Rural Electrification Corp net profit rises to Rs618.2 crore in Q2

State-run power financier Rural Electrification Corporation (REC) Ltd said its net profit for the second quarter ended 30 September 2010 increased to Rs618.2 crore from Rs494.4 crore in the same quarter last year.

During the September 2010 quarter, REC's total revenues rose to Rs2,082.1 crore from Rs1,623 crore in the year ago quarter.

On Monday, REC shares declined 2.2% at Rs373 on the Bombay Stock Exchange, while the benchmark Sensex ended 0.7% up at 20,303 points.


Will the Indian telecom sector become a sunset industry?

With the availability of high bandwidth 3G networks and increasing smartphone penetration, telecom players will have to gear up to embrace m-commerce in a big way. Else, the sector might well become a sunset industry

The Indian telecom industry is at a crossroads. Unless it opts for innovation, it might well become a sunset industry. Companies will have to look much beyond consolidation — which almost seems like a given, considering the considerable advantages that will accrue to players who will tie up across various circles — to combat the varied challenges facing them.

Players have to take full advantage of technologies like 3G and offer more mobile value-added services (MVAS) that can generate more revenues. And most importantly, they will have to channelize their efforts into adopting mobile commerce (m-commerce).

Currently, some baby steps have been taken to promote m-commerce — but this is more because of the ingenuity of users rather than any foray from telecom operators. For example, fishermen from Kerala receive text messages from local markets which keep them informed on the daily prices of marine products — so that they can decide whether it is really worthwhile for them to take their trawlers out to sea on any given day. Similarly, a few banks have also initiated m-commerce gateways, where money is transferred to a payee when the beneficiary of a remittance displays the contents of a text message from the issuer, to a bank. But these are just minor developments in the field of domestic m-commerce — much more can and needs to be done.

According to industry body Associated Chambers of Commerce and Industry of India (ASSOCHAM), the MVAS industry is projected to register a turnover of Rs280 billion by 2013 — up from the current Rs97 billion, after the rollout of 3G services in India.

Over the past few years, mobile penetration in both urban and rural segments has been growing at a phenomenal pace. But despite strong growth numbers, all Indian telecom operators are facing falling average revenue per user (ARPU).

India is one of the fastest-growing telecom markets in the world. During 2009, total mobile subscribers in India (including GSM and CDMA users), crossed the 50-crore mark.

But fierce competition and cutthroat price wars have crashed ARPU numbers; last year, it stood at a measly Rs147 per month — the lowest in the world.

“The main reason for the drop has been intense competition to capture new accounts by predatory pricing and market saturation. Consequently, operators have increasingly focused on generating alternative revenue streams by providing value added services,” says a recent paper on m-commerce by consulting firm Deloitte Touche Tohmatsu Ltd (Deloitte).

Currently, mobile operators have restricted MVAS to basic services like caller tunes, ringtones and wallpapers. But these technologies are bare-boned and easy to replicate. Once an operator offers such low-end services, other players have no problems in following suit, and they are doing so.

Another issue is that these low-end MVAS can be easily pirated — which means the average Indian consumer, who has value-for-money on his mind, has been increasingly shunning ‘official’ services and is opting for cheap knock-offs.  

As a result, mobile operators have failed to generate any significant revenues from these basic services. It is not that players have not been trying to stand out from the clutter. A few organisations, especially CDMA operators, have tried to leverage their technologies and offer MVAS like mobile TV services. But the response from consumers has not been encouraging, thanks to the level of technology which telecom companies currently have in their arsenal.

A few brokerages have tied up with telecom companies to offer mobile online trading facilities. Despite the obvious advantages that a facility like this kind can offer market traders, the response has been tepid at best.

Reliance Communications (RCom) is planning to offer live streaming, scores and commentary of the International Cricket Council (ICC) World Cup, 2011, on a mobile platform. However, this initiative would be operational only for a limited period; this one-off effort will not translate into a recurring source of income for RCom. The mobile services company is also planning to offer the World Cup 2011 theme song as a caller-tune — but that again is a basic service with hardly any value-addition. Subscribers are bound to stumble upon websites that will offer this caller tune as a free download.

But players in the Indian telecom space had better get their m-commerce act together, and soon. According to a research report from analyst firm Berg Insight, the worldwide number of users of mobile banking and related services is estimated to grow at a compounded annual growth rate (CAGR) of 59.2% to reach 894 million users in 2015 from 55 million users in 2009. “People who sign up for their first mobile subscription today will likely open their first bank account in the coming years and thus join the modern financial system. Mobile operators can play a vital role in this development and will have the opportunity to take an active part in the creation of some of tomorrow’s most important financial institutions based in Asia and Africa,” Berg Insight added.

Echoing the same view, Sachin Sondhi, leader, strategy and operations, Deloitte (India), said, “We believe the mobile e-commerce space provides tremendous opportunities to operators to increase revenues and drive profitability. While it is easy for telecom operators to build one side of the platform and acquire the consumers as they own the relationship, it will be challenging for them to get the merchants on the platform and consequently show value to them.”  

But not everyone agrees that m-commerce, especially mobile payment systems, will take off in a hurry. In a recent report, market intelligence service provider International Data Corporation (IDC) has said that mobile payments would take off slower than many industry observers hope, due to the complexity and set-up costs for retailers.

However, strong growth in mobile banking will lay the foundations for growth in mobile payments, it added.

Today, Japan rules the world of m-commerce. Last year, mobile Internet shopping exceeded $10 billion. The US could manage only $1.2 billion worth of m-commerce for the same period.   

In the case of India, one has to wait to see how the rollout of 3G and increasing smartphone penetration will help the nascent domestic m-commerce industry. But the high prices paid by various operators across different circles will put more pressure on operator profitability and shareholders will demand higher profits, says Deloitte.

Nine telecom companies, including Bharti Airtel Ltd, Vodafone Essar Ltd and RCom along with state-run MTNL & BSNL have paid Rs67,719 crore to the Indian government for 3G spectrum fees. All private telecom companies had participated in the 3G auction process, which went on for 34 days and ended on 19th May. However, because of intense competition, no single player could secure airwaves throughout the nation for a 3G rollout.

With the imminent implementation of 3G and mobile number portability (MNP), the competition is only bound to become more intense in the telecom space. While the department of telecom (DoT) is examining the possibility of allowing new entrants to merge with larger operators, other dominant players in the m-commerce space like device manufacturers, retailers and payment gateway providers are already finalising their plans.

This is bound to make the m-commerce forays of mobile operators that much more difficult. Mobile device based platforms like those developed by Apple, Google and payment networks like MasterCard and Visa already pose a clear and present threat to mobile operators in India.

The Deloitte report says, “With mobile operators in danger of getting disintermediated in the mobile e-commerce ecosystem, the telecoms need to change the way they look at their business and evaluate mobile e-commerce to help them monetise their assets to build a sustainable advantage. The answer lies in developing a two-sided platform which can enable operators to bring consumers and merchants together through a mediated commerce platform.”

So what can domestic players do to boost their m-commerce forays? “The solution lies in solving ‘hard jobs’ the consumers face by monetising data across platforms (DTH, mobile and broadband) and creating an effective ‘local search to sale capability’ for closing sales. The operators can then, over a period of time, expand their merchant network and command a share of closed sales. Else they risk getting relegated to (becoming) peripheral players — a ‘glorified pipe provider’, while others create and capture value,” said Deloitte’s Mr Sondhi.

According to research firm Gartner, by 2012, money transfer will be the top consumer mobile application, followed by location-based services, mobile search, mobile browsing, mobile health monitoring, near field communication services, mobile advertising, mobile instant messaging and mobile music.

This shows the growing need for Indian service providers to gear up for MVAS — with a special focus on e-commerce — to shore up their ARPU. That is the only way in which mobile service providers can ensure that they get back in the black. But will the industry wake up and smell the coffee?


Personal finance Monday

BNP Paribas MF floats BNP Paribas Fixed Term Fund-Series 19 A; IDFC Mutual Fund unveils IDFC Fixed Maturity Plan-Monthly Series 27; Fortis MF is now BNP Paribas MF; Videocon Mobile Services launches special tariff recharge at Rs17; SBI Card offers Bonus Pe Flying Bonus Offer

BNP Paribas MF floats BNP Paribas Fixed Term Fund-Series 19 A

BNP Paribas Mutual Fund has launched BNP Paribas Fixed Term Fund-Series 19 A, a close-ended income scheme. The investment objective of the scheme would be to achieve growth of capital through investments made in fixed-income securities maturing on or before the maturity of the scheme.
During the new fund offer (NFO), the units will be offered at face value of Rs10 per unit. The scheme opens on 25th October and closes on 26th October. The exit load for the scheme is nil. The minimum investment amount is Rs5,000.

IDFC Mutual Fund unveils IDFC Fixed Maturity Plan-Monthly Series 27

IDFC Mutual Fund has launched IDFC Fixed Maturity Plan-Monthly Series 27, a close-ended income scheme. The investment objective is to generate income by investing in debt and money-market instruments maturing on or before the maturity of the scheme. The scheme will invest in 100% in debt and money-market instrument having low to medium risk.
The scheme offers growth and dividend option. During the new fund offer (NFO), the units will be offered at face value of Rs10 per unit. The scheme opens on 25th October and closes on the same day. The exit load for the scheme is nil. The minimum investment amount is Rs10,000. The minimum target amount is Rs1 crore.
CRISIL Composite Bond Fund Index is the benchmark index.

Fortis MF is now BNP Paribas MF

Subsequent to a global restructuring of Fortis group, Fortis Investment Management is now a part of BNP Paribas Mutual Fund.
There has been an indirect change in the control of Fortis Investment Management (India) Pvt Ltd and Fortis Trustee (India) Pvt Ltd. Consequent to this change, Fortis Mutual Fund has been renamed as BNP Paribas Mutual Fund, the asset management company has been renamed as BNP Paribas Asset Management India Pvt Ltd and the trustee company has been renamed as BNP Paribas Trustee India Pvt Ltd.

Videocon Mobile Services launches special tariff recharge at Rs17

Videocon Mobile Services has launched a new tariff options for local and STD callings for the customers of Mumbai telecom circle.
The operator launched a new special tariff voucher (STV) worth Rs17. This new special tariff recharge provides local and STD callings at 25 paisa/minute to its prepaid subscribers
The tariff voucher comes with the validity of 30 days wherein all local and STD calls to any network will be charged at 25p/min.

SBI Card offers Bonus Pe Flying Bonus Offer

SBI Card has launched an offer called "Bonus Pe Flying Bonus Offer" for both its existing as well as new cardholders. The festive offer is valid till 15th November.
According to the offer, cardholders can avail double reward points and up to two Kingfisher Airlines tickets on purchases above Rs2,500. One will be credited with double bonus rewards points on every purchase above Rs2,500 made on his SBI Card.
The credit card company has also launched up to 17% cash back offer on rail packages and hotel bookings with IRCTC. SBI Card has also introduced 30% cash back offer on airline bookings done through
In addition, with the gifting season round the corner, SBI Cardholders can buy electronics and lifestyle products at a 0% EMI (equated monthly installment) option with special offers on brands like Sony, Vimal, Reliance Jewellery, Aircel, Jet Airways, etc, said a spokesperson from SBI Card.
Besides this, SBI Card also offers special discounts on bookings done through Yatra and Kingfisher Holidays, he added.


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