Reliance Communications – India’s leading integrated Telecom Services Company with GSM and CDMA Licenses along with international Gigabit Circuits is all set to cash in on the Wireless Broadband / Data boom. The company which swiftly moved into Wireless Broadband Services on the CDMA-EVDO Platform 3 years ago with Reliance NetConnect Broadband+ is already generating 20% of its Revenues from Data Services.
Reliance Communications last year rolled out 3G Services and has presence in 300 Towns across India. More on Reliance 3G Operating Metrics here. Management cited DATA as the key growth driver, which now accounts for 20% of wireless revenues, highest in India and RCOM expects data revenues to move up to c40% of revenues over the next 2-3years. RCOM plans to use a combination of CDMA and 3G to drive data.
In our view, ramp-up by CDMA is positive. Except for the metros present, 3G footprint not very impressive. 3G to see focus on data cards, as well.
One should note that CDMA-led data growth may not require meaningful incremental capex, we believe capex needs to be increased to drive growth via 3G. Present capex for RCOM at 5% of sales are even below spends by developed-market operators who spend 15% of sales on Data Capex. So can RCom still double the Revenues from Data to 40% within the next 2-3 years ?
Update on Data: Analysts estimate overall telecom industry revenues will grow 13% F2011-14, driven by data (27% CAGR). Data will give an uplift for Telcos ARPMs by 1-2% over the next two years, with voice ARPM’s being largely flat.