Dec
31
RCom Rolls Out GSM Service in 11000 Towns
Filed Under Indian Companies, India Business, Mobile Telecom, India Investment Opportunities, Tier-2 Cities | Leave a Comment
In one of the fastest network roll outs to cover one billion people, Reliance Communications (RCom) on has unveiled its nationwide GSM mobile service across 11,000 towns.
The rollout with an investment of Rs 10,000 crore, makes RCom the only national player to offer both CDMA and GSM services to customers.
- RCom plans to execute both CDMA and GSM through an integrated operation.
- RCom’s CDMA network spans more than 20,000 towns and 450,000 villages, with around 60 million subscribers.
- The plan is to double RCom’s GSM coverage from 11,000 towns and three lakh villages to 24,000 towns and six lakh villages over the next few months, involving an incremental capex of a few thousand crore rupees.
Anil Ambani of Reliance ADAG and RCom said:
“In 2003, Reliance changed the landscape of telecom in India. Year 2009 will be no different. The company is targeting 100 million subscribers to use its network. We have done in 15 months what the industry has been trying to do in 15 years. Through the GSM launch, RCom plans to rewrite the rules of the industry in terms of pricing, proposition, value added services.”
- RCom plans to procure seven million handsets for Rs 3,850 crore. For the first year of GSM operations, RCom has set a target to sell 15-20 million handsets.
- RCom will use the existing 2,500 retail stores to push its new strategy.
Quick Facts On Indian Mobile Telecom Industry:
- The Indian mobile handset market is expected to cross 100 million units this year against last years estimated size of 70-75 million units.
- The GSM market serves 75% of the about 300 million mobile customers in India, and adds approximately nine million users every month.
Nov
28
Indian Real Estate - Time for bigger Investments & Change
Filed Under Indian Government, Tier-3 Cities, Indian Companies, Emerging Sectors, India Business, Tier-2 Cities, Metros, India Investment Opportunities, India Real Estate | Leave a Comment
The Times of India reports of a conference in Chennai hosted by Dun & Bradstreet about ‘Dynamics of the Real Estate Market: The Investment Perspective’. As per the conference, the Indian Real Estate Market is pegged at around $14 billion. Although the article presents a summary on the major discussions, 2 major points of discussion emerge.
1. Foreign Investment into Real Estate
This aspect has been well explained in previous posts on this website. The article on FDI in India puts Real Estate as one of the top 3 attractions for Investment.
And the article on Indian Commercial Real Estate also discusses the potential there is in Real Estate. But just to add an interesting fact here – Financial Institutions are among the biggest investors in Real Estate Projects in India.
Merrill Lynch is paying about $377m for a 49 per cent share in a portfolio of residential projects managed by DLF- Indian’s largest listed developer, in one of the biggest deals of its type in India. The transaction, Merrill Lynch’s sixth in Indian real estate, brings its investment in the sector to about $550m.
Late last year, JPMorgan announced its first investment on its own balance sheet in Indian property, paying $60m for a stake in a residential project being developed by Mumbai group, Lodha Builders.
2. Innovative products by Financial Institutions
The Times of India article quotes S. Sridhar, Chairperson and Managing Director, National Housing Bank:
“the real estate community needs to think out of the box and offer wide range of products, which suits the pockets of even people in the low-income group.”
Perhaps new financial products are needed various rate increases by the Reserve Bank of India (RBI) had serious impact for the retail loan segment.
Borrowers have declined in number and default has increased as the interest rates became unbearable and the burden of a rising EMI became too much for the average borrower. The resulting slump has made it difficult for the banks to match previous year’s record breaking credit growth.
Banks have tried to counter the retail loan growth decline by offering discounts on home loan and other retail loan interest rates and associated processing fees during this festival season. This led to a small increase in retail loan off-take, but the results didn’t match the expectations. Home loans have been worst hit - with the segment not taking off as expected, even after festival-season discounts.
About the Author: Ishan Sethi is a Sales & Marketing professional with keen interest in emerging sectors and India business opportunities. He is an alumnus of Indraprastha University and IIM Lucknow. He can be reached via the Contact page.
Nov
28
Mobile Carriers in India- What next? part2
Filed Under India Business, Emerging Sectors, Tier-3 Cities, Indian Companies, Internet in India, New Media, Metros, India Investment Opportunities, Mobile Telecom, Tier-2 Cities | Leave a Comment
Let’s continue the discussion from the previous post. The continued rapid growth of the mobile subscriber base in India presents a variety of management challenges, and as an observer, it is sometimes visible which company’s management is performing better.
So far, Airtel and Vodafone have been engaged in a battle of Call Rates, Lifetime validity schemes, Recharge Coupons, everything to do with a financial benefit to the consumer. Here are a few interesting facts, from the International Data Corp(IDC) survey conducted on the ‘Mobile Service Usage and Satisfaction’:
- The average waiting time to speak to a customer support agent is a little below three minutes.
- When probed on billing, nearly one in every six (18 per cent) mobile users was dissatisfied with the billing system of his/her service provider. This is way off the TRAI guideline that billing errors should be less than 0.1 per cent.
- More than half the users with a billing related problem perceive ‘wrong amount being charged by the operator’ as the prime reason for dissatisfaction.
All these refer to Customer Service problems.
Let’s draw an analogy here: Mobil Oil was in a price war for long at its US Refueling Stations. Mobil’s management always considered price as the single most important criterion for a customer to walk into a station. In a market survey conducted in the 90’s they realized that 80% of its customers had customer service as top priority, and only 20% wanted price to be a factor. Mobil then went into a major program to reorganize a Refueling Station into a more customer-friendly place.
They contacted a Formula 1 team for speed in refueling, and to understand how the team in a Pit Stop worked so well together. They visited Ritz Carlton Hotels to get more know how on how to treat a customer better, and lastly visited Home Depot- a specialty US retailer, to understand how to build long term relations with customers.
On the face of it, an oil company has nothing to do with any of the 3 companies just mentioned, but within a year of making changes, customer satisfaction rating went above 95%. Just imagine!
Now even the Indian mobile carriers want the same high levels of customer loyalty – but don’t seem to be taking specific steps to make it happen. If some action is already being taken, then it’s weak and not visible. After all, given the pending number portability policy that will be implemented it seems logical for the companies to make every effort to hold on to existing customers.
And for these reasons, the biggest opportunity for any Mobile Wireless Carrier in India today is in building a better Customer Service Infrastructure. As surveys worldwide have shown, it’s 5 to 10 times more expensive to get a new customer than to keep an existing one - Business Management 101!
About the Author: Ishan Sethi is a Sales & Marketing professional with keen interest in emerging sectors and India business opportunities. He is an alumnus of Indraprastha University and IIM Lucknow. He can be reached via the Contact page.
Nov
28
Mobile Carriers in India- What next? part1
Filed Under Emerging Sectors, Tier-3 Cities, Indian Companies, India Business, Internet in India, Metros, India Investment Opportunities, Mobile Telecom, Tier-2 Cities | Leave a Comment
5.5 million new customers are subscribing to a mobile connection each month in India. At the end of December 2006, the number had reached 150 million subscribers. According to a research agency iSuppli Corp, the subscriber base will triple by 2010 and reach close to 480 million, thanks to rural penetration of the mobile carriers.
With such a huge market to capture, the pie seems big enough for all wireless carriers. This leaves little incentive for any mobile carrier to try and distinguish themselves from the others, since with increasing consumer base; the revenues are bound to come.
But from a marketers’ perspective, here’s the big challenge: “Should we allow the market to grow in their natural course? Or should we do something to develop the market and pull ahead from the rest of the pack?”
In the International Data Corp(IDC) survey conducted on the ‘Mobile Service Usage and Satisfaction’ only 3 among the 11 mobile service providers emerged as the most preferred operators – Airtel, Vodafone and BPL Cellular. While Airtel and Vodafone are two national brands, their marketing strategies are quite different.
While Vodafone (or Hutch) has maintained a classy positioning, beginning with the “Hi! We’re Hutch” ad campaign, to the cute puppy following you around, Airtel has forever been the Indian brand appealing to the masses, with bollywood icons like SRK and AR Rahman.
But today, it doesn’t matter. As per the survey results as many as 28 per cent of users shift services, even if they were satisfied with their present provider — lured by an even better service or (more likely) by special offers! So this is looks like one example of where all the brand positioning effort is not helping out.
About the Author: Ishan Sethi is a Sales & Marketing professional with keen interest in emerging sectors and India business opportunities. He is an alumnus of Indraprastha University and IIM Lucknow. He can be reached via the Contact page.
Nov
15
Commercial Real Estate- Investment Opportunity in India
Filed Under Emerging Sectors, Indian Government, Tier-3 Cities, India Business, India Investment Opportunities, Tier-2 Cities, Metros, India Real Estate | 1 Comment
Merrill Lynch estimates that real estate industry in India will grow to $ 90 billion by 2015. This growth is quite realistic as most experts predict a growth rate in excess of 35% year on year. These numbers are attracting a lot of attention by the investors worldwide and the media nowadays.
Let’s analyze the underlying fundamentals that will provide the impetus to growth.
India’s population is approximately 1.16 billion at present and it is expected to reach 1.4 billion by 2030 and 1.6 billion by 2050. In addition, India’s GDP growth is forecasted to remain around 8% for next decade or more. McKinsey Global Institute just came out with a paper that stated that the Indian middle class will be around 400 million by 2020.
It is important for us to scope out the discussions when we speak about the commercial real estate. I am limiting the scope of this discussion, for sake of convenience, to urban areas of more than 1 million residents as these would focus of majority of activity in terms of commercial real estate.
From a DB research report last year (2006), there are 44 such urban clusters in India populated by more then 150 million people. According to a UNDP projection, degree of urbanization will grow to above 40% by 2030. Projecting the growth of these urban clusters in the same period, we can predict that closer to 450 million people will live in those 44 clusters by 2030.
In this calculation we are not considering the number of cities that will be part of the 1 million plus cluster by then. So the population of major urban clusters is likely to grow by three times in just over next two decades.
Taking a simplistic view, all these people are going to need place to live and all the industries will need more structures to expand in. And then there is the whole auxiliary & retail growth that will be a direct result of increase in prosperity and number of customers. And this will drive the commercial real estate sector for next two decades justifying the boom we are witnessing in present times.
There is good news for the investors. Regulatory authorities are making effort to reduce the regulation and the entry barriers in this sector. Funds targeted for the real estate sector are a good way to begin. Also the relaxation in the norms for FDI (Foreign Direct Investment) is an excellent initiative. Already, the year 2007 has seen substantial increase in the amount of FDI dedicated to this sector.
And two days back, on November 12, 2007, the Reserve Bank of India (RBI) has also authorized forex to be utilized to fund infrastructure projects. Overall, a number of steps are being taken to enable the growth to happen in this sector.
For foreign investors/companies wishing to participate in this Indian real estate boom, the most practical and rapid way is through partnering some Indian company because it will readily provide the ‘must-have’ local insights required to make successful real-estate investments.
Nov
8
Real Estate in India- Tier2 cities growing rapidly
Filed Under Emerging Sectors, Tier-3 Cities, Indian Companies, India Investment Opportunities, Metros, India Real Estate, Tier-2 Cities, Uncategorized | 1 Comment
The recent slowdown in the US economy has led to a similar slowdown in most developing economies. But the bullish Indian economy seems to be moving only in one direction, up! And the Indian realty sector is following the same pattern. Prices are still inflated and with both commercial & non-commercial realty demand on the rise, the trend seems set to continue.
Real Estate prices initially soared in the Metros, then the effect spilled over to the suburbs and now it’s moving on the Tier 2 cities. For example, prices kept escalating in Delhi for a long time, and then the effect spilled over to Noida and Gurgaon. But now the rise is in tier 2 cities of neighboring states such as Agra & Lucknow (UP) and Chandigarh, Mohali, Panchkula & Manimajra(Punjab). These cities are coming up in a big way thanks to the entry of huge real estate developers like DLF, Sahara, Parsavnath, Omaxe etc. These developers simultaneously build up huge shopping malls, commercial complexes and housing complexes/townships. This provides incentive to people to move in from over populated metros, by providing them with similar living conditions, in a less crowded environment. In Lucknow itself, in the last 2 years, 2 new malls including multiplexes have come up. Down south, a similar boom is being experienced by Cochi(Kochin). Besides being a busy port since time immemorial, it has now become a commercial hub with high-rise apartments and multi-storied commercial centers.
Looking at the exciting new pace at which the sector is growing, a number of new players have jumped in. Godrej began Godrej Properties in 1990, and it has moved forward from simply building other Godrej plants and properties to now making a Rs.2000 Crore IT plant in Kolkota. Even Emami announced its plans to enter into Real Estate in March this year.
Real Estate has always been one of the most preferred investment options in India; it would seem a perfect time to invest in property in a tier 2 city. Property ownership, apart from having highly positive psychological implications, also provides tax and financial advantages. The current slowdown has affected the rate of inflation in prices, but we know that sooner rather than later the prices will rise, and the payoffs will begin!
