Reliance Communications Anil Ambani says the third-largest mobile phone operator will bet on 3G data growth for future.
“This positive change in the ecosystem is creating huge opportunity in data and wireless broadband services. 3G services are finally starting to take off, primarily for high speed mobile internet usage,” Anil Ambani said.
The case for huge growth comes from the fact that the country has a voice penetration of over 70 percent, whereas broadband penetration is less than 1 percent.
Anil Ambani is confident of strong growth going forward, based mainly on expected surge in data market and improving industry fundamentals.
In a letter to shareholders in Reliance Communications annual report for 2012-2013, Anil Ambani said: “The opportunities at hand point to a strong growth path, supporting a positive outlook. The Indian data market is expected to boom from Rs 5,000 crore annually now to seven times that size in just four or five years.”
India has about 15 million broadband customers, the lowest in Asia-Pacific, compared to about 900 million voice subscribers, thereby underlining the potential of data growth.
“Now voice is shifting to a backseat and data and video are emerging as the core focus areas. Reliance Communications is vibrant to this shift,” the company said in the report.
Anil Ambani noted that despite current challenges to India’s economy, where growth has slowed to nearly a decade low, the domestic telecom industry’s fundamentals are getting better, in the form of lessening competition, easing pressure on voice call rates, and increase in data traffic.
In fiscal 2013, Reliance Communications posted net profit of Rs 672 crore, down 28 percent on year, on revenue of Rs 21,778 crore, up 7 percent.
“We intend to remain focused on profitable growth and to improve operational efficiency,” said Ambani.
The company is also open to growing through acquisitions.
“Hectic merger and acquisition activities to consolidate the market share would be the new buzz in the market place. We are open to new acquisitions and opportunities to consolidate,” the company said.
Reliance Communications has 131 million customers as the surrogate for the company’s potential. During the financial year ended March, the company had over 39,000 corporate clients and doubled its sales to government outfits.
The company undertook network upgrades in Asia, Europe, the US and the Middle East regions enabled the company to offer economical and scalable services to our customers.
At present, Reliance Communications is only pan-India telecom operator with complete Indian ownership. It had favoured the government’s move to allow 100 per cent Foreign Direct Investment in the sector.
It said consolidation in the sector has started taking place, following the cancellation of 122 telecom licences last year by the Supreme Court in the 2G spectrum allocation case.
In quite a few circles, the numbers of operators has reduced from the earlier 10-12 down to 8-9 operators after the exit. This has resulted in reduced competitive intensity and lessening of downward pressure on tariffs
“We have seen a tremendous growth in our wire line broadband subscriber base both in terms of quality and quantity. Our Internet subscriber base has crossed approximately seven million. We command 25 percent of market share at second position,” the report said.
As customers now prefer higher bandwidth plans, as per the operator’s assessments, it is also looking to augment its capacity.
“Till, a few months back, there were few wireless networks capable of offering broadband broadband services, the smartphone prices were too steep and usage charges also acted as a deterrent for mass scale adoption. Now, the wireless broadband ecosystem is improving fast,” said Ambani.
The tide turned towards wider data adoption after most operators with 3G spectrum. Ambani says that smartphone suppliers have become competitive resulting in device pries coming down and applications and content are being generated to target specific user segments, with significant increase in adoption.