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RCOM Q4-FY13 Concall Live: GSM + Data Is 64% Of Wireless Revenue; CDMA Decline

RCOM has reported today 7.2 million 3G subscribers and 29.4 million data connections for the quarter ending March 31, 2012, and a 21% increase in data traffic quarter on quarter. That’s the highest increase in data traffic reported so far, and RCOM, in its conference call, is claiming to be the largest mobile Internet operator in the country, although one should remember that RCOM counts USB data dongles as Internet connections. Notes from the conference call:

1235 hrs: the call starts 5 minutes late, and Gurdeep Singh is reading out numbers from the quarterly report in a rather monotonous manner, offering very little color around the numbers. Some numbers in:
– 29.4 million data users, out of which 7.2 million are 3G customers, the highest in industry.
– Data usage is the best in the industry. Readers should note that these include data users
– Spectrum auction: the lack of participation in auctions indicates that the reserve price is unfeasible. Since Feb 2012 order cancellation, 8 telecom opertors have shut down completely or reduced circles. Telecom is facing high input costs.
– Operators are eliminating price-hoppers among subscribers.
– India has lower smartphone penetration than most countries. Calendar year 2013 has begun on a positive note for smartphones, with discounts and EMI schemes for smartphones.
– RCOM increased tariff’s by 20% on both GSM and CDMA. Reduced promotional offers by 65%, and are reducing discounted plans. RCOM is trying to create a healthy ecosystem, forging relationships with leading global plans, and entering into exclusive partnerships with social media networks. We’ve tied up with leading handset manufactuers for CDMA smartphones. RCOM entered into an exclusive arrangement with Lenovo. Phones will be attractively priced and work on CDMA and GSM, allowing switching calls between the two, based on the strength and quality of the signal.
– An exclusive partnership with Google, and have announced partnerships with Whatsapp, Twitter in India. Twitter and RCOM has launched a Reliance Twitter access pack.
– Total data usage has increase 21% quarter on quarter. The large traction is coming from usage of Facebook, YouTube and Whatsapp.
– The idea is to convert users into higher data using customers.

1245 hrs: RCOM will move 9500 employees to partner roles.
2G is inking GSM Intracircle roaming arrangements. The first such agreement is with Aircel. These will increase RCOM’s national 2G footprint by 10,000 base stations. All other agreements will be completed by the second quarter of this financial year.

1248 hrs: The RCOM-Reliance Jio deal. Jio will utilize fibre across RCOM’s intercity fibre optics network. IT will have reciprocal access to Reliance Infocomm’s infrastructure in the future. This is the ‘first’ such agreement between the two companies (which means that more deals are being discussed).

1250 hrs: Globalcom numbers are being discussed.

1256 hrs: Industry is facing virtual consolidation. Pricing power is coming back, and there are improvements in RPM. Have rationalized Prepaid tariffs, by removing free minutes and improving tariffs by 20%.

1258 hrs: What we were waiting for – the Q&A begins

1259 hrs: Revenue contribution of data?

Wireless growth is 2.5%, but the growth of GSM and Data businesses are growth engines identi
64% of wireless revenue for RCOM. One year ago, it was 59%, moving up 500 basis points as a contribution of GSM and Data. We changed course and aligned go to market strategy to as 3G metro, 3G lit markets and non-3G markets, relooking pricing, branding, distribution, and kept the go to market elements differently for all three markets. Quarter on quarter of GSM+Data is going up. We had consciously taken a call that CDMA network will be a high speed data network, by being a dominant player in the dongle market, and make an effort to bring branded handsets into the smartphone market. We will make efforts with HTC and Blackberry, and another few announcements are planned. What’s good about CDMA device ecosystem is that it is CDMA+GSM.

We don’t rule out rolling out EVDO+GSM phones.

The GSM + Data has grown 6% quarter on quarter in terms of revenues. We have been ahead of the industry growth in this segment in the last 3 quarters. We gained 100 basis points in revenue market share, and have an accelerated growth path. A large part of the revenue comes from 2G Internet (GPRS), and in light of some operators who have given up spectrum in some circles, which is increasing opportunity for RCOM in these circles. We’re seeing traction in that direction. GSM+data, the growth will be on data.

Increase in tariff’s not reflecting in revenue per minute changes. Why?
We’d changed the tariffs in September last year, and we’ve completed the exercise as of the third week of last month. The commitment plan tariffs are also being changed, and promotional tariff’s are being cut down by as much as 65%. The impact will be seen in 2-3 months.

We have nearly 6 lakh abusers on the network, using 5000 minutes per month, which is humanly impossible, but they use for call centers. They are pulling the RPM down. Once we get them out of the system, you’ll see the correction on RPM system.

On one time charge?
We have a contracted spectrum under the license condition, and we have approached the courts.

1325 hrs: Mostly been discussions on financials or a repetition of what’s already been said.

1330 hrs: We’re not late with the ICR arrangements. Now that the hypercompetitive stage is behind, there is a good reason for us to consolidate our position. We’ll be smart enough to go for revenue corridor, data corridor. We want to get to the market quickly, make a good case to deploy our own assets.

1332 hrs: There’s a rush for the landgrab of customers. However, 30% of revenue is from those on headline tariffs.

1338 hrs: 2300 MHz needs far more sites than a 2G footprint, should Reliance Jio have an ambition to be a pan-India operators. Ours is a large portfolio of towers, and many of the towers in the main cities are fibre-ised.

We are in advanced stages of discussions to lease out towers to Reliance Jio.

1339 hrs: Our objective is to migrate customers to CDMA smartphones in the CDMA segment. We’ve raised prices of CDMA handsets. The attempt is to get a better quality customer. We’ll see the complete bleed stopping in CDMA in the next two quarters. The bleed is coming to a stagnation, and it will contribute as we populate more CDMA smartphone users.

Growth in GSM+data will outperform the market.

Note: this was updated live, and there might be inaccuracies as well as paraphrasing. We’ll update/correct later once RCOM releases a transcript.

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