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RCOM Q1-FY12 Call: Video On Demand; Tariff Changes; 2M 3G Subs

Reliance Communications believes that its 3G rollout, as far as the 13 circles where it won rights to spectrum, is complete, covering 333 towns. Any further expansion, the company said, will come by virtue of an intracircle roaming arrangement with “like minded operators”.

RCOM had 2 million 3G subscribers (up from 1.7 million last quarter), across mobile data and data cards, at the end of the quarter ending June 30th 2011 (Q1-FY12). Executives on the RCOM earnings conference call held yesterday said that much more is needed to be done to evolve in the devices ecosystem for 3G: handsets are currently at Rs 4000,and they’ll need to come down to Rs 2000-2500.

By the end of this quarter, RCOM expects to have expanded its high speed data network to 900 towns, up from 65 towns a year ago. It also claims to have a 1x data experience in 20,000 towns.

“Non voice”, the company said, contributes almost 20% of its wireless revenues, is among the highest in the country. Some developments on the 3G non-voice front:

– Launched Our Apps last quarter, a Reliance branded applications store, with over 50,000 apps and games, with try and buy options.
– Launched a new version of the RWorld store, making it more user friendly.
Will launch a video on demand application, which will render across various devices such as handsets, tablets PCs etc.

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RCOM executives also clarified that the Reliance 3G Tablet, with Android 2.3, priced at less than Rs 13000, has been launched without any subsidy.

Other notes from RCOM’s Q1-FY12 conference call:


RCOM reiterated that its focus is now on growing paid minutes, and that the free minutes it gave out earlier – “all the unwanted minutes” – will be used up in one more quarter. “You’re seeing two quarters of consistent over-3% Minutes of Use growth, translating into revenue growth. We are not interested in MoU growth at any cost. In the long term, we’ll be in line with the growth in the industry. It also depends on the price increase taken on.” The company said it would not introduce free minutes, and changes have helped maintain revenue per minute at Rs 0.44 “vis a vis the industry which continues to show a decline.”

RCOM has revised tariffs in GSM and CDMA businesses in 18-19 circles, with rates increasing from Rs 0.01 to Rs 0.012 per second. Other operators have hiked rates too, but RCOM said that its decision was independent, and in line with an earlier strategy, wherein it raised SMS pack rates from from Rs 11 to 19 and then around Rs 30. In CDMA, the company said, it only increased off-net rates, saying that keeping on-net rates low is its USP.

It expects takes 2-3 months, at times 6 months for rate changes to have a full impact, and the likely impact will 1p revenue per minute, if nothing else changes.
It also doesn’t expect rate changes to be frequent, since there is “relatively more price stability now. Even newer players who were losing money on every minute are now seeing the rationale behind not losing money. It is difficult to predict an increase, but blended rates will improve as data contribution increases.

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“We are interested in revenue share and more in the EBIDTA share as well. It’s important for the industry to look at the EBITDA share of the total pie, rather only at revenue. There are operators who are getting revenue growth, and losing Rs 600-700 crore a quarter. I don’t think that is sustainable. Revenue share for the sake of revenue share is not sustainable, but profitable revenue share is. We run EBITDAs of 32.4% at RCOM level, and 27%+ at wireless level, and that is how we see the equation.”

Mobile Number Portability

Has been neither a boon or a bane for RCOM. As of June 30th 2011, RCOM was net positive in port in and port out requests for June. Focus will be on value accreditive churn

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© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ