RCom Reveals – Wireless Revenues Included Handset Sales – Discrepancy in Revenues Explained

This has come as a surprise to me and most of the analysts in the call that Reliance Communications booked revenues by sales of proprietary CDMA handsets as Wireless Revenues. JeeZ!!!! This means actual Wireless Services Revenues far below competitors ? Since Tata Indicom is unlisted, we don’t know about it. But Airtel & Vodafone did bundle handsets, did they also do the same ? This explain the discrepancy in Wireless Revenues reported by the company to BSE & NSE and that reported by TRAI. [ Anyway, I am not an accounting major to audit and pin-point, but you understand the practice followed here] More excerpts from the call as follows, [My comments in Brackets]

• Group MD Satish Seth expects consolidation of Wireless Industry in the next 18 to 24 months. Mobile Number Portability is a great opportunity and company is looking forward to it
• On Simply Reliance Plan – Transformational Plan FREE from any Gimmick. It will have value due to its simplicity. MoU and subscribers encouraging. Incumbents reaction is half hearted by offering separate tariffs for OffNet calling. Simply Reliance is valid for Lifetime while other incumbent operators plans are just for 6 / 12 months. [I agree, its a Great Plan. Comparison of Simply Reliance Vs Airtel Freedom is here]
• 3G + BWA Auction – Company likely to Bid in Both segments CDMA + GSM for 3G but will be diligent. They claim that their 3G Capex in GSM will be much lower due to the deployment of Edge GSM Network. CAPEX Guidance of INR 10,000 crore includes 3g auction. The company has spent just 2,000 crore in the first two quarters.
• Drop in Wireless Segment Revenues – Apart from the Handset factor, WAP enabling was discontinued because of TRAI regulation asking the company to take explicit consent from the subscriber.

It is likely that Analysts will now start looking at figures filed by Telecom operators with TRAI as they determine the actual services revenue.