Boom Boom For AirTel, Vodafone, Idea After Reliance Jio Announce Tariff Plan

Reliance jio came out with their tariff price in which they made voice call free. Recently during the trial with 1.5 MN users they traded guns with airtel, Vodafone, idea and other for point of interconnect as 80% of call were getting dropped. Reliance jio needs to pay INR .14 per min to destination service provider and it may cost Reliance 6000 Cr and that will be direct loss for Reliance Jio who is going to pay for it, it's no one but Reliance investor and who is going to gain is airtel , Vodafone and all.

Reliance Jio 4G User Acquisition Plan May go Wayward - Risk vs. Reward May Pinch in long Term

Reliance Jio turned very aggressive in their plan to launch impending 4G network. Loaded with fund which they generated through Bond offering also offered them lots of confidence that investors are positive about their plan.

In their quest of controlling end to end user base, they aggressively launched their branded LYF device and offering device bundled 4G data plan. Interesting step from their side but seems they missed to learn their misstep which happened during their Reliance Communication initial days when they offered bundled voice to end user to buy out the user an in 2012 -2013, Reliance communications voluntarily disconnected more than 20 million from their network and created a perception of one of the network with lowest ARPU

Recently, post facing the problem in pushing their low end LYF device with higher price range, Reliance Jio slashed the device price by 25% but attached two riders with device such as 2 year warranty and 3 months of free 4G. In my point of view and understanding around the segment; Reliance Jio is repeating the mistake again.

The target segment of the device is the entry level Smartphone user who is willing the experience of Smartphone. In that category of user segment the average balance never cross INR 100 and most are on prepaid model. Even though Reliance Jio offer 4G free for first three months, I dont see the repeat subscription of more than 5 to 7% from that category and APRU will not even $1.

 I wish Reliance Jio and LYF team for grand success in their strategy while I keep my finger crossed.

Why Bharti Airtel Should Enter Into Smartphone Segment

It's an irony of the ecosystem that the company who changed the Indian telephony system with their innovative base telephony devices. Mr. Sunil Bharti Mittal vision, predictions and insight about Indian Telecom sector never went wrong. Bharti Enterprise at one point of time through their base telephony device in the Indian market forced global player like Panasonic to Sony to look for cover.

Post mobility revolution, organization moved their focus more on the services side while forging market disruptive methodology of hardware attached revenue share which is now the trend of the industry. In the last 23 plus years, Bharti Airtel positioned itself as de-facto brand in Indian geography while entered into Africa. Many are predicting the potential failure in African Market in coming years but I differ completely with Critique and will come back with reference based article very soon.

The rush for use acquisition post new service provider in India during last 8 years helped Airtel to consolidate its competitiveness and enhanced its workforce determination to weather any threat to their business be it pricing to performance.

I truly admire Mr. Sunil open admission about Reliance Jio entry and its implication on the pricing as he is also predicting Reliance Jio play which I mentioned in my previous article about the reliance jio. Reliance Jio is getting aggressive in their push to capture the device market with an intention to create an ecosystem but again as I pointed out in my previous article's is reliance jio betting to be google of India that Reliance Jio must learn from the failure of Reliance Communications.

In my point of view,  Bharti Airtel should turn the tide towards the Competitor by launching their own device supported with their multiple application such as Airtel Wync Music, Wync Movies, Wync Games for which they are spending user acquisition $. It will again a disruptive move by Bharti Airtel an how

The Management & Promoters understand the manufacturing to distribution market basis their background.

Many ex- Distributor's of their basic telephony system is now the owner of Smartphone companies and it may help them to acquire some of the struggling domestic companies with their facility and rebrand the Device with Quality.

Bharti Airtel Userbase is more than 225 Million and more than 70 Million user on their network are active Smartphone user's using data.

The Total market size of Indian Smartphone will hover around 95 Million to 105 Million during FY 17

The one of biggest beneficiary of MNP ( Mobile Number Portability )

The lowest Churn rate in Telecom Industry

Wide reach of Bharti Airtel Store is in place

The above mentioned points are some of the pointer which Bharti Airtel may consider to turn the tide as device manufacturer works with a margin of 3 to 4 on net level and generate maximum revenue from VAS revenue. The net profit margin of 7 to 8 % can easily be reached given their strongly coupled services, platform and Application layer. I won't be surprised if it comes sooner than later.

Reliance Jio Launching 4G Network & LYF Device - Confusing State

I am truly impressed with the kind of speed Reliance Jio owned LYF Smartphone brand is getting flooded in the market place. More impressive is the price point which is really very competitive and may offer competitor tough time to match. As per the report, Reliance Jio, placed multi million device order to its contract manufacturer getting the price benefits and implemented their refinery business model into wherein they are playing on volume with thin margin.

More interesting that its available across online and offline channel which in turn playing disruptive in the market place.

They have launched some of the device wherein mentioned categorically mentioning the supported network but one needs to understand that in wireless network there are different categories and Reliance Jio is launching 4G network offering very high speed of data transfer which is very much dependent on Network.

Some of the launched devices are as follows and one can observe the RAM and Battery specifications.

Water 5.0, 1GB RAM, Battery 2000 mHA

Flame1, RAM 1GB, Battery 2000 mHA

Flame 6, RAM 512 MB Battery, Battery 1750 mHA

Some of them are for GSM but it should be communicated very clearly to end user as most of the user by now in India is aware that Reliance is going to offer very low priced data. In that case the adoption of such devices at the lowest possible rate will be flying out of the shop in no time.

Just to add that the mentioned devices even with 1GB RAM and mentioned battery will  not be efficient enough to give good experience on 4G network as it is more on the data and that too video centric. Even though Reliance Jio offer best network, device battery will dry out in no time and will face heating problem.

What i can understand that Reliance Jio wants to grab the market share in device market to ensure multi billion $ valuation of that business unit while making its loss marking service business turn out to be positive.

In my point of view, Reliance Jio must go to market with an advertisement that LYF device support all network and not dependent on only Reliance Jio network so that they grab market share even more quickly. Right now it's very confusing which I believe they should correct.  Keep going 

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

Why One Should Invest In Bharti Airtel

Bharti Airtel equity in the last one year is living in artificial fear psychosis created by pundits about the entry of Reliance Jio. Reliance Jio last year successfully managed to get the license from government and can offer voice services. It impacted all listed Telecom Operators but Bharti Airtel was caught up in cross fire. Some of the Analyst talks about Airtel mounting debt level, some talk about their concern about upfront payout to government of India for just concluded spectrum auction, some talk about their Africa business, some talk about growing competition from Idea and Vodafone. I feel that in competitive economic environment, above mentioned points would always revolve around market leader but is it fair to create an environment of negative news by continuously talking about threats. I would like to highlight the following and would appreciate reader view

1. Who is the leader in the Indian telecom sector both on revenue and subscribers
2. Who commands highest ARPU in India
3. Who is generating maximum Cashflow
4. Who is generating maximum revenue from Mobile services
5. Who would get benefitted by lowered Spectrum usages charges
6. Who owns maximum Data user
7. Who is having one of the best data ARPU
8. Who is having minimum churn rate among the Incumbent
9. Who launched 4G in multiple cities
10. Who is maintaining continuous innovation in Product positioning
11. Who cleaned up their management within Six months with all new faces and having a guts to give well established business to a person from FMCG
12. Who is aggressive in Broadband services
13. Who spent Millions of $ in acquiring Qualcomm BWA without having plans for it

I must admit that Vodafone is the only competitor generating nearly same APRU like Bharti Airtel. On Bharti Airtel Africa business, one must be rest assured that once US picks then it will have cascading positive impact on Europe and other continents including Africa. Once that happen then the currently so called African operation would generate the same kind of result the way Jaguar is generating for struggling Tata Motors.

Regarding Reliance Jio entry into voice and data segment of telecom sector would carry no to little impact. I have been hearing for the last two and half year that Reliance Jio is near to launch but they are still on the design table. In my point of view, they are minimum 4 quarter away from full launch and by that time Bharti Airtel would sweep up license area with their 4G launch. One must not ignore that Bharti is having running system in place to do soft launch to realign infrastructure to refine the service defects but that’s not the case with Reliance Jio. The nearest competitor Vodafone and Idea is entangled with Tax authorities. Any tax penalty on both the companies would change their financial dynamics.

In conclusion, potential investor must read the analyst report from all leading analyst firm and their targets for Bharti ranges from 360 to 430 INR but they criticize Bharti Airtel when its trading below INR 310.

In conclusion, any investor must do their own analysis and invest particularly in the case of Bharti Airtel if they really wanna to get rewarded.