Reliance Communications – Riding the Wireless Data Wave

It was January of 2008 that I had asked RCom, Airtel, etc on why were they not aggressive on Data plans. Today I am very delighted to hear from Mr. Syed of Reliance Communications that the company is riding the Data / Broadband Wave which now contributes ~20% of the Topline. This is certainly a punch in the face of other operators. Some of the key milestones reached by Reliance Communications on this front are as follows,

• Reliance NetConnect Broadband+ EVDO based Wireless Internet is now available in 500 towns. [No subscriber numbers were shared]
• Reliance GSM based 3G Data Services available in 350 towns across 13 Telecom Circles of India. Already has 1.7 mn customers on this platform.
• Reliance Wired Broadband which is growing at its own snail’s pace and is mostly Fiber offering is now served to 1.1 Mn customers and has an ARPU of Rs 1523.
• With the rapid increase in Data consumption, the question arises, Is RCom interested in churning CDMA Voice Customers to the GSM Platform and utilize the CDMA bandwidth for EVDO based Broadband Offering ? The management has no such intention and the choice is purely customers.
• This must be the direct result of RCom Chairman,  Anil Ambani’s announcement of Wire Free India in RCom’s last AGM.

Other key excerpts from the Conference Call with the management are as follows,

• Wireless Business – RCom has the second largest subscriber base 136 mn.
• RCom has now reported 5 consecutive quarters of ARPM at 44 paisa. Vodafone’s ARPM declined 1.5 paisa Q/Q, and Bharti’s 1paisa. RCOM continues to focus on ARPM vs. minutes and removing free minutes will take another 2 quarters.
• At the end of April-2011, Indian Wireless industry had 821 mn subscribers. According to Syed of RCom unique customer base is around 500 mn.
• The management boasts of QoS and The Economic Times award of Highest Customer Experience as well as credits from TRAI. [I don’t agree with about the Highest Customer Experience and you all know the Bureaucracy filling up TRAI which can be better explained by, Anna Hazare ]
• RCom has setup a 3G innovation Lab to develop content and application and has enrolled 3rd Party Developers, OEMs, Technology vendors etc
• Network Expansion – Most of the 2G GSM  N/W is rolled out. Depending on the requirements of market and uptake of 3G, future network capacity will be added.
• Enterprise Segment –  RCOM has data centres spanning 450k sq feet in India; also has 9 data centres outside India.
• Hawk submarine system will be operational this quarter
• RCom is the largest ILD operator in India and amongst the Top 15 Telecom Carriers across the Globe.
• DTH – RCom marginally increased its DTH subscriber base to 3.5m as of March 2011, up from 3.3m in Q3FY11, and maintained its market share at ~11%.
• Tower Business – Reliance Infratel, with ~50,000 towers and ~78,000 tenancies, has received formal indicative offers from several interested parties for the acquisition of RCom’s controlling interest in Reliance Infratel Limited.
• RIL’s Mukesh Ambani Vs – RCom’s Anil –  RCom’s Market Cap is mere $ 4Bn because of the $8.5 Bn debt on its Balance Sheet. Mukesh Ambani is interested in RCom’s dark fiber but his management strategy seldom involves partnership, thus he needs an enviable warchest of $12.5 Bn+ a premium of $4 Bn to takeover RCom. What say ?