Reliance Communications is wonderfully placed for 3G auctions

Written by Nikita Upadhyay | Nikita Upadhyay | Updated: Aug 31 2009, 05:41am hrs
Indias largest dual technology company, Reliance Communications (RComm) has been active in the ABC (astrology, bollywood and cricket) value added services offerings. With 3G auctions around the corner, Nikita Upadhyay from FE spoke to SP Shukla , president, wireless, RComm about the companys bidding strategy, business case in rural areas and dual sim card phenomenon.

Is the company prepared for 3G auctions Will RComm bid for two 3G licences

We are wonderfully placed for 3G auctions. RComm can go for 3G auctions either via CDMA or GSM. Everybody is guessing if we will bid for two licences. This is our biggest strategy and would keep it confidential.

How do you plan to raise funds for the auction

We have a very strong balance sheet. Raising funds is a continuous activity. We have steady revenues coming from our operations.

Are you looking at entering South African market through Zain

These are all market speculations. I would not like to comment on the same.

How is delay in 2g auctions impacting your quality of service (QoS)

Nothing has been on hold. The processing is being done, deliberations and discussions are going on, and papers are being circulated between DoT and Trai. Process of allocating the spectrum is on. Hopefully we will hear about it soon. When we speak about spectrum, we are talking about a scarce resource which should be tactfully handled so as to create no issues in future ahead.

What is your definition of a rural area How does the company decide if the area falls under the rural belt

In the telecom sector, most of the companies work on the pincode basis to distinguish between rural and urban area. These pincodes may overlap each other many times. This is just a way to define urban and rural centers and we also depend on the same way. This is not a science but just a way to make life easier. It is more of segmentation than the urban rural divide.

For instance in FMCG sector, targets are given depending upon the product-line but for telecom, everybody is a potential subscriber.

What is the business case for RComm in rural areas with spectrum in 1,800 mhz

For 1800 mhz spectrum, capex is high and low average revenue per user (ARPU). But spectrum has no urban-rural differentiation. Also telecom companies today do not worry about ARPUs as they used to, many years ago. Rural areas has more population and less subscribers, hence more ARPU (500*200). More subscribers, less ARPU (1000*100) will also get the same revenue. Telecom companies are now realising that more than ARPU, its the population or the number of subscribers that matters. The focus has completely shifted now from ARPU to revenue per tower.

How much is revenue per tower for RComm

That I cannot share with you. In terms of revenues all the operators are in 10-15% range from each other. We are doing quite well as our revenue per tower is more than the rest of the industry. This is the advantage that we have over other operators in the sector. On our every tower, we have CDMA and GSM operations along with other services like internet via data cards. Through our rural initiatives, we expect our revenues to see an upside of 5-15%. We are working on making our rural subscribers aware of the services and making them interested in anything other than voice. By third quarter I will be able to give you a clear idea on adoption and usage of these services.

How many subscribers you add in GSM segment every month

Ballpark figures for the industry are the same and we are no different. Industry does around 80:20 or 85:15 ratio every month. This keeps on fluctuating. We do not count subscribers on the basis of technology. Once mobile number portability (MNP) comes in, it would be difficult to say if you are calling a CDMA or GSM customer. Also it would be impossible to say if the subscriber is an RComm subscriber or of any other operator.

Do you think dual-sim phenomenon is daunting for the industry

It is just a selected few who have dual sim. It is not at all a threat for the industry. It is understood if a customer has one CDMA and one GSM phone but there is no valid reason for a subscriber to have two GSM phone.

Purpose of two sims is short term, maybe for a month or so. This is because the moment you make a call from one number, you start getting incoming call on the same number.

Many people bought our GSM for outgoing but within 30 days all our subscribers who had pre-calling, started receiving incoming on the same number and became our permanent customer. This was our largest customer acquisition tool.