Market forays of established CDMA players in the GSM space gained momentum in August. The Indian growth story of the telecom sector does not show any sign of slowing down. Market Pulse continues to track the news and events for your benefit. We hope you gain from the market and consumer insights that we present in our monthly newsletter.

TELECOM MARKET UPDATE

The mobile subscriber population stood at 435,621,543 as of July 31, 2009 - a growth of 2.96% over June 2009. Subscribers on the GSM platform accounted for a little over 75% and continued to register a faster growth. In July, telecom operators added approx 14 million new mobile connections, of which 11% came from Tamil Nadu circle and 9% each were from A.P and UP (East) circles.

Airtel accounted for almost 2.80 million new mobile connections while Vodafone connected 2.23 million new subscribers.

Interestingly, a huge chunk of net additions were registered by Reliance and Tata Teleservices – largely buoyed by their forays into the GSM market.

TTSL added almost 2.25 million mobile connections in July 2009, while Reliance added 2.39 millions.

Growth Pattern in Different Circle Categories

Metro circles witnessed higher growth for the CDMA segment which accounted for 55% SONA.

CDMA subscribers grew at 3.28 % while GSM growth rate slowed down to 2.10% in July.

‘A’ Circles expanded at 2.55%, predominantly led by the GSM segment. In Tamil Nadu, CDMA operators continued to witness a net erosion in their subscriber bases while Maharashtra, Gujarat & AP registered a growth of over 3% in the CDMA subscriber population.

‘B’ Circles registered slow growth for the CDMA platform which accounted for a mere 28% SONA.

‘C’ Circles expanded at the rate of 4.08% - prime driver being the telcos on the GSM platform. In particular, Bihar grew at 5.2%.

Performance of New Entrants

Aircel added 1.3 million mobile connections in July 2009 and grew to a total of 23 millions. Aircel registered their SONA in NE at 44% followed by J&K (40%) share and then Assam at 27 %. In HP, Bihar and Orissa the SONA was 20%.

In Maharashtra, Aircel garnered a base of 21821 mobile users in a span of 2 months. In the Metro circles, Aircel was able to get a share of 12 – 15% except in Kolkata. In UP, they managed a SONA of 3.5 – 8.5%.

Sistema Shyam TeleServices: Total population of SSTL subscribers has more than tripled to 1.43 million in July 2009 since January when it operated in Rajasthan only. They continue to do well in Kolkata with 14.50% SONA and a subscriber base of 96,594.

Idea: In both Tamil Nadu and Orissa, Idea’s SONA has declined to 5.25% and 1.42% respectively.

Tata Teleservices: The launch of DoCoMo has led to a sharp increase in the share of net additions. With the 1 p / sec pulse, TTSL has managed to have the highest share of net additions in Chennai – up from negative territory to 55%. The 6 circles of Chennai, A.P, Karnataka, Tamil Nadu, Kerala and Orissa contributed almost 83% of their net additions.

TELECOM MARKET NEWS & EVENTS

The per-second billing system for calls, pioneered by Tata DoCoMo, has the potential to bring down the sector’s revenues by 10-15% if other operators follow suit, according to analysts. Already, new entrant Shyam-Sistema has replicated Tata DoCoMo’s per-second pricing model. While it is not yet known if other operators will also offer the plan, it remains the biggest risk to the overall sector, analysts tracking telecom said.

Tatas may be looking at repeating the magic of “two-year validity” scheme through its per-second billing plans. In 2005, Tata Teleservices had rolled out the scheme, followed by lifetime validity, which has been a game changer in the Indian telecom landscape.

Infrastructure Sharing

Datacom Solutions has signed an infrastructure sharing deal with Tata Teleservices (TTSL) that will allow it to lease bandwidth as well as towers across the country from the Tata group firm, executives familiar with the development said.

As both Datacom and TTSL are rolling out GSM networks, infrastructure sharing will help the two operators reduce operating costs. Setting up an independent tower costs around Rs 35 lakh to Rs 40 lakh, depending on the location.

Earlier this year, Unitech Telenor, another new entrant in the telecom space, outsourced its passive infrastructure requirements to Tata-Quippo.

Last month, Reliance Communications also announced a 10-year, Rs 10,000-crore infrastructure sharing deal with new entrant Etisalat.

S Tel and Reliance Infratel have signed an infrastructure agreement for sharing telecom towers, transmission for BTS sites and fibre backbone for intercity connectivity.

Reliance Communications will execute the agreement through its tower subsidiary Reliance Infratel. The pact covers six circles - Orissa, Bihar, Himachal Pradesh, Northeast, Assam and Jammu and Kashmir where the telecom operator plans to roll out its GSM services soon.

S Tel, a new telecom operator in the lndian marketplace, has acquired a Unified Access Services License (UASL) and spectrum to operate in the six circles.

3G spectrum bids to start at 3,500cr, WiMAX 1,750 cr

The deadlock over the reserve price for third-generation radio frequency auction, vital for services such as video-calling and high-speed internet access on mobile phones, was finally resolved when the empowered group of ministers (EGoM) headed by finance minister Pranab Mukherjee fixed it at Rs 3,500 crore. This means, any telecom company bidding for pan-India 3G spectrum will have to pay a minimum of Rs 3,500 crore as the auctions will begin at this price.

At the same time, this is nearly Rs 1,500 crore more than the price specified by telecom regulator Trai, which had said the base price must be only Rs 2,020 crore.

The EGoM also decided that a total of five players will be allowed to offer 3G services in every circle, of which one slot will be reserved for state-owned telcos BSNL & MTNL.

The reserve price for WiMAX spectrum will be Rs 1,750 crore. The auctions will be completed by November.

TCM Mobile and Ganton to Launch First Cellular VoIP Network in India

TCM Mobile LLC (tcmmobile.com) announced that it has signed an MOU with Ganton Limited to deploy a commercial cellular VoIP operating network in India. This will be the world's first commercial network to utilize TCM's revolutionary, patented telecommunication technology, and will be rolled out to an initial 500,000 subscribers with a project capex of US $300 million dollars. The specific operating territory is currently being designed and will be announced in the coming weeks.

Microsoft Moves to Smarten Up Cheap Phones

High-tech companies angling for a piece of the mobile phone business are almost entirely focused on high-end “smart phones,” showing little love for less-sophisticated “feature phones” that are common in emerging markets like India and Africa. Microsoft on Monday said it has come up with a scheme to transplant some of the brains of the pricey handsets to lower-priced models.

The company has crafted a piece of software for feature phones called OneApp, which will serve as a foundation for other software makers to create rudimentary versions of the whiz-bang e-commerce, social networking and other applications that run on iPhones, BlackBerrys and other smart phones. To demonstrate its capabilities, Microsoft itself created software that runs on OneApp for accessing Facebook, Twitter and other services. The company is first rolling the free software out with a South African company, Blue Label Telecoms, before expanding to other markets.

NEW TELECOM ADVERTISING CAMPAIGN

Vodafone: While Idea is encouraging mobile users to walk while they talk, Vodafone has decided to let a walk determine its network strength. The telecom company has launched an interesting on-ground campaign, in association with My FM, with the common objective to showcase their network strength.

The campaign, called Vodafone My Network My Journey was executed between July 22-28 across My FM's six stations in the MPCG (Madhya Pradesh and Chhattisgarh) region. On July 22, Vodafone completed its network coverage of the MPCG region. Harit Nagpal, chief marketing officer, Vodafone India, says, "Our core brand promise is our vast network coverage -- this is what we wanted to bring out.

Aircel did what BMC did not: MiD DAY photographer Sayed Sameer Abedi, out shooting flooded areas, was, surprised to see an inflatable rubber dingy ferrying people from one end of the subway to the other at around 2.30 pm on 15th July.It was not a BMC initiative, but part of a corporate social responsibility exercise by mobile service provider Aircel.

Trained staff operated the boat, which carried out numerous trips all through the afternoon, till the water receded. Reliance GSM: Customer Experience Pack - On the first easy recharge of Rs 50, customers get talk-time worth Rs. 44.50 as well as free night calling to local numbers on Reliance GSM and CDMA.

Tata Indicom: Indicom is providing a Bundled Handset offer in Mumbai, Maharashtra & Goa. The offer allows subscribers to enjoy free talktime along with the handset.

Virgin: Virgin is providing full talk-time on values as low as Rs 11. Virgin had also launched an attractive campus pack, where one can talk to friends for free.

Reliance CDMA: With Rs 999 STV, all the local and STD calls made to Reliance CDMA are absolutely free. This benefit is available for 30 days.

MTS: With the Rs. 11 money saver pack, MTS to MTS STD is offered @ 35p/min; With Rs.100 MSAVERFREE, unlimited local calls are offered MTS to MTS.

For further information please write to: Prabal Sarkar