDMA operations. (See MTS India Puts Its Faith in Data.)
Now Tata, which unleashed the voice price war by cutting its tariffs last year, is confident it can capitalize on the head start it has over its competitors, and benefit from its CDMA EV-DO experience.
"We believe we have an advantage over others, since we already have more than 1 million [mobile data] subscribers across the country. The technology and the spectrum we have is superior. We are already ahead of the other operators," said Mathias. (See Huawei Bags India 3G Deal.)
The likelihood is, then, that rivals such as Bharti Airtel Ltd. (Mumbai: BHARTIARTL), which has previously said 3G service prices are unlikely to be as low as 2G, might be drawn into a data tariff war along with all the other 3G players, with Tata Teleservices the probable leader in cutting prices. (See Bharti Gets a Makeover Before 3G Launch, Bharti Needs More Data Drive, and Tata Docomo Unveils 3G Packages.)
Though Tata's Mathias didn't comment on the data services ARPU (average revenue per user) across all of Tata Teleservices, he said Tata Photon Plus, the operator's CDMA EV-DO service, currently has a monthly ARPU upwards of 800 Indian rupees (US$17.45).
— Gagandeep Kaur, India Editor, Light Reading

Surprising October figures for MTS India

SSTL October 2010 additions are down compared to Sept 2010 though marginally. So month on month gain that was expected has not materialized

As expected amongst all circles Mumbai and Maharashtra performed poorly..Mumbai additions are just 1000!!! and maharashtra saw a decliine!!!.

What is the Maharashtra team up to under the leadership of the new circle chief !

Sistema Shyam CEO Vsevolod Rozanov: “We expect a price war in the post-paid market"

MNP to trigger post-paid rate wars

Katya B Naidu & Surajeet Das Gupta / Mumbai/ New Delhi November 24, 2010, 0:03 IST

Tariffs of post-paid customers are expected to fall, as telcos — particularly new operators — brace for a price war with the launch of mobile number portability (MNP) on Thursday from Rohtak in Haryana. MNP allows customers to retain their number while changing their operators.
Telcos say tariffs could be cut by up to 20 per cent. While post-paid customers constitute only 5 per cent of the total customer base of 670 million, they make up over 15 per cent of revenues thanks to their relatively higher average revenue per user (Arpu).

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Says Sistema Shyam CEO Vsevolod Rozanov: “We expect a price war in the post-paid market, where customers have been loyal to their operators for a long while. Also, most of the fall in tariffs that we saw in the last few years has been in the pre-paid category. We expect tariffs to fall by double digits.” New players like Sistema see an opportunity to grab customers from incumbent operators, who have congested networks.
J Gopal, executive director of Mahanagar Telephone Nigam, confirmed the likely fall in tariffs: “By how much is tough to say, because that will depend on how many people leave or come into the network. We are hoping to get a large number of consumers after MNP.”
New private operators say that they will now use this one-time opportunity to garner high-Arpu customers by offering them a better network. “We see tariffs falling by 20 per cent. Our strategy will be to get high-paying customers, who are unhappy with congested incumbent networks and give them an alternative at a lower price,” said a top executive with a new operator.
Operators say the big challenge will be corporate accounts, where operators offer managed services — a Rs5,000-crore market in which mobile revenues are nearly half — that include mobile connections to employees.
It is a market that Reliance Communications, for instance, is planning to address by weaning away accounts.
Executives in the company say this market will also see a price war, as incumbents have to drop tariffs by around 15 per cent to ensure that they do not lose customers. New companies that do not have a large post-paid base have nothing to lose by dropping tariffs and garnering incremental business.
But incumbent operators, while agreeing that the initial churn might go up by 5 percentage points, do not see any tectonic shift in consumers due to MNP. The current industry trend is a 7-10 per cent churn, which simply means that every customer changes his or her operator once a year.
"You might see an overall tariff drop of 5 per cent by new players, but that cannot be a differentiator, as it will be matched by others," said a source at Vodafone-Essar.
However, some experts say the MNP battle will be fiercest in the post-paid market. "We strongly believe that MNP could be a game-changer in the Indian wireless space, more so in high-Arpu subscriber segments, where churn rates remain low," said Satish Seth, group managing director of Reliance Communications, in a conference call.
"The lower end of the market looks for the best possible offer. After MNP comes in, behaviour in the high net-worth segment might change. Since there are few differentiators in the service offered, churn could go up," said Romal Shetty, head of telecom at KPMG.
"This could be only a temporary phenomenon. In the long-term, high-end subscribers prefer good network coverage and service, and incumbent operators will score. We don't expect anything so spectacularly different that would change the dynamics of the game," countered Sangeeta Tripathi, a telecom analyst with Sharekhan.

SISTEMA SHYAM SEPTEMBER QTR REVENUES UP 200 PERCENT !!!

SISTEMA SHYAM SEPTEMBER QTR REVENUES UP 200 PERCENT !!!

SSTL has registered gross  revenues of INR 150 cr  (aprox) in Q2 of 10-11  against  INR 50 cr (aprox) in Q2 of  09-10 and INR 110 cr (aprox) in Q1 of 10-11...that's a growth of 200 percent year-on-year and 35 percent quater-on-quarter.

On a 9 month basis revenues went up over 200 percent in 9 months ending sep 2010 as compared to 9 months ending sept 2009..for 9 months ending sept 2010 sstl has revenues of INR 340 cr aprox against revenues of INR  110 cr  (approx)for 9 months ending  sptember 2009 .

1 cr = 10 million
1 US$ = INR 45
Q2 : JUN -SEPT

DoT says it won’t cancel any telecom licences

Govt says revoking licences not on the agenda for now; those not in compliance face ‘heavy penalties’

Shauvik Ghosh, shauvik.g@livemint.com

The department of telecommunications (DoT) will not cancel any of the telecom licences and spectrum given to operators in January 2008, for now, but is looking at ensuring that losses made due to alleged faulty procedures prior to 2008 be rectified as much as possible.
“We cannot cancel the licences based on the procedure followed by the government at the time. We are, however, looking at whether it is possible to discover a new price for the licences. This will be higher, so we will have to ask the operators to pay the difference,” a DoT official said on condition of anonymity. “There is scope for renegotiation of the licences and we will make every effort to get back the money that the government has lost.”
On Thursday, the Telecom Regulatory Authority of India (Trai) had written a letter to DoT recommending that around 70 licences be cancelled due to non-compliance of roll-out obligations stipulated in licence agreements.
According to Trai data on subscriber numbers as of end -August, Videocon, Etisalat DB and Loop had no or negligible subscribers in a majority of the circles they held.
“We cannot cancel the licences on the basis of what should have been done by the earlier regime. Agreements have been signed with the operators,” another DoT official said. “But we cannot be unfair to genuine companies.”
The ministry, however, will look into penalizing the telcos for not complying with roll-out obligations, if this is proven.
“We are looking into the recommendations by Trai. The guilty will be heavily penalized, but we cannot allow the consumer or the industry to be affected. The sector is a vital source of government revenue,” the second official added.
All the new operators got spectrum in nearly all the circles they won as soon as they signed their licences almost three years ago, in January 2008.
The development comes as a consequence of the Comptroller and Auditor General of India (CAG) report submitted on Tuesday, on the controversial second generation mobile spectrum allocation.
The report alleges that policies followed by DoT under former communications minister A. Raja led to a loss of between Rs.50,000 crore and Rs.1.76 trillion to the exchequer. Besides allotting the spectrum at “throwaway” prices, DoT gave licences to companies that did not qualify.
CAG has asked that the 121 licences, issued to nine operators in January 2008, be cancelled due to the alleged wrongdoing.
“This may lead to many of the new operators surrendering their licences in some circles due to the inability to start operations or the operations not making commercial sense. This, in turn, could lead to more spectrum being available in the country and quality of service improving significantly,” a Mumbai-based analyst with a multinational brokerage firm said on condition of anonymity as he is not allowed to speak to the media. “The government may also allow mergers and acquisitions in the sector in order to clean up the mess.”

Shyam-Sistema refutes Trai charge on roll-out obligations

Shyam-Sistema refutes Trai charge on roll-out obligations
Refuting telecom regulator Trai's charge that it has not met its roll-out obligations, Sistema-Shyam, on Thursday said the company has launched services in all 22 circles and has over seven million subscribers. "Amongst the new telecom operators, Sistema Shyam Teleservices Ltd (SSTL) was the first company to launch its services. The company has complied with all its roll-out obligations in all the 22 telecom circles and has already secured over 7 million voice subscribers and over 3,00,000 data customers," the company said in a statement.
Telecom Regulatory Authority of India (Trai) on Thursday said Sistema-Shyam has failed to meet roll-out obligations in 10 circles and has recommended cancellation of its licences in those areas.
A joint venture between India's Shyam group and Russian giant Sistema, Sistema-Shyam is the only new telecom operator which is offering CDMA based services across the nation.
Among the new licensees, no irregularity was found by the government auditor CAG, which has said that 2G spectrum allocation by the government cost the exchequer up to Rs 1.76 lakh crore. CAG report also mentioned a few companies, saying that they were ineligible for telecom licences.
Russian firm Sistema holds nearly 74% equity in the company, and has also roped in the Russian government which holds nearly 19 per cent stake.

Sistema India unit says has met all rollout obligations Thu, 18th Nov 2010 12:42

NEW DELHI, Nov 18 (Reuters) - Sistema Shyam Teleservices, the Indian arm of Russia's Sistema, said on Thursday it had met all its obligations for rolling out mobile telecom operations in the country.

The company's statement came after local television channels said that the telecoms sector watchdog had recommended cancelling as many as 69 telecoms licences issued to various operators due to delay in the rollout of services.

ED weighing if money from stake sales can be termed criminal proceeds

NEW DELHI: The Enforcement Directorate , or ED, is investigating foreign entities that bought stake in new telecom companies that were given permits in 2008, to determine if the money received from these stake sales can be classified as criminal proceeds.
The agency, which investigates violation of India’s foreign exchange laws, has also written to countries from where money was received by the Indian firms for details on the investors and source of funds.

“Prima facie, it appears that money was routed through several tax havens and we have written to these countries for details,” said an ED official who did not wish to be identified. “If the procedure for allotment of licences is found to be faulty or inappropriate, then the money received by these companies could be treated as criminal proceeds,” the official added.

India’s national auditor, in its report submitted to the government on Wednesday, had indicted telecom minister A Raja for selling scarce airwaves to nine new entrants in 2008 using a faulty and outdated policy, and costing the exchequer between Rs90,000 crore and Rs140,000 crore. The report has resulted in a political firestorm, with Opposition parties calling for Mr Raja’s resignation.

In its report, CAG has said mobile permits given to five of the new entrants were illegal. It has slammed the telecom department for not rejecting the applications of Loop Telecom , Unitech, Swan (Etisalat DB), Datacom (Videocon) and S Tel and added that these firms had failed to meet the eligibility criteria for obtaining telecom licences. The nub of ED’s case is that if the licences awarded were illegal, then the money received from selling stakes in them could also be tainted.

ED is probing money allegedly received by two companies from Cyprus and Dubai, respectively. “We have sent letters of rogatory to these countries and are examining whether foreign exchange laws were violated by these fund transfers and also the source of these funds,” said the official quoted earlier. The agency is also learnt to have informed the Supreme Court of these developments.

The nine firms that got licences in 2008 for a mere Rs1,651 crore include Essar Group-owned Loop Telecom, realty firm Unitech, Datacom (Videocon), Swan (Etisalat), Sistema Shyam, Spice and S Tel.

Some of these firms immediately sold stakes to foreign companies for huge valuations.

Unitech ceded control to Norwegian telecom major Telenor for $1.1 billion; UAE-based telco Etisalat bought a 45% stake in Swan for $900 million; and S Tel, which had permits for only six circles, sold 49% stake to Bahrain’s Batelco for about $225 million. These deals were clinched even before the companies set up a single tower or any other infrastructure to roll out services.

The Comptroller and Auditor General of India (CAG) in its report said “based on the foreign equity attracted by them, the value of a pan-India mobile permit could be anywhere between Rs7,442 crore and Rs47,918 crore”. It added that Mr Raja acted in an “arbitrary” manner and deliberately followed faulty policies to “benefit” a few operators.

ED recently told the Supreme Court that it has registered an Enforcement Case Information Report (ECIR) earlier this year under the Prevention of Money Laundering Act, or PMLA, on the basis of the FIR registered by CBI in the spectrum allocation scam.

ET had earlier reported that the agency has registered complaints against Unitech and Loop under the Prevention of Money Laundering Act or PMLA. Another ED official, who declined to be named, said the agency is also examining the role of a prominent corporate lobbyist who is alleged to have played a role in influencing the way the licences were awarded to new companies. The agency has summoned this lobbyist for questioning under the provisions of PMLA, this official added.

ED officials are also studying the comments by the national auditor that companies such as Swan, Unitech and S Tel were able to attract huge foreign investments soon after getting mobile permits. Sources in the agency pointed out that the auditor has questioned the motivation of Telenor, one of Norway’s largest firms, for acquiring stake in Unitech, stating that the high value it paid for the stake in the communication venture was primarily for spectrum and not for “other inputs claimed to have been infused by Unitech”.

“The value which should have accrued to the public exchequer went as a favour to the new licensees in the form of capital infusion for enriching their business,” the chief auditor has said. The extension of the ED probe could spell more trouble for Mr Raja, whose decisions related to awarding mobile licences in 2008 are also being investigated by CBI, CVC and the Parliamentary Affairs Committee . Cases related to these are being heard in the Supreme Court. CBI in its FIR has said the loss to the exchequer from the spectrum scam is about Rs22,000 crore.

Message from the CEO

Dear Amsost members,

 

Thank you very much for the greetings!

Let me in turn wish very happy Diwali to you and your families, let the coming year be joyful and prosperous! Let me reassure you the management team will continue it’s effort to deliver the best for our customers, shareholders and employees.

 

Very best regards,

 

Vsevolod Rozanov

 

India adds 2.5 Lakh CDMA data card subscribers every month

Corporate - Others

By: Nilabh Jha| afaqs! Telecom Yatra | New Delhi, November 03, 2010

In a country where broadband targets have continuously been missed, CDMA operators have crossed the three million subscriber mark with their EVDO data cards, which provides high speed internet access.
According to research done by Telecom Yatra, CDMA operators are adding around 2.5 lakh data card subscribers per month. Also, the absence of 3G data cards has proved to be a big factor in success story of CDMA data cards.

Amongst the CDMA operators, Reliance is the biggest player in the data card business with about 55 per cent market share, and Tata Indicom is the second with close to 35 per cent share.
On the other hand, MTS - the new operator in the space is a distant third with 2.5 lakh subscribers.
Public sector operators BSNL and MTNL, who also have CDMA networks, are only marginal players. BSNL has upped the ante and hopes to capture a bigger market share in this lucrative market.
In terms of net additions per month, both Reliance and Tata are in close competition. Both are adding one lakh customers a month with an additional 50,000 being added by MTS and the public sector operators.
In the vendor space, Chinese equipment manufacturers have captured almost the entire dongle market in India. ZTE has 43 per cent market share while Huawei has close to 55 per cent. Together they have been able to push more than 5 million dongles to operators.
The dongles business is very lucrative for CDMA operators - while their average revenue per user (ARPU) hovers at around Rs 111; ARPU for data cards is more than Rs 700.
Given the importance of the business each operator has already chalked out plans for expanding their EVDO network. RCom plans to expand its Netconnect (Its wireless internet brand) service to 600 towns and cities from the current 69 cities. MTS is also planning to take its MBLaze service to more than 100 cities. Right now it is available in 84 cities; while Tata Photon plus is available in 76 cities.
Operators are also thinking of upgrading to next generation EVDO Rev B platform which will enable them to offer speeds up to 14.3 Mbps. However, none of them have committed a time period for this upgrade.
So far, CDMA operators have had no competition from GSM operators in data connectivity from. But with the launch of 3G in the offing they will soon have to face the onslaught of HSPA data cards. Though HSPA data cards will offer similar speeds, being a GSM product can help their brand.
Kunal Bajaj, director, Analysis Mason, had a different perspective, "I don't think CDMA camp will face any threat from GSM camp in this space. It will in fact help in expanding the market. Moreover, 3G operators will also have to carry voice in this limited bandwidth available to them, so they will not be very keen on pure play dongle business, I think they will use 3G to provide better value added services".
Despite being successful, CDMA operators other than MTS refused to share the number of dongles sold by them. The probable reason for this could be the criticism from GSM operators that CDMA operators are getting unfair advantage as they are able to offer 3G services (EVDO is a 3G standard) without paying for it, While GSM operators have to pay a huge spectrum fee.

Rediffusion Y&R wins MTS business for over 200 crores..

Rediffusion Y&R wins MTS business

By Anushree Bhattacharyya, afaqs!, New Delhi, November 01, 2010

• The size of the business is estimated to be more than Rs 200 crore.

Rediffusion Y&R has bagged the creative duties for MTS, the CDMA mobile telephony brand. Prior to this, Saatchi & Saatchi was the incumbent agency. MTS started looking for a new creative partner in July this year, after its contract with Saatchi & Saatchi expired.
The development has been confirmed by the MTS' spokesperson.
MTS' media duties are handled by Media Planning Group (MPG) India, the media buying arm of Havas Media.
MTS is the global telecom brand of Mobile TeleSystems (Sistema) of Russia. In December 2008, Sistema and Shyam Group of India formed a joint venture and brought the MTS brand into India under a brand license agreement with Mobile TeleSystems (MTS).

MTS to offer 14.7 Mbps!!

MTS to offer 14.7 Mbps speeds through CDMA dongles

By: Nilabh Jha| afaqs! Telecom Yatra | New Delhi, November 01, 2010

MTS, the mobile telephony services brand of Sistema Shyam TeleServices (SSTL), plans to upgrade its network to EVDO Rev B platform. This new technology is an advancement over the currently deployed Rev A.
With this new platform, MTS will be able to offer speeds of up to 14.7 Mbps. Currently, the CDMA operator offers speeds of up to 3.1 Mbps through its Rev A network in 84 cities.

The company, however, declined to give a specific timeline on the upgrade.
Leonid Musatov, chief marketing officer, Sistema Shyam Teleservices Ltd (SSTL), said, "We certainly plan to migrate from Rev A to Rev B; but due to strategic reasons we would not be able to share a definite migration timeline."
He added, "MTS would like to extend MBlaze to 100 cities by the year end. We intend to cover 20 per cent of the data subscribers' market share by 2012."
MTS has 2.5 lakh data subscribers using its MBlaze service (CDMA dongles). It offers MBlaze at speeds of up to 3.1 Mbps in 84 major cities across India.
Leonid Musatov said, "The Wireless broadband data market is still relatively small, but is growing at an extremely fast pace. Given this context, MTS is clearly one of the major players and leader in the prepaid segment within the Indian mobile broadband market."
Data subscribers are a very sought after segment as they bring very high ARPU (average revenue per user). For the mobile broadband industry, blended ARPUs (prepaid and postpaid), are generally about Rs 700.
This is why 3G auctions garnered such a high price. Tata Teleservices, which also offers CDMA based high speed data services, has tried the Rev B platform and announced that it too will upgrade its network.