Upward Tariff Revision :any Possibility

[ravi_patent 28]

we have been seeing upward tariff revision by rcom .probable the news item below is giving reasons for the same

http://economictimes.indiatimes.com/articleshow/6443456.cms?prtpage=1

India's two largest private telcos — Bharti Airtel and Reliance Communications (RCOM) — claim that “virtual” consolidation is underway in the country’s crowded telecom market, with new entrants scaling down their rollout plans and shying away from reducing tariffs further. “Although 14-15 telcos continue to exist, consolidation has already begun in the virtual sense,” says Mahesh Prasad, president for wireless services at RCOM.

“In most circles, only about six operators continue to sustain market momentum. The intensity of competition has come down,” says Mr Prasad. Some of the new entrants in the telecom market have not rolled out networks in many geographies despite being granted spectrum. Many new entrants did not bid for 3G and broadband spectrum. All these are tell-tale signs that consolidation has started in the minds of companies, says Sanjay Kapoor, chief executive of the country’s largest telco by both customers and revenues, Bharti Airtel.

“Consolidation has also started in the minds of customers,” says Mr Kapoor. “Even in this crowded market, six operators now account for almost the entire revenue market share, indicating that customers have learnt to recognise bigger, stronger and better brands,” he says, adding that this along with the increase in minutes of usage for larger mobile companies are proof that only certain players are present in the minds of consumers.

Bharti’s average monthly minutes per customer has jumped 3% this quarter to 480 minutes, compared with the figures for the previous three months. Idea Cellular and Vodafone Essar have reported 13% and 10% growth, respectively, in minutes of usage during the period.

Japan’s NTT DoCoMo, Norway’s Telenor and Russia’s Sistema set off a savage tariff war last year when they entered the Indian market. This resulted in a fall in profits and revenues of all operators . But the rate of growth posted by these companies slowed substantially in the last quarter . Uninor, STel, Loop, Etisalat DB, Videocon and Sistema together added less than 12% of the 18 million customer additions in June, according to the data released by Trai.

This is in sharp contrast to last year’s numbers when Uninor added a million users within 30 days of its launch . STel managed to clock one million subscribers in 90 days from three small circles. While Videocon added 1.39 million users in May, it could add only a third of that in June. The new entrants together account for less than 3% of India’s 600 million mobile users. KPMG’s telecom head Romal Shetty said new entrants failed to come up with innovative offerings to sustain the initial blitz that accompanied their launch.

“The top six players have an unique advantage , as they have a larger and longer brand recall . The new entrants did bet heavily on mobile number portability to get customers, but this facility has been delayed,” adds Mr Shetty. Even Uninor, the best performer among the new entrants, has been struggling to make a dent in the market, while also fighting an uphill battle to get second-generation spectrum, the airwaves on which all mobile services are currently offered.

Recently, the company announced the resignation of Stein-Erik Vellan as India MD amidst reports that the parent company was not happy with his performance. Uninor has also brought in its head for the Asian region, Sigve Brekke, to add momentum to its Indian operations.

The rollout of the new companies has been slower than expected. All new entrants — with the exception of Sistema — are under probe by both the Central Vigilance Commission as well as the Prime Minister’s Office for delaying the rollout of their operations. While it has been close to three years since these firms bagged licences , Etisalat DB is yet to launch commercial services. Loop Mobile has started services only in Mumbai, while Videocon has launched services only in five of the 22 circles. Even Uninor and STel, the other new entrants, have failed to meet all their rollout obligations.

Analysts say the older established players are pulling ahead. “Bharti and Idea have outpaced industry revenue growth and gained revenue market share. Bharti and Idea’s aggregate gross revenues grew 5.5% and 6.1%, respectively QoQ. This reconfirms the view that Bharti and Idea have recaptured minutes from the competition . Aircel continues to gain revenue market share which increased to 4.9% in Q1FY11 against 3.6% in Q1FY10. RCOM’s AGR grew by 13.1% QoQ,” research analysts at India Bulls Institutional Equities, Piyush Choudhary and Vivekanand Subbaraman, said in a note.

Data released by Trai also reveals that incumbents , with the exception of RCOM and BSNL, have regained their revenue market share, which they had lost to new entrants between July 2009 and January 10 this year. Bharti Airtel’s revenue market share, which stood at 33.7% as of June 2009, dipped to 32.7% in December 2009, but has recovered since to touch 33.3% for the quarter ended June. Vodafone Essar’s share, which had fallen to 20% as of September 2009, has seen it go up to 20.5% in the June quarter.

The telco commanded a similar share of sales in the same period last year. Idea Cellular and Tata Teleservices have also recorded significant jump in their revenue market share over the past 12 months. For instance , Idea’s market share jumped to 13% in June ’10, when compared to 12.5% a year ago, while for the Tatas, the company now commands 8.4% of the total sales in the sector when compared to 7% for the quarter ended June ’09.

[raccoon 53]

"Consolidation has also started in the minds of customers," says Mr Kapoor. "Even in this crowded market, six operators now account for almost the entire revenue market share, indicating that customers have learnt to recognise bigger, stronger and better brands," he says, adding that this along with the increase in minutes of usage for larger mobile companies are proof that only certain players are present in the minds of consumers.

Bigger, stronger and better??? Bigger maybe (depending on what parameter you are considering) but stronger and better in what way?? Both the biggies, Airtel and RCom (GSM) have horrible networks at least here. Even quality of RCDMA seems to have declined to some extent in some parts, from what I hear. BSNL network has always been bad. Its only the newbies that seem to have much better tariffs and also good voice clarity. Docomo has good voice clarity and recently I was surprised to find that even Uninor seems to have excellent voice clarity. Both these are easily on par with CDMA, in voice clarity, if not better. Aircel is also ok, though not quite as good as the above two. If the Indian consumer is not recognizing the difference, then it is indeed sad.

I seriously feel consumers should support these newcomers, due to whom we have much cheaper tariffs and better networks. The incumbents have cartelled and ****ed our blood and taken customers for granted for long enough. I know that their coverage may not yet be as wide as the existing players, but just coverage is certainly not the only factor to be considered while choosing an operator. If coverage be the only factor to be considered, then we should all be using BSNL But how many of us are ready to even consider that?

Edited August 27, 2010 by raccoon

[nayasaroj 14]

right said.Rcom is increasing tariff with faltu network.why anyone will chose this network.docomo is providing 30ps calling docomo std with 51rs stv with 15rs talktime with 2gb gprs for 1yr.rcom giving 77rs for 30day @20ps calling.uninor giving extra talktime with discount in per second billing for std and local.network is also good .so take incoming on biggies and call from other

[Himanshu Singh 19]

Whats good news for operators is always bad news for customers!!!

[ipkonfig 10]

Let MNP roll into this nation. Then, we will see what these so-called "biggies" has to tell.

Edited August 27, 2010 by ipkonfig

[raccoon 53]

right said.Rcom is increasing tariff with faltu network.why anyone will chose this network.docomo is providing 30ps calling docomo std with 51rs stv with 15rs talktime with 2gb gprs for 1yr.rcom giving 77rs for 30day @20ps calling.uninor giving extra talktime with discount in per second billing for std and local.network is also good .so take incoming on biggies and call from other

Taking incoming on the biggies means you are filling their coffers (interconnect charge). I would like the operators I am happy with to make that profit.

[ravi_patent 28]

@raccoon

i was expecting comments from you for sure ,with which i fully agree..

herd mentality /unflinched brand loyalty are greater than anything else..

[kesav 127]

Let MNP chips in, we'll see whether these biggies can remain as "biggies".

Certainly there'll be a change in the position of the operators.

These statements by "biggies" is surely based on fear of losing customers once MNP comes to force.

Let me through you a small example on impact of MNP.

There are 1000 vodafone connections in my area in which call between those connections are free but with others they're charged 40p/min.

Now, Those 1000 connections are going to be transferred to Aircel on the next day of MNP implementation with charges to other being 30p/min.

The deal is already clinched with Aircel with all the porting charges to be borne by Aircel.

Edited August 28, 2010 by kesav

[pasumark 51]

Let MNP chips in, we'll see whether these biggies can remain as "biggies".

Certainly there'll be a change in the position of the operators.

These statements by "biggies" is surely based on fear of losing customers once MNP comes to force.

Let me through you a small example on impact of MNP.

There are 1000 vodafone connections in my area in which call between those connections are free but with others they're charged 40p/min.

Now, Those 1000 connections are going to be transferred to Aircel on the next day of MNP implementation with charges to other being 30p/min.

The deal is already clinched with Aircel with all the porting charges to be borne by Aircel.

How did you link these 1000 numbers?

Are they all individual connections?

If you could share your experience then surely it will be helpful for all

Thanks in advance.

[kesav 127]

It's similar to corporate connections with CUG. Nothing special.

[vvinayakpai 26]

Definitely I feel that tariffs are not going to head southwards from here on. Northwards would be the ultimate lng term plan of operators. Maybe once MNP is implemented we may see a short term race among at least the newer operators to garner a share. But again once the freshness about MNP is lost and people settle down, tariffs would head northwards.

In the end we may not have as many operators as now. The smaller ones may be gobbled up by the bigger ones, or a totally new strategy would be the smaller ones joining hands to take on the incumbents. Again this would depend on the Mergers and Acquisition Policy for the telecom sector.

[ravi_patent 28]

the biggies will fix merger policy...in thr rush for cheap tariffs,the ensuing exodus will

create massive overloads on operators...

[raccoon 53]

As a hedge against future upward tariff revision, it is a good idea for pre-paid users to pick up plans that have lifetime tariff validity. Unfortunately, RCom has now terminated lifetime validity for all plans. AFAIK, only Docomo still has lifetime tariff validity of 1p/second.. Does anybody know of any other lifetime validity plans?

Pre-paid plans should be like post-paid... unless customer changes, they should remain constant for lifetime. In this, post-paid has a distinct (and unfair) advantage.

But I don't see tariff hikes in the near future at least... not with the mirage of MNP looking more real. Airtel is known to make rubbish statements which more often than not, do not hold water.

Edited August 29, 2010 by raccoon

[KanagaDeepan 1,084]

But I don't see tariff hikes in the near future at least... not with the mirage of MNP looking more real. Airtel is known to make rubbish statements which more often than not, do not hold water.

VERY TRUE...

Airtel usually say BOOOH loudly to frighten their competitors and this one is the latest example...

And NUMBERS GIVEN BY AIRTEL ALWAYS TELL LIES... In my hometown Sivakasi, Airtel once had 3000 postpaid subscribers... Now many customers have converted to Prepaid and many have disconnected and changed the service provider.. Hence now, Airtel has only around 950 active customers and most (remaining) Higher ARPU ones are already waiting for MNP..

[ravi_patent 28]

DOT studying merger policy

http://economictimes.indiatimes.com/news/news-by-industry/telecom/New-telcos-may-exit-set-off-consolidation/articleshow/6458989.cms

[raccoon 53]

Regarding the link above:

Bharti Airtel, the country's largest telco, too believes that consolidation is inevitable. "We have been saying from day 1 that 14 operators cannot have an economic model that is sustainable and viable. We have always maintained that final consolidation will see not more than 5-6 operators," said Sanjay Kapoor, CEO, India & South Asia, Bharti Airtel.

So what AirHELL is effectively saying is that things should revert back to what it was when the cartel had a free run (5 - 6 operators is what we had before the new entrants came in). I hope and pray this never happens. A huge and growing market like India should be able to support few more players. The bad ones should go out of business. But this will never happen unless the Indian consumer wakes up and becomes less tolerant of mediocrity.

The new entrants together account for less than 3% of India's 600 million mobile users.

Don't know how true these numbers are; but if it is true, then this is indeed extremely sad. The Indian consumer has not shown maturity and willingness to change with time and instead have been waiting indefinitely for MNP, for years. The incumbents (esp. Airtel) seem to have calculated it well, and have delayed MNP foreseeing the Indian subscriber's lethargy to change and lackadaisical interest in quality and even price, to his own and national detriment.

Edited August 30, 2010 by raccoon