Indian GSM Mobile Operators premium had touched 110% in Mar-09, highlighting sub quality differential. This probably made running a dual-technology network compulsion for Reliance Communications / Tata DoCoMO. ARPU differential has steadily narrowed since (GSM was 7% higher v/s CDMA in Dec-13). This was largely due to CDMA Subscriber clean-up and contribution by higher mobile data % (33% of rev; 12% for GSM) & higher competition in GSM have been the key. In this backdrop, we believe Reliance Communications’ / Tata DoCoMo’s CDMA networks are unlikely to become redundant, contrary to broader view.
4% of Post-Paid Subscribers Contribute 16% Revenues
Competitive intensity has eased in the last 4 qtrs but only in pre-paid. TRAI data shows that post-paid outgo/min continues to remain under pressure – fell 2% in 3 qtrs ending Dec-13 v/s 7% increase for pre-paid. Post-paid subs are 4% of the base but contribute 16% to topline. Mobile Number Portability now allows competition to wean away these lucrative subs – not only do they generate higher ARPU (4.5x of pre-paid) but are also heavier data users which is the next leg of growth.
Revenue / Minute has risen by 8% in 3 qtrs (Dec-13) as telcos have reduced discounts. The improvement however varies across circles as rev/min for metros has remained broadly unchanged while other circles have narrowed their gap with the metros – 10-30% lower in Mar-13 v/s 3-24% in Dec-13. Outgo/min has risen for pre-paid in the last 3 quarters as competition has eased. However, outgo/min for post-paid has continued to decline, highlighting operators are still competing in the segment.