If you cannot read this message, please click here
May 22nd, 2014, Vol:1

Editor's Words

By Sridhar Pai, ceo, Tonse Telecom

DoCoMo in India – Timing is Everything


Emerging market dynamics can be ruthless and if that market is India, apart from all the smarts, right contacts, public relations, tons of cash, one might still need not so obvious things like sorcery to succeed. Early May, Japan’s DoCoMo decided to exit Indian alliance with Tata (now famous Tata DoCoMo, fully integrated multi-services brand) after five gruelling years and large investments in brand, network and marketing dollars went down the tube.

When DoCoMo entered the market with a 26.5% stake in Tata Teleservices for $2.7Bil in 2009, no one really gawked because it was the heady days of mobile: India was adding several million subscribers every month over a base of about 500 million, every major CSP (cellular service provider) wanted to be a player in India, multiple rounds of spectrum were being made available (although the rationing of 4.4MHz / or 5MHz per circle was a pittance compared to global standards) and was the fastest growing mobile market in the world.

Five years later, in 2014, after perhaps another billion dollars in sales, marketing and customer acquisition /service efforts, DoCoMo has decided to throw in the towel, and walk away. Terms of the contract requires that Tata pay back at least 50%of the original investment ~ $1.35 billion owing to a sell-back to founding partner clause which it decided to exercise.

The timing of DoCoMo’s entry is quite unfortunate: 2010 was the beginning of the end of the good days in Indian telecom. The 2G scam broke out, the judicial system stepped in because an inept government couldn’t handle it, smaller telcos fled, joint ventures broke down, new licensees stalled investment and progress, courts cancelled 122 illegal licenses, and the market fell into doldrums. The period from 2011-14 was the worst phase of a completely bottomed out market with neither impetus nor momentum to progress.

In this market, over this period, DoCoMo’s Indian venture built out a 62 million subscriber base, built a revenue base of about $1.79bil (as of 2013), incurring a loss of about $800 mil (for year 2013) accumulating a debt of about $3.9 bil. Continued uncertainty of spectrum policy / pricing (active sharing unclear), business uncertainty regarding exit (merger policy very new), delayed decision making and unfriendly business practices by government (arbitrary interpretations of taxation rules retroactive from a historic base year) paralyzed DoCoMo’s business planning and added level of uncertainty the company wasn’t able to handle. It gave up choosing to exercise its safe exit option, where it would cut its losses and exit.

To make it worse, DoCoMo’s exit is ill-timed too. Riding on the back of a strong single party dominated majority, a new government is taking over within 2 weeks of DoCoMo’s announcement to exit. This government represents positive movement for the economy, business friendly environment, a mandate built upon the promise of growth and development. It is expected to represent everything the previous regime was supposed to but did not deliver. Of course, Tata DoCoMo alliance may have failed to cross its internal hurdle rates by a large factor and / or it could have pulled the plug for other reasons. Still, there is no denying that the signs of a mobile broadband growth trigger is likely sometime in 2015 are visible.

3G prices have fallen and will be soon approaching mass market levels. Airtel just launched a 4G data plan in Ludhiana for Rs100 per month and Reliance Jio magic is believed to be a big kick-starter. 3G handsets are already breaching $60 mark and will likely take off by 2014. India is one of the world’s fastest growing social media markets and most underserved broadband markets too. DoCoMo will exit a serving base of over 62 mil subscribers and walk away, while players such as Reliance Jio have yet to begin the race.

Perhaps DoCoMo ill-timed the Indian market twice – upon entry and exit too. A more detailed analysis of Tata Teleservices Maharashtra limited (TTML) is included in this edition of Tonse MBI.

Sridhar Pai runs Tonse Telecom, a Bengaluru-based telecom research and consulting house that is a research partner to Light Reading India

Huawei Pitches for IPL T20: Backs Bangalore's RCB

Huawei asserted its position in India as not yet another telecom equipment vendor but a strong player with a commitment to stay in the market for the long haul. The Chinese giant has now taken a deeper view of the market and has unleashed a series of measures to enhance its corporate social responsibility. Huawei India has now introduced a progressive student scholarship and educational fund for progressive Indian students who want to pursue advanced education. The company has also engaged in high-impact initiatives such as investment in manufacturing and continues its world class research initiatives in India. The current IPL Cricket Tournament also has Huawei as a premium sponsor of Bangalore’s RCB team. The bright Huawei logo is un-missable on the front of RCB jerseys worn by players.


Telstra and Ericsson Conduct Live Demo Of 450Mbps LTE-A
Australia’s Telstra and Ericsson have claimed to have conducted the first live demonstration of 450Mbps transmission over an LTE-A network. The companies used carrier aggregation to combine one 20 MHz block of 1800-MHz spectrum with two 20 MHz carriers on the 2600-MHz band. LTE Category 9 compatible devices from Aeroflex were used for the trial. more here
Reliance Jio and Tower Vision Sign Tower Infrastructure Sharing Agreement
Reliance Jio Infocomm Limited, a subsidiary of Reliance Industries Limited (RIL) and Tower Vision India have entered into a MSA (Master Service Agreement) for tower sharing. Under the agreement, Reliance Jio would utilize the telecom tower infrastructure of Tower Vision to launch its services across the country. Tower Vision has a portfolio of 8,400 towers in India. more here
DTAC Picks Alcatel-Lucent for 100G Upgrade
DTAC has chosen Alcatel-Lucent Agile Optical Networking to upgrade its existing 3G network and lay the foundation for a 4G LTE network that will eventually deliver ultra-broadband mobile access to more than 40 percent of the Thai population. New optical network will support DTAC’s mobile subscription growth rate of 6 percent per year plus the large number of visitors bringing their own devices into the country, providing all users with fast broadband needed for increasingly sophisticated high-bandwidth mobile services such as streaming video and data applications. more here
Broadnet and Huawei Sign IP Core Network Enabled 400G Technology Contract
Huawei, a global information and communications technology (ICT) solutions provider, and Broadnet, a provider of fiber-based data communications in Norway, today announced the launch of the Nordic’s first, and Europe’s biggest, IP core network enabled for commercial use of 400G technology. The Huawei NE5000E 400G core router allows flexible sub cards to be removed and re-installed, and supports flexible combinations of 100GE, 40GE, and 10GE boards, boasting a smooth extension to Terabit/s-level capability for each slot. The Huawei NE5000E core router will help Broadnet to optimize the network architecture and make it more flexible, reduce the bandwidth cost of each bit, and improve customer satisfaction. more here
PTGi-ICS Selects Dialogic’s Control Switch System to Transform Network
Dialogic Inc., a Network Fuel company, announced that PTGi International Carrier Services selected Dialogic’s Control Switch System to upgrade its current switching platform to help shed its network of the limitations imposed by its legacy infrastructure. With its latest Control Switch release, Dialogic has introduced additional IMS/VoLTE-ready media gateway control function (MGCF) capabilities that include Diameter support for charging and postpaid applications as well as support for CAMEL services such as mobile number portability. This new reduced footprint Control Switch configuration gives service providers, even with more modest initial traffic requirements, a future-ready, cost-effective, carrier-class switching platform. more here

About Tonse Telecom

Tonse Telecom is a research, consulting and advisory services organization focusing on the India telecom sector. Tonse Telecom enables telecom equipment vendors, ISVs, infrastructure developers and investors for success in the Indian telecom marketplace.

Tonse Telecom has onboard, a team of reputed senior industry executives and consultants who provide advisory services on specific projects. Tonse covers a broad spectrum of telecom technologies that include 3G, Wi-Fi /BWA, IMS, FMC and Triple Play, VoIP, Mobile VAS, End-device Applications and Mobile Content.

home  |  consulting  |  Reports  | case studypress release  |  downloads
©2013 Tonse Telecom. All rights reserved. Read our legal terms and disclaimers.
Subscribe Unsubscribe