Archive for March, 2015

After the Spectrum Sale, Reliance Jio to head for Swap Deals

March 31, 2015

After the spectrum sale, the telecom venture of Mukesh Ambani-led, Reliance Industries, Reliance Jio Infocomm is now looking for spectrum swap deals. These deals may help the company to achieve adjacent frequencies with which it will be able to provide efficient 4G (Long Term Evolution) LTE services on its acquired 800 MHz band.

Views of analysts and Reliance Jio Infocomm

Analysts showed concern for Reliance Jio’s present 800 MHz acquisitions. They find it ill-suited for providing 4G LTE services. The spread out of 4G services will depend on the previous government’s approval on trading of spectrum and rules for leasing.

The company however feels that such concerns are incorrect. It said that a Notice Inviting Application (NIA) was given to telecom operators at the auction so that they give the best possible services.

A spokesperson of Reliance Jio informed, “The NIA allows and the DoT encourages operators to swap spectrum. Reliance Jio has in the past entered into swap deals with other operators with DoT’s approval to arrive at the most efficient configuration.”

Senior Principal at Dua Consulting and Former Chairman of VSNL, BK Syngal, feels that Reliance Jio may efficiently make some easy spectrum swaps with other telecom operators. He also said that such swaps will be much cheaper as against trading or any other option.

Analysts are anxious to see how Reliance Jio will use its non-adjacent airwaves in the 800 MHz band to provide their 4G services.

Brokerage IDFC said that if Reliance Jio has chosen 800 MHz band to launch its 4G services, with no continuous spectrum, then it is either hoping to buy more airwaves through spectrum trading or it may make use of technology to join two bands for providing 4G services.

Analysts at Bank of America Merrill Lynch is of the view that Reliance Jio will either have to acquire adjacent spectrum through swap deals or will have to liberalize it’s 800 MHz band in selected regions. A top executive of Reliance Jio however disagrees from such suggestions. He said that the spectrum that was sold in the recently ended auction was already liberalized.

Acquired spectrums of Reliance Jio

Reliance Jio bagged 49 units in 10 circles in the spectrum band of 800 MHz. It paid a total amount of Rs. 7,876.42 crores for the same. The company also acquired 5 MHz slots in 9 areas. It has adjacent spectrum in the band in only four regions, namely Madhya Pradesh, North East, Mumbai and Assam.

Reliance Jio had won broadband bandwidth of 2300 MHz in 2010 and is now gearing up to roll out its 4G services. It spent Rs. 13,000 crores for the same, five years ago. After that, Reliance Jio bought airwaves in the 1800 MHz band in February, last year for which it spent Rs. 11,000 crores.

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RIL soon to compete with Public Oil Retailers

March 23, 2015

It has been over five months that the Central Government deregulated prices of diesel in India. However, the private companies did not do much to compete against the state-run fuel retailers. It is now that the biggest private player, Reliance Industries Limited, has slowly begun to expand its activities.

Government measures

In October, 2014, the NDA Government took its first major step by deregulating the diesel prices. The government took this step to relax its burden over subsidies and on seeing the global scenario of decreasing crude prices. In 2010, the petrol prices were decontrolled. However, the private companies are only now focusing over expanding their business activities.

Unaffected State-run companies

The State-run, Indian Oil Corporation (IOC) feels no threat from the private players. It is untouched by their nominal presence. Besides, it has immense faith in its loyalty programs and other initiatives to survive in the competition.

From April, 2014, to January, 2015, 71 Thousand Metric Tons (TMT) of petrol was sold by Reliance Industries. It also sold 36 TMT of diesel. Compared to this, Essar sold a lot more. It sold 179.5 TMT of petrol and 209 TMT of diesel. There is a huge gap in the figures of private and state-run retailers. IOC sold 6,816 TMT of petrol and 23,170 TMT of diesel.

Reliance as a threat

As of now, the state-run companies have been dominating the fuel market. The deregulation opened avenues for private companies like Reliance Industries to sell the fuel directly to the customers. With its varied techniques and customer service, the company may attract a lot of customers. It is also good at making quick decisions, better execution and has access to products from its refinery.

One of the major reasons that the state-run retailers are not scared of the competition is, its biggest threat, Reliance Industries is moving at a slow pace.In 2006, Reliance Industries had taken over 14.3% of market share in high-speed diesel.

An executive of Reliance Industries said that the company was trying to be extra cautious and sure of where the crude will settle. It also wants to know how the government will manage things when the oil price may rise again.

Crude prices had set a record by reaching at $147 per barrel, in 2008. The then government offered subsidies to state-run companies which then sold fuel to customers at low rates. This had shaken the business of private companies. Reliance Industries has thus now decided to take each step with patience and deliberation.

In the beginning of this year, Reliance Industries had given an earnings presentation in which the company said that it wants to create a replica of itssuccess of 2006. It will make use of technology and consumer schemes for this. With this, the company hinted that it will soon bounce back in business. Reliance Industries owns 1,400 stations. Out of these, it has already opened 230 outlets. The company also aims to reopen the others within a year.

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11 Start-ups to be groomed by Reliance

March 12, 2015

Reliance Industries Limited informed that it had rolled out an accelerator program along with Microsoft Ventures during the end of 2014. Under this program, the organization mentored 11 upcoming enterprises belonging from distinct sectors, as a part of their first batch.

GenNext Innovation Hub

The initiative is known as GenNext Innovation Hub. The program initiated in September, 2014 and 267 start-ups showed their interest by applying for the same. Out of these, 11 were selected. A panel made up of executives from Reliance Industries, Microsoft and venture capitalists shortlisted the 11 enterprises. These companies underwent a grooming and mentoring session extending up to four months. This course was conducted at Reliance’s Navi Mumbai facility.

The selected start-ups work in the sectors of education, transportation, HR, healthcare and retail. During the training sessions, the companies were given guidance and varied dynamics and market insights were taught to them.

The Hub is meant to guide the start-ups to sustain and excel in the global competition. It aims to give a shape to their ideas and help them build a strong customer base. Few selected start-ups will also get financial aid from GenNext Ventures, after the program.

Under the program, Microsoft helps in conducting workshops and arranging meetings while Reliance Industries provides the infrastructure and involves its heads of departments to conduct the workshops.

Views of Reliance

Reliance Industries has set up a company that invests in ventures, known as GenNext Ventures. At the time when the new project was announced, Microsoft Ventures was operating an accelerator lab in Bengaluru.

The Mukesh Ambani-led company said that it feels pride to inform that 11 start-ups have successfully graduated from their first batch. They have also planned a strong business strategy to showcase in front of a group of venture capitalists, experts from the industry and corporates.

RA Mashelkar, being the board member of Reliance Industries and Chairman of GenNext Ventures, expressed his happiness on the fact that many businessmen of this batch had quit their lavish jobs in the country and overseas, only to come up with innovative companies that address global needs.

Graduating companies

The upcoming companies that have graduated from the course consist of start-ups that provide technological solutions to many companies. One of them is CarIQ that provides a platform of collected cars. It helps the customers connect with the cars through internet. The Founder and Chief Executive of CarIQ, SagarApte, said that the program has assisted them in overcoming their ‘frog in the well’ mentality. They now can dream bigger and make larger goals.

Another one is Mocioun, which belongs to the consumer section and provides a mobile application that helps in organizing group activities. Some other companies are Piron Corp. Inc. that integrates technology in the process of teaching; Light Information Systems Pvt. Ltd. that created a language processing engine which gives answers to the users and not web links; and Insaas Software Pvt. Ltd that helps companies in online recruitment process.

These 11 chosen companies have also been awarded with business deals from big names like Flipkart, DotCabs, Fortis, Raymond, Snapdeal and Credit Suisse.

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Spectrum Auction to Begin from Today

March 4, 2015

The government has opened bidding for airwaves from today. These include airwaves that were already in use. As a result, the big telecom operators like BhartiAirtel Ltd. and Vodafone Group Plc. will be competing with Reliance JioInfocomm in the auction.

Mukesh Ambani’s Reliance has shown its strong stand by giving the largest amount for deposit. It has given a bank guarantee of Rs. 4,500 crores; followed by Airtel with Rs. 4,300 crores and Vodafone with Rs. 3,700 crores.

Expectations from the auction

The airwaves that will be auctioned provide service to over 300 million customers. It is predicted that Airtel, the largest carrier in the country, followed by Vodafone may spend around $4.5 billion for the spectrum.

The government sold 22 regional circles that had varied dates as expiry. In the previous year, it was able to raise Rs. 612 billion from airwaves. This year, the government is hoping to raise Rs. 64,840 crores with 20 circles up for sale. These circles cover around 1.1 billion people. The auction will take place for 2 weeks and will decide the fate of survival for some telcos.

Around two-fifth of the spectrum belong to the 900 megahertz (Mhz) band. Signals travel quickly in this band with less number of towers, thereby improving the voice quality. Hence, this spectrum will be the most preferred one.

The four largest operators currently have control over this band. Besides Airtel and Vodafone, these are Idea Cellular Ltd. and Anil Ambani’s Reliance Communications Ltd.

Plans of Reliance

In previous year’s auction, Reliance Jio had acquired 1,800 Mhz spectrum. It also secured 2,300 Mhz airwaves in 2010. These two spectrums will enable the company to provide high speed data. Ambani wishes to build the biggest broadband network of the world. The company is thus looking forward to capture 900 Mhz band as well, which supports both voice and data.

Government plans

Government of India has announced its $18 billion project of Digital India. It aims to provide people with high-speed data and online government services. With the money received from the auction, the government plans to bridge the national budget deficit.

Post the spectrum scam, wherein 122 permits were cancelled as they were given illegally and at very low prices, India modified its rules in 2012.

Risk for companies

6 coverage areas of Airtelare on sale in the auction. These contribute to 35% of the total revenue collected from its cellular phone services. For Vodafone, it is seven circles that have 44% share in the revenue while Idea has the largest 73% revenue of cellular phone service at stake.

Impact of the auction

The phone bills of the consumers may soar as the telecom companies will seek to repay their loans, they took to buy the spectrum. A hike of 5p/min is expected. However with the competition getting stiffer, it will be difficult for the companies to increase the rates.

If a company will lose its previously acquired band then it will have to shut its business in that area. As a result, the subscribers of that region will have to search for other cellular operator.

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