Q2-09: RCom VAS Revenues Stagnant At Rs. 110.8 Crores/Month; Broadband Lines Up 9.6%

Reliance Communications has reported net profits (consolidated) of Rs. 1530.8 crores, up 1.2 percent since the last quarter. Total revenues (consolidated) for the quarter were Rs. 5645 crores up 6.07 percent quarter on quarter, while EBITDA (consolidated) grew by 2.28 percent quarter on quarter to Rs. 2301.6 crores.

Reliance currently offers CDMA services in 20 service areas, and GSM services in 8 circles. They intend to expand GSM services to 14 circles by the end of the calendar year 2008.

VAS Revenues & ARPU

As per our calculations, RCom’s VAS revenues were flat, growing by just 1.89% quarter on quarter to Rs. 110.8 crores/month from Rs. 108.81 crores/month. At the same time, ARPU declined for the quarter, to 271 from 282. With around 5.7 million subscribers added in the quarter, VAS APRU and contribution of Non-SMS VAS services declined. The overall Non SMS VAS revenues also increased by just 1.11% to Rs. 92.64 crores a month. It does appear that the new subscribers on RCom’s networks are not contributing significantly to VAS revenues.

Do bear in mind that in case of RCom, Non-SMS VAS, like Voice, Internet (WAP), Gaming, Music (Ring-Back Tones) etc, contribute as much as 83.56% to VAS ARPU, and their SMS revenues are rather low.

Subscriber Addition, Minutes Of Use & Churn

RCom’s Wireless subscriber base was up 12% quarter on quarter to 56,045,885 from 50,772,888. Net subscriber additions were up to 5,272,997 from 4,979,212 last quarter. 99.1 percent of the new additions were prepaid, and they now constitute 91.7% of total wireless customers. Minutes of use per subscriber were down marginally, to 423 from 424. RCom has fairly low subscriber churn, at 1.3%.

Mobile Services: 56,046000 up 10.39% from 50,773,000
CDMA: 46,840,000 up from 42,707,000
GSM: 9,206,000 up from 8,066,000
Marketshare: 18.1%, with 18.6% of net additions
Prepaid: 91.7% of the total subscriber base, with 99.1% of new additions
Churn: 1.3%
Minutes of Use: 423 down from 424
Distribution Channel: 1,008,031 outlets.

Broadband
– Access lines - 1,259,000, up from 1,147,000
– operating in 44 cities, 821,000 buildings
– Added 112,000 lines in the quarter, down from 117,000 in the last quarter, and 130,000 in the Q408
– Average Revenue Per Line - Rs. 1668, down from 1715
– Operational in 18 service areas, 42 towns
– Claims 60% of USB Data Card market

Wimax
already operational in the top 10 cities in India, and claim to have received government approvals for deployment of WiMAX in 184 more cities

Q209: Quarterly Earnings Report

Q109: Quarterly Earnings Report, Report/Analysis
Articles related to Reliance Communications

RCom Offers Free Laptops From Intel, Acer, Asus,HCL & Lenovo With Internet Data Card Connection

Telecom operator Reliance Communications has announced a strategic alliance with laptop companies Acer, Asus, HCL, Intel and Lenovo, to offer a laptop free with a two year “unlimited” subscription to its Internet data card service Reliance Netconnect. The specifications of the laptops aren’t mentioned, but with a lock-in of 2 years, the customers will pay a total of Rs. 36,000 and service tax over and above that.

Perhaps the laptop manufacturers are offering the laptops to RCom with reduced margins, hoping for an improved topline growth. In case of RCom, this may be a means of acquiring a subscriber base for wireless Internet services - one that they can later upgrade to higher speeds when 3G and/or WiMax services are eventually launched. Remember that BSNL has something of a head start here, with EVDO services already operational. I’m a Reliance NetConnect subscriber, and I can tell you that at an inconsistent speed of 2-14 kBps, it’s anything but Hi-speed; While typing this post, the NetConnect connection got disconnected thrice (thankfully, Wordpress has an auto-save function) and I lost one version when I clicked “Publish”. I shudder to think about what will happen if they get more customers, and bandwidth get even more clogged. This also reminds me of something Shyam Somanadh of Web18 had said to me a year go - that it will take someone like a Reliance to go out and completely break this market open by offering PCs for free. In this case, it’s laptops, and probably lower margin than in case of PCs.

Also, does this mean that Reliance is no longer associated with the One Laptop Per Child project? Last year, RCom had announced a pilot with OLPC in Maharashtra, in a tribal village at Khairat (near Karjat, Maharashtra). The project had planned to cover “more than 25,000 towns and 60,000 villages” by March 2008. So obviously things didn’t go according to plan. Take this current announcement from RCom as, well, just an announcement, and hope for an increase in Internet penetration.

Related: 3G India: BSNL 3G Service Already Operational - 2Mbps Via EVDO for Rs 750/month

Adlabs Gets Into The Digital Cinema Business

While Bharti Airtel is still considering the digital cinema business, Adlabs has announced plans for digitizing 500 cinema screens over the next 18 months, reports ET. Adlabs has access to Reliance Communications’ optic fibre network, and also plans to leverage the network owned by Reliance Globalcom (FLAG Telecom), for global digital distribution. Adlabs Digital Cinema, with Patrick von Sychowski as its COO, is encoding the films at DAKC in Mumbai.

The model for digital distribution used by UFO Moviez and Pyramid Saimira involved encryption of films, and then distribution of the content via satellite to theatres. A setup at the theatres would decrypt and project the film on screen. The same will probably apply to Adlabs, except that the distribution will be via an optical fibre network, not satellite. Digital Distribution enables exhibition of content in remote areas, particularly on the day of the release. Earlier, prints were distributed physically, where there was a risk of theft and piracy, and remote areas would be able to screen the films much later than a city release.

This move by Adlabs highlights the advantages of being present across the value chain for ADAG: keep in mind that Pyramid Saimira pulled out of the business in 33 theatres in India, citing a lack of viability.

Also check out: Adlabs Digital Cinema COO Patrick von Sychowski’s blog, here.

Related:

- Pyramid Saimira Winds Up Film Distribution In India; Defers Reel Acquisition
– Airtel Considering The Digital Cinema Business
– UFO Moviez Group Buys Defunct VoD Service MovieBeam

On Reliance GSM And Mobile Number Portability

A few weeks ago, a senior exec working with a mobile operator gave me his take on when Mobile Number Portability (MNP) would be implemented in India - not a date, but “Once Reliance Communications has established its GSM network in India.” The reason, according to him is that RCom wants to free itself from the royalty it pays to Qualcomm on handsets, which make them more expensive than the GSM handsets available in the market. This issue was reportedly resolved last year, but according to this particular exec, it isn’t over yet.

RCom soft-launched their GSM service in Delhi and Mumbai circles last week (via ET), and is testing the network in “parts of UP, Gujarat, Punjab, Rajasthan and the four southern states” - in cities that currently have around 45 percent of the subscriber base. The network has been live in Delhi for a while, and Presstalk wrote about it first a couple of weeks ago.

So the network for a GSM-CDMA switch is being readied, and it appears that the policy will allow a switch as well: ET reports that the MNP norms have been modified, to allow consumers to change from CDMA to GSM, remain with the same operator offering both platforms, and yet retain their mobile number. This is being called Internal Mobile Number Portability. I thought that was a given, since the policy should not differentiate between technology, and if an operator wants to switch users to a different technology, its his choice.

In this context, it’s very interesting to note the COAIs (GSM lobby) reaction to a proposal for Internal MNP: the headline to this story in BS is misleading, but they’re essentially against allowing Internal MNP before allowing users to switch mobile operators. Why is that? Obviously because once RCom starts switching users from CDMA to GSM, the GSM operators want to acquire some of RCom’s users. For the mobile operators, it’s all about the mobile subscriber base right now.

In this entire switch from CDMA to GSM, it’s Qualcomm that loses out.

Blackberry’s India Issues Resolved? Whither Transparency?

Update: The Economic Times quotes Department of Telecom sources, according to whom government organizations have managed to decrypt email messages sent via Blackberry, on Airtel, RCOM, Vodafone and BPL networks.  The tests have been done only for non-enterprise solutions. Nothing official about it, though.

Original story: So has the security issue with the Blackberry been resolved? A couple of months ago, there was no formal notification from the government - just a comment on the sidelines of a conference, which was followed up by something of an about-face.

And yet, since Research in Motion co-CEO Jim Balsillie’s visit to India, a number of initiatives have been announced:

– Airtel announced the launch of the Blackberry Bold in India, priced at Rs. 34,990
– Reliance Communications launched the first Prepaid service for the Blackberry in India
– RIM may set up a Manufacturing, R&D, Logistics and Support facilities in India [via Indiatimes]

However, the one that really caught my attention was the launch of Blackberry services from Tata Teleservices.

Remember that it was Tata Teleservices application to the Department of Telecom to offer Blackberry services that started this debate over security issues around the Blackberry in India; the government wanted “lawful interception” of communication over the Blackberry. While I’m not saying that they should block the Blackberry, but once they’ve raised an issue, there should at least be some communication over how it has been resolved, so that other vendors know what’s kosher, and what’s not. What has changed over the past six months?

– Is Blackberry providing means of decrypting communication?
– Is Blackberry relocating servers to India?
– Has the government decided that interception of Blackberry services is not an issue? Should that apply to other vendors as well?

Some transparency, please.

P.s.: In case you missed it, it appears that Republican Presidential nominee John McCain invented the Blackberry. Heh.

Reliance Launches BIG TV DTH; What About IPTV?

It’s over 3 years since we first heard Reliance ADA Groups DTH venture, and finally, they’ve launched BIG TV. Interestingly, the company - Reliance BIG TV Ltd - is a wholly owned subsidiary of Reliance Commnications…takes me back to that interview that Kamla Bhatt did with Rajesh Sawhney, President of Reliance Entertainment a year and a half ago, where he outlined the ADA Groups strategy of having a presence across the value chain - as content creator, licensor and distributor. Can listen to it here.

So BIG TV DTH will be the distribution arm, and there are 20 BIG TV channels planned as well. BIG TV is being priced at Rs. 1490 + recharge coupons, and offers over 200 TV channels in the MPEG4 format. Note that Airtel is also using MPEG4 for their DTH service. BIG TV claims that the retail channel for BIG TV will cover 1 lakh outlets in 6500 towns, but this part of the release easily takes the cake:

“An army capable of installing over 15,000 daily connections with specially trained installers would ensure fulfillment of every customer order within 48-72 hours.”

Reliance also has also had an IPTV service in the works…when will that be launched?

Related:
– Is Airtel Getting Its IPTV & DTH Act Together?
– Is Videocon Looking To Acquire Loss Making IPTV And VoIP Co IOL Netcom?

RCom VAS Revenues At Rs. 109 Cr/Month; Non-SMS VAS At Rs. 91 Cr/Month; 60 Pc Of Data Card Market

VAS Revenues
As per calculations done by MediaNama, based on data given by Reliance Communications in its quarterly performance report, the Non-SMS component of Wireless Value Added Services (VAS) accounts for 84.2 percent of total VAS revenues for RCom. This contribution is up significantly from 75.43 percent for the same quarter last year.

For the quarter ending June 2008, RCom’s Total Wireless VAS revenues were Rs. 108.81 crores/month, up from Rs. 100.16 crores/month for the quarter ending March 2008. and 68 crores/month for Q1 last fiscal. Growth in Non-SMS VAS (Ringtones, CRBTs, GPRS, Voice Portal Services etc) was 10.7 percent, increasing to Rs. 91.63 crores/month from Rs. 82.74 crores/month for the last quarter.

IMPORTANT: Please note that RCom includes both Mobile and Wireless Local Loop (WLL) subscribers in its Wireless numbers. Hence RCom’s performance indicators are not comparable with those of other operators like Airtel and Idea Cellular.

Download the quarterly performance report here

Overall Results
RCom reported a net Profit of Rs. 1,512 crore, and revenues of Rs. 5,322 crore, at an EBITDA margin of 42.3% (up marginally from 42.2%). Wireless revenues (excluding access charges, license fees) at Rs. 31280 million, down 1.5% from Rs. 31757 million last quarter. Broadband contributed 9% to revenues, as compared to 8% last quarter. Net broadband revenue at Rs. 481.5 crores, up 8.8% from Rs. 442.40 crores last quarter. (Net revenue excludes access charges, license fee etc)

Mobile Subs, MOU and Churn
– Wireless - 50772888, up from 45793676
– GSM Wireless - 8065455, up from 7016205
– CDMA Wireless - 42707433, up from 38777471
– Wireless marketshare - 18%, up from 17.9%
– Prepaid customers - 90.9%
– Wireless Churn - 1.4%
– Minutes of Use - 424, down from 430

Broadband
– Claims 60% of USB Data Card market
– Operational in 18 service areas, 42 towns
– Acces lines - 1,147,000, up from 1,031,000
– operating in 44 cities, 821,000 buildings
– Added 117,000 lines in the quarter, down from 130000 in the last quarter
– Average Revenue Per Line - Rs. 1715, down from 1760
– RCom claims to have a presence in 23,000 towns and 600,000 villages.
– A branded retail presence in 1300 towns, have over 500,000 retailers

Global
– 1.7 million customers for Reliance Global Call service, accounting for 40% of retail market calls from US to India
Broadband - and almost 1.15 million access lines

WiMax
– have begun deploying WiMax stations in top 10 cities in India (WiMax 802.16d)

Related:
– Earnings: Idea Cellular VAS Revenues Increase in Q1 2008-09; VAS ARPU At Rs. 24.74
– Airtel Mobile VAS Revenues At Rs. 235.55 Crores Per Month; Non-SMS 57% of VAS At Rs. 133.56 Crores Per Month