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RCOM had 12.9M 3G & 37.4M data connections at end of Q4-FY14

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Reliance Communications (RCOM) has reported a total 37.4 million data connections for the quarter ended March 31, 2014, registering a minor 3.3% growth from 36.2 million data connections in the previous quarter. Year on year, it reported a 27.2% growth from 29.4 million data customers in the same quarter last year.

It added only 1.2 million data connections for the quarter as compared to 2.2 million data additions in the previous quarter. However, given that RCOM’s overall connection base declined by 6.4 million during the quarter, it might be possible that the telco managed to convert non-data connections into data connections. RCOM defines a data connection as any connection with data usage of more than zero Kb in the quarter, hence this includes incidental users as well.

Last week, RCOM’s competitor Idea Cellular had set the benchmark for reporting mobile Internet connections in India by not including those connections that used up less than 1 MB for the month, which lead to a decline of 10.6 million 2G connections for the telco. In our opinion, this should become the norm.

3G connections: Of the 37.4 million data connections, 12.9 million are 3G connections, registering a 16.22% growth quarter-on-quarter (QoQ). This is despite a 27% increase in 3G data rates in December 2013. The company claims to have largest 3G connection base in the industry, however we’re not sure whether RCOM classifies its EVDO data card users as 3G users or merely “data users”. Strangely, RCOM also notes that a 3G connection is any connection “having made at least one revenue generating call or data usage of more than zero Kb in the relevant period”.

In comparison, RCOM’s competitors Airtel had reported 10.98 million 3G connections while Idea Cellular had reported 10.2 million 3G connections for the quarter.

Data Numbers

– 1.2 million data connections added during the quarter, as compared to 2.2 million last quarter.
– 1.8 million 3G data connections added for the quarter, as compared to 2 million last quarter.
– 2G data connections declined to 24.5 million data connections for the quarter from 25.1 million data connections. This decline is probably because of RCOM’s 2G customers shifting to 3G during the quarter.
11.5% of RCOM’s total connections are on 3G, and around 34.5% of RCOM’s total data customers are on 3G.
– Data traffic on its network has increased to 50.25 billion MB, up 20.5% from 41.7 billion MB in the previous quarter, and almost doubled year-on-year from 25.97 billion MB in the same quarter last year.
– Data usage per subscriber is up 14.9% to 455 MB per connection from 396 MB last quarter, which RCOM claims is the highest in the industry. Idea had reported 410 MB data usage while Airtel had reported 277 MB data usage per subscriber during the quarter.
– Non-voice accounts for 23.5% of RCOM’s wireless telecom revenues for the quarter, up from 23% in the previous quarter.
– RCOM has 3G coverage in 333 towns across India and it has 11,659 3G sites across the country, same as 11,659 sites in the previous quarter. This has remained constant for the last few quarters.

RCOM’s EMI-Like Device Tie-ups

During the quarter, RCOM had replicated the data bundled device tie-up it had inked with Apple last year, with more smartphone brands across various pricing points. These include select Nokia Lumia smartphones like the Nokia Lumia 1320 & Nokia Lumia 1520 and GSM + CDMA based HTC devices like HTC Desire 700 (Rs 2,179 per month), HTC One dual sim (Rs 2,899 per month), HTC Desire 600c (Rs 2,099 per month) and HTC Desire XC (Rs 1,599 per month) among others.

In the telco’s previous earnings call, RCOM’s CEO (Wireless) Gurdeep Singh had mentioned that they believe Zero Plan can be a new category like Postpaid and Prepaid Plans, which will drive the revenue growth in future. More on that here.

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