3G spectrum winners chasing own user base

Source :Shalini Singh, TNN, May 21, 2010, 12.44am IST


NEW DELHI: A closer look at the 3G bidding strategies of the winners shows a clear trend, which can be simply encapsulated as 'chase your own subscriber base'. With the exception of one operator, there is a close correlation between 3G winners' existing subscriber bases and the circles where they have successfully chased and won 3G spectrum.

The reason why the existing subscriber base is key, is due to the established brand, goodwill, and a large number of post-paid customers — many of whom will be the first adopters of 3G. It is the safest and surest strategy to make sure that existing subscribers move over to better service and higher revenue streams.
Delhi and Mumbai are perhaps the only exceptions that almost every operator wanted for the quality of subscriber base, the prestige, and the ability to run national campaigns using 3G as bait. In fact, Delhi and Mumbai alone account for almost 38% of the total 3G revenue.

Bharti's 13-circle 3G win at a cost of Rs 12,295 crore closely corresponds with its highest subscriber base in existing 2G circles. Andhra Pradesh, where it has 12.9 million subscribers, Karnataka with 12.6 million subscribers, Bihar with 11 million users, Rajasthan with 10.3 million subscribers and Tamil Nadu with 8.2 million users. Perhaps UP (East) where Bharti has 9 million subscribers is the only real miss apart from Maharashtra and Gujarat. In these two circles, its subscriber base is relatively smaller. Bharti has also picked up Delhi and Mumbai with a subscriber base of 5.9 million and 3 million respectively.

Vodafone's wins demonstrate the same strategy. Vodafone has bagged Gujarat where it has 10.8 million subscribers, UP East where it has 10 million, West Bengal with 7.2 million, Tamil Nadu with 7.2 million and Maharashtra with 7.1 million subscribers.

Vodafone has missed out on Rajasthan and UP (West) where it has 7.4 million and 6.4 million subscribers respectively. It has won Delhi and Mumbai, where it has roughly 5 million subscribers each. Idea, which has won 11 circles, has perhaps demonstrated the smartest bidding strategy. It successfully picked up Maharashtra where it has 9.3 million subscribers, Madhya Pradesh with 7.2 million, Andhra Pradesh with 6.3 million, UP (West) with 5.8 million, Gujarat with 5.4 million and Kerala with 5.3 million. The rank order of its subscriber base matches its 3G wins better than any other operator.

Aircel has won 3G in Tamil Nadu where it has 11.7 million subscribers, along with Bihar with 3.2 million, Assam 2.5 million and West Bengal 2.2 million subscribers. It received nearly 14 of its 22 licences for 2G in 2008. For the most part, it was a Tamil Nadu-based operator with many C category circles under its belt. It has ensured that it has procured 3G spectrum to serve its oldest customers first.

Tatas have shown the same resolve of rewarding existing customer bases. It has won 3G in Maharashtra where it has 7.8 million subscribers and Karnataka where it has 5.4 million subscribers. Tatas have lost Andhra Pradesh and Delhi where it serves 7.3 million and 5.2 million subscribers respectively.

Reliance Communication is an exception whose results don't quite correspond with its subscriber base. It has picked Delhi and Mumbai the two most prized circles but missed out UP (East), Maharashtra, Andhra Pradesh, and UP (West) where it has a sizeable subscriber base.