Although the ADA group company does not see a 'tariff war' in 3G services, the launch of broadband services by Reliance Infotel will be the most important factor in determining the tariffs for high-speed data services
Telecom services provider Reliance Communications (RCom), which launched its third generation (3G) services in four cities today, has said that it does not see any 'tariff war' similar to 2G voice services in the newly-launched 3G service.
Syed Safawi, president and chief executive for wireless business at RCom, said, "The tariff war that was witnessed in 2G voice services is now subsiding. In the past several weeks, no one has reduced call tariffs drastically. This, I believe, would become applicable to 3G tariff as well and I do not see any kind of tariff war in this segment."
However, not many (in fact, only four companies, including state-run MTNL and BSNL) have launched 3G services. The Indian government has restricted the number of 3G services providers in a circle to four, one of which has to be a state-run company. As of now, Tata DoCoMo and RCom, are the only private telecom players who have launched 3G services.
Other companies waiting in the wings to roll out broadband wireless access (BWA) services across the country are Reliance Infotel Ltd, a unit of Reliance Industries Ltd which was the only company to win the recently-concluded BWA on a pan-India level. Therefore, the launch of broadband services by Reliance Infotel would be interesting to watch out for any likely tariff war in the high-speed internet space in India.
RCom has said it would offer simple and transparent tariff plans without any hidden charges, in the range of Rs199 to Rs499 per month. Its current tariffs for 2G voice and SMS will remain unchanged, RCom said in a statement.
Currently, all telecom companies earn over 85% of their revenues from voice-based services while the rest comes from non-voice-based or value-added services, including data. "In the next few years, RCom would earn about 30% of its revenues from non-voice services," Mr Safawi said.
RCom, which won the license to provide 3G services in 13 circles, today launched its services in Mumbai, Delhi, Kolkata and Chandigarh. The company will roll out the 3G services in 13 circles, where it holds the license, by the end of FY2011, said Prashant Gokarn, head for 3G services, RCom. "The company is targeting a national footprint of Reliance 3G services through associations with other like-minded, quality 3G licensees in the balance nine telecom circles, during the course of next year," he added.
Mr Gokarn said, RCom's 3G network is capable of offering peak speeds of up to 21 megabits per second (Mbps) and the network can be upgraded to provide services of up to 42Mbps in future. RCom's 3G network has been designed to offer blanket coverage in every town being connected on 3G, with all its 3G sites connected through IP backhaul to provide maximum download speeds and minimum latency, he added.
While the existing subscribers of RCom can access and use the 3G network on their supported device, they can opt for Universal Subscriber Identity Modules (USIMs), which are known to be super secure SIMs for mobile commerce related applications. The company said there is no need for its current subscribers to change their SIM cards and that they can access 3G services depending upon their handsets.
At present, there is not a single company that offers a mobile handset to support speeds of up to 21Mbps. However, RCom is offering a dongle (USB modem) that has the capacity for such high speeds while using it with a laptop or desktop computer.
RCom has collaborated with Nokia for devices, with Facebook, Nokia and Ericsson for applications, and with Universal Music for content and Motricity for the Web portal.
Earlier in May 2010, RCom emerged as the winner in 13 telecom circles during the 3G auction, including the key metros of Delhi, Mumbai and Kolkata. RCom holds 3G licenses in the telecom circles of Delhi, Mumbai, Kolkata, Punjab, Rajasthan, Madhya Pradesh, West Bengal, Himachal Pradesh, Bihar, North East, Jammu and Kashmir, Orissa and Assam.
Research reports have suggested that there could be a fall in power demand, resulting in a surplus power scenario in India in a few years from now. But is this happening sooner than expected?
Overall power generation in November this year was up by 5% year-on-year to 62.5 billion units, but month-on-month generation fell sharply by 11% on account of a fall in demand, according to the latest data from the Central Electricity Authority (CEA).
As per the data for November 2010, peak deficit fell from 12% in November 2009 to 9% in November this year, helped by capacity additions over the past year. Overall energy needs grew only marginally-by 0.7% on a year-on-year basis-even while peak demand increase by 4%.
Month-on-month generation fell across all fuel categories (thermal, hydro, nuclear) as well as across sectors (for central, state and private power plants). An IDFC report points out that the "sharpest m-o-m fall was in hydro (-31%) and gas-based generation (-18.5%), while coal-based generation also fell 5.6% m-o-m."
In August, an ICICI Securities report said that 67 gigawatt capacity addition (over the next four years) would result in the power deficit dropping to low single digits and that this would put pressure on merchant power prices. With the supply expected to rise at a 10% CAGR till FY14E, ICICI had said that it expects the power deficit to come down drastically to just about 5% by FY14. Aggregate technical and commercial (AT&C) losses would come down to 25% by FY14E and if new thermal capacity would operate at say an 80% plant load factor (PLF) (against 75% assumed) there would be no deficit at all! (To read 'Merchant power: All plug and no play?' click http://www.moneylife.in/article/4/8794.html.)
In early November, Moneylife highlighted research by Religare and Macquarie which talked about rising PLFs but falling merchant power rates in October. (Read 'Utilities: Religare says PLFs up; Macquarie finds fuel concerns rule investor mindset' at http://www.moneylife.in/article/4/11144.html.)
IDFC's latest report points out that in November "NTPC's generation grew 2.7% y-o-y, but fell 9% m-o-m due to a sharp 23.6% m-o-m fall in gas-based generation; PLF of NTPC thermal plants for November 2010 was 85% compared to 89% in November 2009 and 88.6% in October 2010. Among private power producers, the highest fall was seen in the case of Jaiprakash Power's Baspa and Vishnuprayag plants (-47.8% m-o-m). GVK's Jegurupadu and Gautami power plants both reported a sharp fall in generation on year-on-year and month-on-month basis."
(This article is based on secondary research. The report is for information only. None of the stock information, data and company information presented herein constitutes a recommendation or solicitation of any offer to buy or sell any securities. Investors must do their own research and due diligence before acting on any security. Some of the opinions expressed in this article are the author's own and may not necessarily represent those of Moneylife.)
Medha Patkar insists that a project without environment clearance cannot be allowed to go ahead
After saving the Nav'is of Pandora, James Cameron was in India, talking about his desire to help Bollywood make 3D films. What better place for him to be at, than the plush Lavasa township, the latest hotspot in the raging battle for protection of the environment?
Strangely, a hearing on the matter at the Ministry of Environment and Forests (MOEF) in New Delhi on Thursday, was almost unattended by the media. The ministry has asked Lavasa Corporation to produce relevant documents and a detailed environment impact assessment report, which will be submitted to the Bombay High Court on 16th December.
Social activist Medha Patkar attended the hearing on behalf of the National Alliance of People's Movement (NAPM). But Ms Patkar did not want to speculate on the outcome of the hearing, which would be known only after the return of union environment minister Jairam Ramesh from Cancun. "If he sticks to the law, the construction has to be stopped. No such project can be undertaken without obtaining an environmental clearance from the Ministry of Environment and Forests," Ms Patkar told Moneylife over the telephone.
The main feature at the hearing last week, was a presentation by Lavasa Corporation, describing its plans to enrich the environment at the site of the township project. The measures range from water treatment to seeding and greening. However, details that the ministry sought with regard to the environmental clearance required for the Rs6,000 crore project was not furnished.
The show-cause notice issued by the ministry on 20th November said Lavasa Corporation had started construction on 1,600 acres, when it had a clearance to build on only 1,500 acres. Ms Patkar said that the massive project has impacted the ecological system in the area, including a river and the forest, and that it had impacted the livelihood of people in the area.
In the words of additional solicitor general representing the MOEF, M Khambata, "They brazenly went on with the construction, though admittedly they had no environmental clearance. The burden to prove that the project was not harming the environment is on Lavasa."
Following the show-cause notice, the company accused the environment minister of malafide intent, of coming under the influence of activists, and in a 1000-page letter it petitioned the Bombay High Court to stay the stop-work notice by the environment ministry. However, it is said that the letter did not answer the questions that have been raised by the environment ministry.
Lavasa reportedly obtained a clearance from the state government in 2002. But under the law, it is the Centre that is supposed to issue the clearance. A certificate was obtained from the Pollution Control Board also, after construction had already started. In 2005, the environment ministry apparently took note of the matter and through the state government sent Lavasa a notice. Somehow, there wasn't any progress in the matter for nearly three years, till some activists raised the issue again.
In its petition before the court, Lavasa Corporation gave quite an astounding reason for skipping the environmental clearance. According to the company, the plan did not require clearance since it was a tourism project and is situated within 1,000 metres above sea level. Besides, about Rs6,000 crore was already invested in the project. The company's reply to the ministry's notice can be read on the company website.
The Forest (Conservation) Act (1980, amended in 1988), is clear that no project which entails diversion of forest land for non-forest purposes, can be undertaken without clearance from the MOEF. The project also violates the Environment Protection Act (1986), Ms Patkar said.
Now, as the activists and the affected people await a decision, Mr Cameron has been talking about how he helped stop projects in the Amazon forest and back home in Canada that threatened to displace indigenous tribes, and how he plans to make a documentary on this. Lavasa is a similar case that he might consider making a documentary on.