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Who Is Responsible For Reliance Communication Current Situation

Just like a fairy tale story once upon a time…. in 2004 -2005 era Reliance communication was the darling of every user in India. Wow, then what happened; Reliance communications business came to younger son of Respectable DB Ambani and he changed the track of the company direction. Reliance was instrumental in bringing devices to common hand and thought that once user will get habitual like alcohol then start charging end user. As a smart user, once user stopped getting the free talk time they moved to other service provider without closing the existing connection. That led to detoriation of HLR vs. VLR active user % and also impacted the ARPU.

It is really interesting to observe that Reliance communications selected CDMA just opposite of majority of other player and in turn lack of fashionable devices and it also helped competitor to snatch the remaining user base. The growth rate of Reliance Communication landed at the lower end as they invested in domain like undersea cable to data center where the business is capex intensive but global downturn as well as offering of better value proposition based cloud based solution blocked Reliance Communications path to prosperity.

In most recent quarterly report, the user Base came down to 102 mn andARPU is one of the lowest among peers. They claim to have 34 million plus data user Base and generating one of the lowest again.

In order to reestablish itself, they merged with MTS brand ownerwhere Reliance communications will still hold 90%, on the other side they are talking with Aircel another Indian service provider reeling under huge debt plus failed to attract high ARPU userbase.

I am following Reliance communications for the last 3.5 yearand every year they come up with one or another punch line that they are going to sell their tower business and they are in discussions  including exclusive discussion  but unfortunately the tiered investor all the time keep on waiting.

Six months back they announced that they are on the verge and equity price got the bump upwards and now they are saying that it will be done post Aircel deal. How they can claim that it will be done post Aircel deal when Aircel deal discussion just got extended.

In my point of view, that equity investor will not buy the point that what is your EBITA and concern regarding serving of debt but they actually want them to see tower and other non profitable business to reduce the interest cost and in turn increase the earning per share.

The current state of Reliance Communications foundation happened on the day they started giving subsidized device with Reliance communications connection.

Now they are doing another mistake of forcing more than 6 mn to port to their new network otherwise they are disconnecting the service. I am sure it is not going to help them as well as take them anywhere.

It's a strategy of Reliance communications to stream line the business and then get acquired or merged with Reliance Jio. We should not forget that how Reliance Jio entered into it indirectly.

The Ongoing Indication from Indian e-Commerce - Consolidation is Inevitable

Most of the e-commerce companies are making round of news for all wrong reasons. The latest one is the delay in honoring their commitment to Campus selected student into professional world. The even interesting part of lack of communication from e-commerce companies with proper answer to such universities so that universities plan for the alternative for their budding high quality brains. It seems that e-commerce companies started a feel that by the end of 2015 that they are governing the economics of India and went from humble to arrogant mode.

In my point of view, recent regulation and missteps landed them in a soup

1. Regulation around Discounting
2. Stiff Discounting to acquire and retain userbase
3. Hiring Named and Famed professionals without any defined Roles
4. Very high attrition rate is very high as experienced resources donot need Brand but Brand needs them and hence many of them left abruptly and all project running under them went underwater
5. Left and right acquisition without clear vision on Integration and synergy
6. Product Quality sold on their portal
7.  All e-commerce companies fighting for the limited number of userbase and In India; e-Commerce centric userbase is not more than 140 Million
8. Problem around order something and receive something dented their image
9. Their main revenue stream relied on Electronics and that too Smartphones supported by heavy discounting by e-commerce sites
10. Lack of Innovation and Cross Collaboration
11. Lavish expenditure on Offices and resources. Recently many e-commerce companies announced that they are closing their office in tier 2 and Tier3 cities

It lands us to think that E-Commerce companies relies mainly on metros and sub-metros cities based userbase. Also concluded that retention of the userbase is very low and also the process of registration with their applications to portal is bit cumbersome as per the Indian user standard. The stiff competition and continuing discounting as well as in/out acquisition of companies coupled with many investment landed them in cash crunch.

When they thought of raising the fund and started preparing for the same; Analyst firm started marking down their valuation and put them in Cat and Mouse game.

In my point of view, 90% of the Indian e-Commerce companies will ultimately land into closure mode and rest of them will be forced to join hands to survive. They must also realize that most of the Indian State imposed taxes on their shipped products and in-turn the last mile benefit offered by e-commerce companies coming to an end and they must think of alternative revenue to be viable in the market place. We all should introspect that why our e-commerce companies are not making profits whereas the international e-commerce companies operating in other countries making profits. It's better to join hands and fight collectively instead of fighting internally.