Ericsson seek Ambani arrest over unpaid RCom bill

Ericsson has filed its second contempt petition against Reliance Communications in the Indian Supreme Court asking for Chairman Anil Ambani to be arrested.

The dispute between Ericsson and Reliance Communications is not a new one, though this certainly steps the conflict up a level. With previous lawsuits focusing on unpaid bills, Ericsson has requested be detained in civil prison and be barred from travel overseas unless he can guarantee the payment of 550 crore rupees (roughly $79 million) owed for various products and services.

According to The Economic Times, Ambani has previously given guarantees in court that the debt would be repaid to the Swedish vendor, though since the December 15 deadline is firmly in the past Ericsson executives have gotten twitchy. The last filing asks Ambani be detained until there are concrete guarantees the bill will be paid.

Having missed the original payment in September, Ambani and Reliance Communications were given until December 15 to find the cash, though this has proved more difficult than expected. Ambani is in a bit of a stalemate at the moment, as while he will not want to be arrested, payment somewhat relies on the sale of licenced spectrum assets to Reliance Jio, a transaction which is being held up by the Department of Telecommunications.

This deal is currently in limbo, as while the National Company Appellate Law Tribunal has given the green light for the sale (and told the Department of Telecommunications to clear it), the hold-up is concerning cash. The Department is standing its ground, stating it is not possible to clear the deal unless there was clarity on payment of dues and associated charges. Reliance Jio CEO Mukesh Ambani has stated the company would not be prepared to take any liable for dues owed by Reliance Communications.

With all parties refusing to give in the road ahead does not look like a pleasant one. Not only has his telco business suffered due to the success of his brother’s disruptive influence on the market, but in refusing to accept liability Mukesh is pushing further misery, and a potential jail sentence, onto Anil.

On the other side of the coin, Mukesh’s Reliance Jio is having a much happier time. The latest figures from TRAI suggest the telco grew its subscriber base by more than 10 million, taking total market share up to 22.46%.

That said, family disputes mean nothing to the Swedes. Ericsson will seemingly push ahead to recover the debt, whatever the cost.

Jio bags another 10 million – how was your October?

The Telecom Regulatory Authority of India (TRAI) has released the subscription data for October and it’s another familiar story as Reliance Jio grows its subscription base again.

Looking at the market on the whole, India now has 1.17 billion wireless subscriptions, having added another 720,000 during October. Amazingly, market penetration is now up to 87%. While growth has been staggering since Reliance Jio shunted the status quo, if the country follows what would be considered the traditional trend (mobile penetration eventually exceeding 100% of population) there are still a couple of hundred million mobile subscription to realise.

Unsurprisingly, Reliance Jio has greedily devoured almost all of the positive growth.

Subscription growth Market share
Reliance Jio 10,500,227 22.46%
BSNL 386,926 9.7%
Reliance (3,831) 0.002%
MTNL (8,068) 0.3%
Tata (925,299) 1.8%
Bharti Airtel (1,864,065) 29.2%
Vodafone Idea (7,361,165) 36.55%

With only BSNL, India’s state-owned telco, heading upwards Reliance Jio has firmly placed itself in the strongest position across the market. Bharti Airtel is in somewhat of a downward spiral and it’s difficult to see how it will get itself out of this position, therefore eyes will be cast towards Vodafone Idea for resistance to the Reliance Jio tsunami which is sweeping India.

Looking at these figures alone paints a relatively dreary picture, though you have to appreciate the complicated process the business is currently undertaking. The merger between Vodafone and Idea, which was caused by the jittery upstart Jio, is going through the rationalisation period right now. This is a very complex time and will define the firm’s ability to tackle the Reliance Jio headache in the months to come.

On the money side, we do not foresee this being a massive issue. Vodafone and Idea are merging two massive networks and will soon enough realise the benefits of scale. The subscriber base is massive, providing security for any future investments, and the sale of various different assets (such as the respective tower businesses) provides a hefty war-chest. Taking these factors into account, money should not be an issue, so we have to wonder whether the right people will be put into the right roles and if the right (and flexible enough) strategy will be put in place.

Vodafone Idea is now clearly the market leader in India, but it will only take a couple more months of Reliance Jio continuing on its current path for this lead to be eroded. The momentum is gathering behind Reliance Jio and new products and services (such as fixed broadband) will only add more as convergence ambitions are realised; the emphasis is certainly on Vodafone Idea to prove this isn’t turning into a one-man market.

TRAI reveals Jio is the only Indian telco in growth

The Telecom Regulatory Authority of India (TRAI) has released its monthly report on the state of play in India, and it’s a pretty gloomy picture for everyone aside from Jio.

Across the country, the message is relatively positive. Wireless subscriptions have grown once again this time by 2.4 million, not as glorious as previous months but growth is still growth, but to add a slight dampener to proceedings, broadband declined, this time by 70,000 subscriptions. Once again we reiterate the fixed broadband segment is one which is bursting with opportunity.

Sustained growth in India, while commendable, is not necessarily an interesting development as we have been saying the same thing for more than 18 months. Perhaps the most interesting aspect is who is capturing the additional subscriptions. Stating Jio has collected the lions share will surprise no-one, but September saw everyone else shrink.

Subscription growth Total market share
Reliance Jio 13.02 million 21.57%
MTNL -9,435 0.3%
Reliance -16,349 0.004%
BSNL -536,407 9.67%
Tata -1.01 million 1.88%
Bharti Airtel -2.36 million 29.38%
Vodafone -2.62 million 18.97%
Idea -4.06 million 18.23%

Reliance Jio has now firmly established itself in second place in the market share rankings, which has been a long-time coming, though it is starting to make genuine in-roads against Bharti Airtel. Each month new figures are released and while Bharti might have been able to maintain its position, recent figures have shown the eroding impact of Jio.

The issue for those who are trying to resist the Jio revolution is what is around the corner. Jio has made no secret of its plan to capitalise on the ridiculously low broadband penetration across the country, and you have to wonder what will happen when a more established network can be developed. The company recently purchased controlling stakes in Den Networks and Hathway Cable, offering it a foot through the door, though expect some big developments over the coming months.

Predicting what will happen is a simple task; Jio will take the same low-cost approach to broadband as it has with mobile, though the potential of a convergence product portfolio could further pile the misery onto competitors. How many customers might be tempted to switch over to Jio’s mobile proposition when a cheap broadband bundle is thrown in as well? This is what will be the most interesting development.

Jio has done an absolutely wonderful job of revolutionising the Indian digital economy, but what can be done on the fixed broadband side of things remains to be seen. Just as the story is starting to become repetitive, Jio is about to start on a new chapter.

Vodafone blames big loss on India and other impairments

UK operator group Vodafone announced a net loss of €7.8 billion for the six months to the end of September, thanks largely to some one-off impairments.

Group revenue was down 5.5% year-on-year, but the company wrote down €3.5 bil on the disposal of Vodafone India and a similar amount for various impairments that also included India as well as Spain and Romania. There was also the time-honoured adjustments for currency and various other bits of accounting arcana that presumably make sense to someone. Here’s the P&L, which registers a slightly higher loss, but what’s a hundred mil between friends?

Vodafone 2018 P&L

“Our performance in the majority of our markets has been good during the first half of the year, and we have taken decisive commercial and operational actions to respond to challenging competitive conditions in Italy and Spain,” said Vodafone Group Chief Exec Nick Read.

“Looking ahead, my new strategic priorities focus on driving greater consistency of commercial execution, accelerating digital transformation, radically simplifying our operating model and generating better returns from our infrastructure assets. Our goal is to deepen customer engagement through a broader offering of products and services and to deliver the best digital customer experience, supported by consistent investment in our leading Gigabit networks.

“As part of our effort to improve returns, we are creating a virtual internal tower company across our European operations, and we are reviewing the best strategic and financial direction for these assets. Our focus on organic growth along with the strategic and financial benefits of the proposed acquisition of Liberty Global’s assets give confidence in the Group’s ability to grow free cash flow, which underpins our dividend.”

The comment about towers seems to imply Read is thinking of selling and leasing back some towers, or something like that. The upshot seems to be that Vodafone is fine for cash (the write-downs were mainly the devaluation of existing assets, so there’s no expenditure involved) and so it’s fine to maintain the current dividend level. This resulted in Vodafone’s share price ending the day around 8% up, so no worries. You can read further analysis of Vodafone’s numbers here.

We’ll be ready for 5G by 2020 – Reliance Jio

Reliance Jio owner Mukesh Ambani has stated India will be fully-4G by 2020, and is setting his eyes on the 5G euphoria already.

The statement of intent adds to a remarkable couple of years for Reliance Jio and the Indian digital economy on the whole. Starting from nothing in December 2015, Reliance Jio has risen to become arguably the most influential telco in India, dragging the country’s digital economy into the 21st century. A little over two years ago, India was in the digital baron lands, though now the Indian digital appetites are as insatiable as those in ‘developed’ nations.

“India has moved from 155th rank in mobile broadband penetration to being the number 1 nation in mobile data consumption in the world… in less than two years,” said Ambani at the India Mobile Congress, courtesy of Live Mint. “This is the fastest transition anywhere in the world from 2G/3G to 4G. By 2020, I believe that India will be a fully-4G country and ready for 5G ahead of others.”

Paying complements to the pro-active approach to stimulating the digital economy from the Indian government, Ambani is continuing the ambitious expansion of the Reliance Jio business. 5G is what will attract the headlines, most notably after a few telcos highlighted 5G is not a top priority for some nations at Broadband World Forum last week, but the broadband ambitions are just as important.

Tackling the 5G euphoria and increasing broadband penetration across the country perhaps work happily alongside each other when you consider the importance of a fibre network in both cases. The JioGigaFiber proposition, announced during the company’s AGM in July, promises FTTH connectivity in a market where broadband penetration is roughly 10%. ‘Fibering up’ the country is critical for 5G, and Reliance Jio has already started the mission.

“India will be among the largest digital markets in the world,” said Ambani. “Every enterprise must have an ‘India First’ vision to participate in this market. We will need to reinvent to grow and nurture this market to its full potential. This will be a win-win for the entire industry, for India and for the entire world.”

One interesting question which remains is whether the lessons taken from the Jio-effect can be implemented into other nations which are struggling in the lowly places of the digital league tables.

Jio earnings more than double as it tops a quarter of a billion subscribers

The spectacular, if unsurprising growth of Indian operator Reliance Jio continues with an annual EDITDA increase of 148%.

You can see the main numbers below and you don’t even need to be able to get your head around India’s arcane number system to see that everything’s moving in the right direction, fast. This doesn’t come as a great surprise since it put up similarly spectacular numbers last quarter too, but the Jio train is showing no sign of slowing.

Jio Q3 financials

“We, at Jio, are glad with our progress towards our mission with more than 250 million subscribers on our network within 25 months of commencement of services,” said Reliance boss Mukesh Ambani. “Our next generation FTTH and enterprise services are now being made available to our customers to further enhance our value proposition to our customers. We are making rapid progress on the growth of our digital platforms, across new commerce, media and entertainment, agriculture, education, healthcare and financial services, which will further enhance the quality of life and productivity of the people of India.”

Not content with all this ownage, Jio is splashing some of the cash that is now flowing in on some other strategic investments. It has grabbed majority stakes in Indian cablecos Den Networks, Hathway Cable and Datacom, as well as a 12.7% stake in US personal rapid transit company SkyTran,

“Our partnership with SkyTran reflects our commitment to invest in futuristic technologies,” said Jio Director Akash Ambani. “Reliance is well-poised to capitalize on its existing business portfolio and capabilities to accelerate the development of SkyTran across the world and especially in India.”

Check it out.

 

US Senators hit out at India’s pro-privacy and localisation laws

Two US Senators have signed a letter addressed to India’s Prime Minister Narendra Modi suggesting new rules to tighten up data practices in the country could lead to a weakened trade relationship with the US.

The US Government has already shown the damage which can be done when it starts throwing around economic sanction and hurdles, almost sending ZTE to join the Dodo on the extinction list, and it appears to be using the same tactics here. However, instead of punishing an organization which broke trade laws, it is attempting to bully a country into its own line of thinking and away from a pro-privacy stance.

“We see this (data localization) as a fundamental issue to the further development of digital trade and one that is crucial to our economic partnership,” the letter signed by Senators John Cornyn and Mark Warner states. The Senators serve as co-chairs of the Senate’s India caucus.

The letter, seen by Reuters, relates to new data protection, privacy and localisation rules which are set to come into play this week (October 15). The rules have been in the making for some time, and while there are some very suspect clauses, this is an attempt to tame the wild-west internet in the country, applying regulations which should be deemed more acceptable for the digital economy.

Back in July, the Indian Government unveiled a report which detailed its new approach to data regulations in the country. Included in the rules are restrictions on how data can be collected and utilised, setting out a similar stance to GDPR in Europe, while also including new approaches such as the right to be forgotten, explicit opt-in consent for certain categories of data (that which is deemed sensitive), and also data localisation. It is a much more stringent approach to the data economy, taking India closer to the European stance on privacy than the US’ views.

Aside from the data protection and privacy benefits of localisation, and not to mention greater influence for the Indian Government, such a strategy also stimulates the economy. Local jobs will have to be created and new data centres will have to be constructed to meet the rising demands of the increasingly digital Indian economy and society. These are clearly benefits for the country, though the threat of an impact on US trade will certainly be a worry for India.

Over the course of 2017, India exported $34.83 billion worth of goods and services to the US. This figure accounted for 16% of the total exports for the country, making the US the largest trading partner. The US Government certainly does have leverage to coerce India into its own way of thinking.

The letter from the Senators also happens to coincide with some pretty heavy lobbying from the likes of Visa, Mastercard and American Express. All would certainly find life simpler if there was no such thing as localisation, though it seems lobbying Senators to fight the cause has been more effective than efforts to persuade Indian officials to head a different direction. The new rules seem to have been influenced by Europe’s GDPR, though the US, both the Government and companies, have a different approach to data than the pro-privacy Europeans.

With India’s economy fast evolving from analogue to digital, there certainly will be profits to be made. Many US companies, most notably those in Silicon Valley, will be looking greedily at the country though such rules would make life more difficult. Not impossible, but not as simple. Perhaps the economic weight of the US Government can bully India into believing the ‘American Dream’.

Indian government greenlights plan to increase broadband penetration

While Reliance Jio has been ripping up the rulebook, causing chaos in the Indian mobile market, some might be surprised to hear broadband penetration is still less than 10%.

Accessibility has long been an issue in India, from a mobile perspective Jio seems to have addressed this issue, though broadband remains an challenge. According to the latest subscription figures from the Telecom Regulatory Authority of India (TRAI), there are currently 22.2 million broadband subscriptions in the country, compared to roughly 250 million households. This is one of the discrepancies being addressed by the National Digital Communications Policy – 2018.

According to the Indian Express, the government has officially given the green light for the policy, which aims to attract $100 billion investment and create an additional four million jobs in the digital communications sector. The ambitions and targets are certainly bold, though momentum is certainly with India.

In terms of the top-line objectives, there are six; provisioning broadband for all; creating the four million jobs; increasing the percentage digital communications contributes to GDP from 6% to 8%; taking India into the top 50 places in the ICT Development Index of ITU; ensuring digital sovereignty; enhancing India’s global contribution to the digital economy.

Looking specifically at the broadband side of things, by 2022 the Indian government hopes to enable fixed line broadband access to 50% of households across the country, 100 Mbps broadband on demand to all key development institutions, provide 10 Gbps connectivity to all Gram Panchayats of India. These ambitions will be realised through creating a ‘fibre first’ initiative, promoting collaboration models involving state, local bodies and private sector, as well as incentivising and promoting fibre connectivity for all new developmental construction.

The telcos will surely be rubbing their hands together in anticipation of the opportunity. Fixed broadband infrastructure is an expensive game, though love and care from the government, as well as subsidies and potential tax benefits, will certainly offer opportunity to deploy infrastructure, new customers and revenues. Over the next couple of months, the government will aim to create a National Digital Grid, through the establishment of the National Fibre Authority, building Common Service Ducts and utility corridors, facilitating development of Open Access Next Generation Networks, as well as standardising costs and timelines.

Broadband offers a significant opportunity for the telcos who have seen profit margins decimated by the entry of Reliance Jio. With such low broadband penetration, the land grab for customers will be a vicious one, though with higher ARPU the rewards are quite clear.

From a global perspective, increased broadband penetration will certainly offer India a greater opportunity to play a more notable role in the global marketplace. This is looking at the global question outwardly; there will be a number of international businesses keeping an eye on developments here. Should broadband accessibility increase, companies like Netflix will almost certainly be lining up new products and tariffs. This in turn will stimulate the Indian creative industry, as a cornerstone of the Netflix strategy is to create local content.

The mobile revolution kicked off by Jio’s disruptive pricing proved to be a catalyst for India in the international digital economy, though increasing broadband accessibility and penetration could have the same impact. India has been an interesting market over the last 12-18 months, and with broadband now being addressed, it has recaptured our attention.

Jio leapfrogs Idea and Vodafone for second place in India

The Telecom Regulatory Authority of India (TRAI) has unveiled the monthly growth statistics for July and India is still the market which keeps giving.

Looking at the wireless segments to start with, Jio is once again dominating. Overall, the market grew by 10.5 million subscriptions taking the total to 1.15 billion. This number is already pretty staggering, though when you consider the total population of the country is over 1.3 billion there is still room for growth. In most developed markets the mobile penetration (the total number SIM cards) exceeds 100% of the population, while there are numerous cases of this percentage going north of 110%. Looking at these statistics in the simplest of terms, there is still potential for another couple of hundred million subscriptions in the country.

Of course, Jio is capitalizing most from the insatiable appetite of the Indian digital society. When looking at the total number of subscriptions secured by the telcos, Reliance Jio captured roughly 91% of the new customers, boosting its subscription base by 11.7 million. Amazingly, the 609,000 subs captured by Vodafone or the 313,000 attributed to Bharti Airtel are nothing more than footnotes; how many markets are there were you could say that!

The end result is continued momentum for Jio. As you can see below, Jio has leapfrogged both Vodafone and Idea in the market share rankings. That said, with the much-anticipated merger on the horizon it won’t be long before the combined entity hits top spot.

Telco Net Adds Market Share
Reliance Jio 11,796,630 19.62%
Vodafone 609,974 19.3%
Bharti Airtel 313,283 29.81%
BSNL 225,962 9.8%
Idea 5,489 19.07%
MTNL -9,914 0.3%
Reliance Communications -31,814 0.004%
Tata -2,357,690 2.1%

Perhaps the most amazing aspect of these statistics is in the broadband market however. The staggering growth of the mobile segment will continue for at least the short- to mid-term future, though with a total of 22.2 million broadband subscribers there is an incredible opportunity for the right offering.

Just to put these numbers in perspective, the broadband would have to grow 50-fold to even come close to the same scale as mobile. Admittedly, it significantly more expensive to invest in infrastructure for a future-proofed broadband network in comparison to mobile, but this is an area which seems primed for the right disruption.

Of course, with disruption comes uncomfortable truths. Jio might be on an upward trend, collecting subscriptions and hiring generously, though the consequence of this disruption has been market consolidation. In the most general terms possible, consolidation is never a positive for the job market, while the Financial Express is reporting job losses of 50,000-75,000 in the Indian telco market across 2018.