RCOM Q2-FY13 Earnings Call: On Raising Tariffs; Data Focus & More


On its quarterly results conference call, Reliance communications mostly focused on the growth in its data business. In its results, it claimed 4.8 million active 3G users, and 26 million data (2g + 3g) users. Read about the results here.

Gurpreet Singh, CEO of wireless business, informed that the company has 26 million data customers and that its 3G user base grew by 20% QoQ, with total data usage on the network touching 17400 terrabyte, and average  usage at 232 MB, which he claimed was highest in industry. As indicated in the previous quarter, the company feels that the next big opportunity is from data and that RCOM was continuing with a data focused strategy for growth. RCOM continues to provide wireless broadband in 1300 top towns including 313 towns in 3G and 1000 towns in high speed data networks, and Edge and 1X data in all circles. There was some concern on how India was the only country where voice share was 70%, but the company was banking on content and application development, and low smartphone prices for growth. It also talked about its partnership with WhatsApp, and said that it will continue to partner other players for similar initiatives.

 - Raised tariffs & Postpaid strategy: The company raised tariffs by 25% across 3G and CDMA networks, and said that the full impact of the move onthe company’s revenue would be seen by early next year. It launched new family plans in Postapaid segment and reduced postpaid tariffs by upto 40% in some plans. The company said that it wanted to disrupt the postpaid market, even though it’s a new entrant in the GSM category. It introduced a new plan offering Unlimited calls for Rs 899 and the same plan with 3GB data at Rs 1299. Quantum of improvement on tariff was 1.2p to 1.5p per second increase – newly acquired customers are on 1.5p/sec – the company was moving existing customers to new rates.

- CDMA business performance: RCOM said that its GSM business continues to grow but CDMA was not growing at the same rate as the CDMA ecosystem was bit stretched due to drying up of handsets, but now more handsets were coming into ecosystem and Samsung and others have brought in new dual SIM handsets with a unified chipset, so it will begin to look healthy and will move into comfort zone. The company did not disclose CDMA business KPIs separately. It also refused to comment on whetehr it planned to surrender its CDMA segment, but was critical of the government’s high spectrum prices in CDMA for the 2G auction.

 - Separate approach for 900MHz & 1800 MHz spectrum: The company was rationalising customer acquisition on the basis of spectrum band. The company said that spectrum in 900MHz was 8 – 10 years old and came up at a time when it didn’t have a pan India presence. The company’s 14 circles are new and that it was important to look at position of strength vs position of entry, and the strategy was because RCOM didn’t have high value GSM customers, which were with older players. So with 1800MHz, it was the 6th or 7th entrant in revenue market player, and in these circles its strategy needed to be aggressive like a new player.

Growth in acquisitions: The company said that the growth in subscriber acquisition was coming on the back of on ground efficiency of good quality acquisitions and its impact was seen in growth in VLR.


-->

Archieve