Sify Consumer Business Revenue Down 7% To $7.5 M; Drops Broadband Rates To Stem Decline

I wonder how long Sify will continue to hang on their consumer business - finding a buyer in the current financial crisis won’t be easy. Not that the company has disclosed any plans to sell the business - but the decline in the consumer business, the longer they take to get rid of it, the less it will be valued at.

What’s telling is that the only question on the earnings conference call, was about how much of an impact on its bottom-line does Sify expect, if they reach a settlement with Yahoo. Sify declined to comment since the matter is subjudice.

Consumer Business

The quarter ending September 30th was yet another poor quarter for Sify - revenues for the consumer business declined 7.46% quarter on quarter - down to $7.50 million, from $8.06 million last quarter.

Broadband Rates Reduced, ARPU Decline: In what appears to be an effort to stem the decline of their broadband subscriber base, Sify has dropped Broadband access prices to Rs. 95. Consequently, Sify’s ARPU has further declined to Rs. 305, from Rs. 316 at the end of the last quarter, and Rs. 336 at the end of Q4 of last year. At the same time, the Sify has reported a decline of 10,000 in their broadband subscriber base, despite an increase in their Cable Operator network.

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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

Q2-09: Bharti Airtel Monthly VAS Revenues At Rs. 259.55 Crores; Non-SMS VAS At 57%

Bharti Airtel has reported net profits (consolidated) of Rs. 2046 crores, up 1.05 percent since the last quarter, and 27 percent from Q208. Total revenues for the quarter were Rs. 9020 crores, up 6.33 percent since the last quarter, and 42 percent year-on-year. The company reported an EBITDA growth of 5.03 percent quarter on quarter, and 37 percent year on year. We’ve put together a quarter-on-quarter snapshot for you to compare their performance. For the year-on-year performance, please refer to the financials linked to below.

VAS Revenues & ARPU

Airtel has reported a decline in ARPU for the quarter, and as per our calculations, on the VAS front, the company earned Rs. 259.55 crores, up from Rs. 235.55 crores last quarter. At the same time, the contribution of Value Added Services (VAS) has increased to 10 percent of ARPU, and as per our calculations, the contribution of data services continues to increase, albeit marginally, to 57% of VAS APRU, up from 56.7% last quarter.

In absolute terms, non-SMS VAS, which includes Voice, Internet (WAP), Gaming, Music (Ring-Back Tones) etc, has grown from Rs. 133.56 crores per month to Rs. 147.94 crores per month, for the quarter.

Subscriber Addition, Minutes Of Use & Churn

Airtel’s subscriber base was up 12% quarter on quarter to 77.4 million, with net monthly additions at 2.698 million subscribers per month. 98.4 percent of the new additions were prepaid. Minutes of use per subscriber went up marginally from 534 minutes to 536 minutes. Interestingly, pre-paid churn declined to 3.1% from 3.8% last quarter, while post-paid churn increased marginally from 1% to 1.1%.

Mobile Services: 77479215 up 12% from 69,384,000
Marketshare: 24.6%, with 28.5% of net additions
Prepaid: 92.9% of the total subscriber base, with 98.4% of  new additions
Churn: 3.2% Prepaid, and 1.1% post-paid
Minutes of Use: 536 up from 534
Distribution Channel: 1,008,031 outlets.

Telemedia Services

Airtel Telemedia, which consists of their Broadband and wireline business, has a total subscriber base of 2,509,460 customers, which is up 5% from 2,393,732 subscribers last quarter. They added around 116,000 subscribers wireline subscribers, and reported an ARPU of Rs. 1147, up 1 percent from

Airtel has around 9.2 lakh broadband subscribers, 36.7% percent of wireline subscribers. Broadband subscribers up 7.96% from 8.53 lakh last quarter. Airtels wireline services are available in 95 cities. According to the company, their strategy for broadband is to focus on the city, while they’ve taken a pan-India approach to DTH.

Note: The next quarter should give indications of the impact of the launch of DTH services on Bharti Telemedia. More on the launch of DTH services here.

Q209: Release, Financials, Quarterly Report,

Q1-09: Release, Quarterly Report | Analysis/Report
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September 2008: India Adds 10.07 M Wireless, 170k Broadband Subs; 280k Wireline Cancellations

In September 2008, India added 10.07 million wireless subscribers - a significant step up from the 9 million odd monthly additions earlier this year. The wireless subscriber base is now 315.31 million, up from 305.24 million at the end of August. What is ironic is that the highest increase in wireless connections has come in the same month as one of the highest declines in wireline: with around 280,000 fixed line connections cancelled during the month, to bring the base down to 38.35 million, from 38.63 million in August.

With this, the teledensity is now up to 30.64 percent, with the total number of telephone (wireline and wireless) connections at 353.66 million.

India is also inching towards 5 million broadband connections - with around 170,000 broadband connections added in the month, the total base stands at 4.90 million. What’s important is that the fixed line cancellations are outpacing the addition of broadband connections - it’s a losing battle now for the Indian government, though it’s apparent that they really aren’t interested in broadband connectivity.

Tata Teleservices To Deploy Nova netPC At $55-76; The Fine Print?

Tata Teleservices (TTML) will deploy Nova netPC, the thin client computer from Chennai based Novatium Solutions at a setup cost for as little as Rs. 2499 (around $55) with a monthly subscription cost of Rs. 350 ($7.6), and Rs. 3499 (around $76) with a monthly subscription of Rs. 250 (around $5.4). TTML provides services in Mumbai and the state of Maharashtra, so one may expect a wider deployment than that in case of Delhi.

Do note that it appears that the pricing is lower than the one being offered by MTNL Delhi - Rs. 4999 for installation and Rs. 399 per month for the service, but one can’t really be sure without looking at the fine print. As an example, take a look at the prices for the MTNL-netPC service, which we gleaned from Novatiums website:

A user who doesn’t have an MTNL landline connection will have to pay for a brand new landline connection, new broadband connection, and Nova Service; all in all, the installation cost will be Rs. 6698.96 ($146) and Rs. 616.86 ($13.5) per month, inclusive of all taxes. That’s because it includes MTNL phone charges, modem rental, and registration charges for the landline, broadband, and installation.

These are all legitimate costs, but significantly increase the barrier to entry for a lower income household. What Novatium wants, and indeed what the XO and any other $100 PC contender wants, is scale, which will allow the price to be lowered.

There’s money from the USO Fund - money collected from taxpayers with the objective of funding telecom growth in rural India - that remains underutilized…If the government is serious about broadband, they should use it to subsidise some of these costs, so MTNL won’t have to charge for installation and registration, and bring the overall installation cost down to around Rs. 5000 (around $110).

Novatium has received an undisclosed amount of funding from NEA.

India Adds 9.16 M Wireless Subs In August 2008, And Only 160k Broadband Subs

India crossed the 300 million wireless subscriber mark in August 2008 by adding 9.16 million wireless subscribers. The wireless subscriber base was 305.24 million at the end of August, according to official figures released by the TRAI. If if you combine both wireless and wireline subscribers, that’s a total of 343.87 million subscribers, and a tele-density of 29.83 percent. The number of wireless additions in August were marginally down from 9.22 million subscribers added in July. Do bear in mind that the “Wireless” subscriber base includes GSM, CDMA and WLL subscribers, because Reliance Communications does not report WLL subscribers separately.

The situation continues to be bleak on the broadband side, with just 4.73 million connections, and just 160,000 connections added in August 2008. We’re inching towards the 5 million connections mark. For three months in a row now, the rate at which broadband connections have been added has declined. Take a look at the numbers.

Do note that while the conversion rate (of Wireline to Broadband) appears to have improved in August, this is only because the number of wireline connections have declined as well. Ideally, a steady or growing wireline base, and a healthy conversion rate is what is needed.

We await the Wireless Broadband miracle.

Beware: WiFi May Be Evil

What is that saying about throwing out the baby with the bathwater? After two instances of hacked WiFi connections being used by terrorists to send emails, WiFi security is making news in India. I think this is an over-reaction, and the media isn’t helping much. Stories of WiFi connections being used to send the emails were all over the TV Channels; now the newspapers have picked it up, and are blowing things out of proportion. In India, WiFi is suddenly evil, and don’t even think about telling your neighbours you have a WiFi connection.

The TRAI is getting into the act and planning to issue guidelines to ISPs, asking them to ensure that WiFi connections permit access only to authorized persons.

Newsflash: A WiFi connection that uses authorization can be hacked too, so making authorization mandatory will not help. It’ll only make the task a little more difficult. Here’s a thought - they’ve used email addresses from service providers like Yahoo to send these terror emails, so why not also force Yahoo, Rediff, Microsoft and Google to verify users from India, before allocating accounts? The mobile operators had to do it…And hey, since they used an auto rickshaw to plant bombs…shouldn’t auto rickshaw drivers be asked to note down IDs of every single passenger?

My problem is with WiFi irrationaly being highlighted: going after WiFi connections is pointless, and I’m afraid WiMax might face similar issues in the future. The WiFi connections, or even cybercafes in the past, weren’t used to bomb…they were used to send emails. If the idea is to be able to trace the people sending the emails, they’ll still find workarounds. However, in the process, the security agencies will end up inconveniencing those with WiFi connections, and Cybercafe customers and owners.

Cybercafes are struggling for survival in India, and the number of permits required, and the harassment of cybercafe owners is one of the reasons for that. Take a look at Reasons For The Declining Growth of Cybercafes In India.

Related:
Slashdot: Open WiFi may become illegal in India