Showing posts with label Tata Teleservices. Show all posts
Showing posts with label Tata Teleservices. Show all posts

Friday, February 8, 2013

BHARTI VS RCOM: POST 3G

The illogically costly 3G auction, evidently, has strategic implications for both Bharti and Reliance Communications. B&E does a snapshot 'dummies guide' competitive analysis primer on the two by Virat Bahri

First we come to the bidding outcomes, which have left only the government smiling, really. And spectrum is the kind of product where price elasticity of demand is just about non-existent. The all India license ended up costing Rs.167.5 billion, which was 379% above the original base price of Rs.35 billion, and this is being cited as a crazy valuation by many, even considering the credentials of the Indian market. No wonder that even Bharti and Reliance backed off from a pan-India license. Bharti led in terms of payout at Rs,122.95 billion, whereas RCom’s payout was Rs.86 billion. Ravinder Taneja, former VP, Enterprise Business, Tata Teleservices and currently Senior VP, Sales & Operations, Head-end-In-The-Sky (HITS), WWIL, tells B&E that the prices were high, but adds, “If the government has taken 3 long years to announce 3G spectrum auctions, it is an opportunity for companies to invest in it for the long term basis. Spectrum is a scarce resource, so when it comes up players don’t have any choice.” That’s especially true for incumbents, who have a lot to lose. The strategy has been to mostly take up 3G spectrum in their key circles, which would be a ploy to protect their high ARPU subscribers and improve their revenue yield from them as well. According to Kedar Sohoni, President, Informate Mobile Intelligence, “The ‘low hanging fruit’ is going to be the operator’s own postpaid set of users and enterprise users. They have the highest ARPU and the highest capacity to pay.”

In that sense, Bharti, despite paying the most, looks like the one that would be most disappointed. A Macquarie report points out that “Bharti has not got 3G spectrum in nine circles which cumulatively contribute 31.6% to its overall wireless revenue.” RCom has taken up a mix of Metro and C circles, and its total revenue coverage (GSM +CDMA) in the circles it has won is estimated at 41% of its total (Angel Broking). But Bharti has reasons to be optimistic. Airtel and Idea are likely to have highest ROI followed by Vodafone, Tata & Reliance. Going by the data, metros will struggle on ROI, but the key markets that will determine future ROI are UP, Maharashtra, AP, Gujarat, Tamil Nadu and Karnataka. Apart from eastern UP, Maharashtra and Gujarat, Bharti has got all these key circles, but RCom hasn’t won any of them. However, in the 9 circles that Bharti didn't win, it is among the top three operators, and Goldman Sachs predicts in a report that it could face significant customer churn to 3G operators in those circles. RCom, meanwhile, has taken up circles like Punjab, Madhya Pradesh, Kerala, Orissa, West Bengal, et al; which are aligned particularly to its GSM circles.
 

Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.

Posted by at
Labels: , , , , , , , , , , , , , , , , , , ,

Sunday, November 18, 2012

Never say die.................till you’re dead!

The biggest five loss making companies of India

Tell us! What’s the connection between ‘Love’, ‘Loss’ and ‘Alprax’? This one’s easy. It’s damn easy to get rogered in the former two, and you better have the latter close at hand to avoid a nervous breakdown. There; that was easy, wasn’t it! Accept it; finally, all it takes is that one call, one sms, one email from the woman you loved all this while – or from the portfolio manager you hated all this while – to inform you that all your investment has gone down the drain! India as a country is in the middle of a growth flood. It’s hard to imagine then that a company can end up getting losses in an economy where the corporate sector’s profits have actually grown by a smashing 25% in FY08 (see our last story).

It’s not just getting a loss in one quarter, but getting it again and again quarter after quarter, year after year, and so on, that gives the creepiest nightmares to the shareholders that have invested in these handful of companies of India Inc. And the wonder of it is, that it’s not just loss making Indian companies that have destroyed shareholder value, but even hugely profitable ones (see our third story). If India’s sneezing, surely America must have been knocked out cold! And truly, American companies, with their sub–prime blunders, seem thoroughly smashed up (see our fourth story).

But closer home, it’s an issue that seems quite worrisome. Think about it. While companies like Wire and Wireless and Moser Baer India have raked up losses close to Rs.80 crores, well known companies like Tata Teleservices (Maharashtra) Ltd. and Strides Arcolab have added to the glory by going beyond the Rs.100 crore loss figure. But the king of bad times clearly seems to be Deccan Aviation, with a mind numbing loss figure of Rs.834 crores, the largest loss by any listed company in India!

So how did they end up in losses? It’s interesting to note that almost all the above mentioned companies had their spokespersons travelling when we contacted them for the reasons. Air Deccan to B&E: “Captain Gopinath isn’t in town...”; Tata Teleservices (Mah): “As the spokesperson is travelling, TTML would not be able to participate”; Strides Arcolab: “Your questions are too general; the concerned spokesperson is not available, we cannot participate”; Moser Baer: “We have been very busy for the last few days; you can take comments from our press releases...” and so on so forth.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
Posted by at
Labels: , , , , , , , , , , , ,
Subscribe to: Posts (Atom)