Bharti Airtel Tariff Plan - Open Challenge to Reliance Jio

The buzz is everywhere in the Telecom sector that Reliance Jio will be coming out with very aggressive tariff which will be bundled with cheaper device from LYF as well as device from their panel. Reliance Jio intention is to focus on the data revenue through series of data centric applications or games or services whereas offering subsidised voice or free voice.

Even Bharti Airtel Chairman Mr.Sunil Mittal also admitted that Reliance Jio entry will change the tariff dynamics of Indian mobility segment and it will take an year to settle down the dust. The impending price war will also force some of the running Telco to go for merge or will be acquired by big fish.

In the meantime, In order to create non breakable wall to protect their high APRU user Bharti Airtel came out with myPlan  Infinity. In the two plan segment, Under 1199 plan user will get free voice call , few free SMS and 1GB of 3G/4G data free along with Wink movie and music whereas under 1599; the data pack offering is increased to 5GB.

I call the proposition a master proposition as Bharti Airtel is well aware that average data consumption per user per month stands at 0.9GB and at the same time, they will promote their in-house product  which will trigger user to use higher data at the same time reduce the Bharti Airtel user acquisition price for those product by INR 50 .Bharti Airtel is also well aware that the average ARPU per user is around $3.2 on a consolidated basis but when it comes to postpaid it comes up around $10. In new plan they will increase the ARPU by $7. On  contrary, in 1599 plan, Bharti Airtel is trying to attract very heavy data user and am sure that they will be putting the new plan attached user under priority based queuing access mechanism to ensure the best QoS ( Quality of Service).

The proposed plan will also attract many prepaid users who will be willing to convert into post paid given the fixed rate as it include all the options of calling including roaming. At the same time,  In my point of view many users from other network who is not happy with their service providers will opt of Mobile Number Portability and switch over to Bharti Airtel

It will be interesting to see Reliance Jio marketing strategist movement to super counter Bharti Airtel classic move. I also believe the further delay by Reliance Jio will put Reliance Jio in difficult position to lure away high APRU userbase from competitor.

Impending threat to Video Centric Mobile Applications - More player's than User base

Indian economic directions and subsequent entry by players are generally dominated by one successful use case. In India, most of the companies hesitate to take the first step whereas the case is just reversed when it comes to other developed companies. That is the reason that being one of the greatest mind aggregator, Indian companies always act as service providers instead of owner of product or services or applications or be it anything else.

With the ongoing revolution underway in Telecom sector and slow death of Telecom operator centric Mobile VAS segment due to very stringent regulatory guideline in India; many VAS companies moved into Applications or platform or service category to survive. Reliance Jio, helped the ecosystem with a hope that India will be the market of data user and data centric products or applications or games or anything else will get adopted like forest fire.

Indians are generally fond of music, movies and cricket. The fall of MVAS business at operator level prompted major players like Hungama and Saavn to quickly change their strategy and moved into Application based content delivery through Device manufacturing delivery. Hungama even went one step further an launched their movie based applications. The slight success of both the player brought in number of players like Sony, Zee, Star, VIU, Eros and many more. Ironically, most of them went with open wallet and acquired user through heavy promotional activities instead of organic growth. Indian Telecom sector with Data ARPU of less than $2.25 in best case scenario trumped most of them as their content adoption went high for free content or till the offer period whereas they failed to get the expected growth rate for the paid userbase. I do agree that Indian Smartphone segment is growing but at the same time the mindset of the end user is to access default Video application YouTube.

In my point of view, the video applications player should come out with disruptive engagement model with end user wherein user start paying for the content instead of relying on advertisement which is not long term option

Upcoming Outcome of Indian Spectrum Auction - Telenor may shut their operation

Telecom Ministry of India is gearing for one of the biggest auction of spectrum in coming months and expecting to mop-up more than $100 Bn. How good to hear that government is going to garner revenue which will enable them to reinvest in government backed project to kick start the Indian economy.

Indian Telecom service providers are already reeling under more than $70 Bn in debt and recommended base price of very efficient 700Mz is so high that it is enough to bankrupt established players of the ecosystem.

Telenor tried to re-established itself post cancellation of their license post Indian Telecom Department identified Telecom Scam and now operating in 6 Circle of India and 4 out of 6 are non tech savvy states and only 25% of its total user base are Internet user base.

Telenor already ordered infrastructure in order to launch 4G services but they cannot sustain heavy competition in upcoming months and years until unless they are present across all circles. Any user at any point of time prefer service provider offer services across all circle. Many of the low hanging fruits who wants to experience 4G may latch onto Telenor 4G network and subsequently move out another service provider using Mobile Number Portability ( MNP)

Telenor head quarter and Indian management quadrant on multiple occasion indicated that the recommended base price of spectrum in different band are too high and will not help service provider to even achieve RoI.

I believe that Telenor HQ will prefer to quit India and take one time Goodwill and focus on their remaining userbase where they have high ARPU user base. I strongly believe that it will be the first causality of upcoming auction of spectrum

Ericsson Acquiring Red Bee Media – Building Service Around Connected Devices

Ericsson entered into definite agreement with UK based Media Servicing Company Red Bee to enhance its portfolio. With growing adoption of content interoperable across connected devices are attracting leading network gear makers to integrate end to end media asset management. Most of the broadcasters are looking to upgrade their infrastructure to tap in mobility user base with their differentiated digital properties. The dynamic undergoing shift in industry prompted solution providers to integrate automated metadata service coupled with creative service and enable publisher to populate their digital video to content across multiple geographies. The ongoing downturn on Telecom Network gear market place and aggressive moves by Chinese player prompted major OEM player to shape out their business strategy one step ahead to keep winning and maintaining market share.

Indian Telecom Commission Approved 100% FDI – Tagged with Expected Delay

Indian Telecom Commission approved 100% FDI in Telecom sector to shore up investor confidence and kick-start growth in the sector. The FDI is going to be helpful for Indian Telecom sector players to handle their debt effectively and trigger investment cycle. Post 2G license cancellation and slew of regulatory enforcement, Indian Telecom sector experience unprecedented fall in investor and investment confidence by the ecosystem players. Reeling under Fiscal Deficit, CAD; government is considering all avenues to get inflows to protect country rating which is under downgrade threat. Good move coupled with simultaneous concern raised by security and MHA to allow 100% FDI. The concern is definitely going to delay approval by another year. It is surprising that different regulatory body release their segregated reviews rather than offering consolidated recommendation post discussion with all stakeholders. Investors already feel that policy uncertainty is too high and any investment in Telecom sector may be stuck in future. I feel that Indian Telecom sector need streamlined clear policy roadmap compared to FDI approval. It is highly expected that there will be little to no investment in sector till policy and licensing aspects are crystal clear

Indian Telecom Operator Roaming Tariff Packs – Self Induced Potential Showdown with Regulators

Indian Telecom Regulator( TRAI) last month came out with amendment to enforce roaming tariff ceiling for Incoming and Outgoing calls. Regulators also approved second mechanism of voucher offering by Mobile Operators to enable free roaming. Regulators agreed to Mobile Operators and its association strong view that scrapping of roaming charges is going to have negative impact on Mobile Operators financial health. On 1^st July, two leading mobile operators came out with voucher offering to offer free roaming packs. It is interesting to observe that one of the leading operator reduced incoming call tariff while on roaming under voucher packs. It also enables subscribers to roam in its licensed geography and the tariffs are more or less same as if subscribers are making or receiving voice call to/from its home circle network. Aggressive tariff plan is nothing but another new tool for mobile operators to attract new subscribers from competitor network. Post TRAI directive, Reliance Communications showed their unhappiness regarding roaming regulation and within 24 Hours, Honourable Telecom Minister argued for frees roaming and promised to discuss potential second look regarding TRAI roaming directives. It would be extremely difficult for mobile operators to argue that they are going to lose billions of Dollars in case roaming is fully free. On one side, mobile operator’s initiates tariff war and then raise their concerns about loss and talks about raising tariff. Mobile operators recently only cut data tariff by 90% and it raises eyebrows; when they can make money by offering such a low tariff then why mobile operators kept on charging such a high tariff till now. It is going to be tough for mobile operators to raise tariff in coming years. I strongly feel that any upwards tariff move by mobile operator is going to face stiff regulatory resistance.