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ACT continues to lead in wireline broadband internet additions in 2015: TRAI October 2015

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BENGALURU: South Indian broadband internet service provider Atria Convergence Technologies Private Limited (ACT) continued to lead in addition of new subscribers in wireline broadband internet services during the period between 31 December, 2014 and 31 October, 2015. ACT added 2.10 lakh net subscribers or 22.11 per cent of the all India additions during the period as per the Telecom Regulatory of India (TRAI) report for the month ended 31 October, 2015. As per the TRAI reports, as on 31 December, 2014, ACT had 6.1 lakh subscribers (3.98 per cent of all India subscribers) and it had 8.2 lakh subscribers (5.04 per cent of all India subscribers) as on 31 October, 2015. Hence, its growth has also been the highest in percentage terms at 34.43 per cent during the period.

The top five players in India in the wireline broadband internet space in pecking order are the public sector Bharat Sanchar Nigam Limited (BSNL), Bharti Airtel Limited (Airtel), public sector Mahanagar Telephone Nigam Limited (MTNL), Atria Convergence Technologies Private Limited (ACT) and You Broadband (You BB). Among these five, only BSNL and Airtel could be termed national players at present. BSNL, Airtel and MTNL also provide wireline and mobile services while Airtel also has a direct to home (DTH) segment.

Note: (1) 100,00,000 = 100 Lakh = 10 million = 1 crore

(2) TRAI reports indicate data in millions of numbers up to two decimal places. Hence it is assumed in this report that a figure of 0.47 million (4.7 lakh) subscribers for You BB for July-2015 would be granular to the nearest 10,000. While percentages perforce have been mentioned up to two decimal places, the accuracy may vary, depending upon the exact number.

(3) Industry sources say that TRAI numbers in the case of ACT for May-2015 are incorrect at 0.66 million and the correct number would be 0.693 million. This paper considers the number as 6.93 lakh or 0.693 million.

(4) MSOs have a number of subsidiaries and alliances, hence broadband numbers are split as applicable. The consolidated subscription numbers of these entities could be larger. Hathway is a case in point.

(5) Ortel’s numbers for Q3-2015 have been estimated from the numbers released by it for Q1-2015, Q2-2015, Q4-2015 and FY-2015.

(6) The term ‘operating revenue’ in this paper indicates ‘total income from operations.’

Please refer to Figure 1 below. Overall, during the 10 month period in CY-2015 until end October 2015, wireline broadband internet subscriber base in India grew by 6.2 per cent or by 9.5 lakh net new subscribers. During the period, wired broadband internet subscriber base increased from 153.2 lakh to 162.7 lakh. During the period, the combined share of wireline broadband internet subscribers of the top 5 players has dropped 246 basis points from 88.45 per cent as on 31 December, 2014 to 85.99 per cent as on 31 October, 2015. The drop in share between 30 September, 2015 and 31 October, 2015 was 31 basis points from 86.30 per cent to 85.99 per cent as on 31 October, 2015. Of the 9.5 lakh new all additions, 4.4 lakh (46.32 per cent of total additions) were added by the top five players. Compared to the all India growth of 6.2 per cent in subscribers, the top five players combined subscription numbers grew by 3.25 per cent.

Telecom major Bharti Airtel Limited (Airtel) is not far behind ACT in subscriber additions during the 10 month period. Airtel has added two lakh net new subscribers or 21.05 per cent of the net new all India additions during the period. Its subscriber base grew two lakh (grew by 14.18 per cent) in the first 10 months of CY-2015. Airtel’s wireline broadband internet subscriber base grew from 14.1 lakh (9.20 per cent of the all India base) as on 31 December, 2014 to 16.1 lakh (9.90 per cent of the all India base) as on 31 October, 2015. While the share of subscribers of Airtel, ACT and You BB has been growing, the shares of the public sector BSNL and MTNL have fallen, either because of fall in number of subscribers or because of no growth in numbers. Please refer to Fig 2 below.

MSOs’ contribution to broadband

As mentioned above, the combined share of overall wired internet subscribers of the top five companies is declining, with other players increasing their contribution to wireline broadband subscription numbers.

The decline between 31 December, 2014 and 31 October, 2015 was 246 basis points. Other ISPs’ share of subscribers has increased to the same extent. Among the ‘Others’ are included Cable TV MSOs. MSOs in India, which are looking at broadband revenues to prop up their cable revenue numbers because of the comparatively higher ARPUs from broadband internet services. We can only repeat the figures that we have mentioned in our earlier report Wired Broadband: ACT, Airtel lead growth in Sep 2015; MSOs’ broadband numbers increasing.

MSOs have started reporting double digit increase in internet subscribers and revenue. Four MSOs – Hathway, Siti Cable, Ortel and Den added 1.09 lakh (25.34 per cent of total additions in Q2-2016 or the quarter ended 30 September, 2015) subscribers during that period as per their financial reports filed at the bourses. QoQ, the combined broadband subscribers in Q2-2016 added by the four MSOs increased by 58.36 per cent from 0.69 lakh added in Q1-2016. The third quarter of the current fiscal (Q3-2016) ended on 31 December, 2015 and companies will start filing their numbers over the next few weeks.

Some MSOs’ broadband numbers from our previous report

Broadband contributes in double digit percentages to the total incomes or operating revenue of two of the four companies – Hathway (about 25 per cent and growing) and Ortel (declined from 21.07 per cent in Q1-2015 to 16.80 per cent in Q2-2016). In the case of Siti Cable and Den, revenue from broadband services contributed to less than five per cent to their operating incomes. However, sources at Siti Cable say that the company will now be focusing at broadband internet services in a big way.

Hathway reported broadband revenue of Rs 71.9 crore (26.24 per cent of operating revenue) in the current quarter, 58.4 per cent higher YoY than the Rs 45.4 crore (17.23 per cent of operating revenue), and 10.4 per cent more than the Rs 65.1 crore (24.62 per cent of operating revenue) in the immediate trailing quarter. Last quarter, the company said that it had added 50,000 broadband subscribers in Q1-2016, and claimed a broadband subscriber base of 4.6 lakh, of which 1.7 lakh were under Docsis 3.0. Hathway says that broadband ARPU increased 6.8 per cent QoQ to Rs 616 from Rs 577 and that its Docsis 3 consumer ARPU has reached Rs 750.

Ortel’s broadband customers grew 8.9 per cent to 63,663 in Q2-2015 from 57,528 in Q2-2015 and grew 4.5 per cent from 60,900 in Q1-2016. Ortel’s broadband ARPU in Q2-2016 was Rs 395, in Q2-2015, it was Rs 398 and in Q1-2016, it was Rs 393. Ortel reported 11.7 per cent growth in YoY total broadband services revenue to Rs 8.1 crore (16.80 per cent of operating revenue) in the current quarter as compared to Rs 7.3 crore (19.89 per cent of operating revenue) and a 7.9 per cent QoQ growth from Rs 7.5 crore (17.40 per cent of operating revenue).

Siti Cable says that it has added 16,950 broadband subscribers in Q2-2016, taking its broadband subscriber base to 91,450 from 74,500 in the previous quarter. Broadband revenue increased 50 per cent YoY in Q2-2106 to Rs 9.30 crore (3.30 per cent of operating revenue) from Rs 6.20 crore (3.95 per cent of operating revenue) and increased 3.3 per cent QoQ from Rs 9 crore (2.83 per cent of operating revenue).

Den says that it has added 21,000 subscribers in Q2-2016 as compared to 12,000 in Q1-2016. Its total broadband subscriber base in Q2-2016 was 57,000 as compared to 35,000 in Q1-2016 and 16,000 in Q2-2015. Den’s broadband revenue increased 58 per cent in Q2-2015 to Rs 8.23 crore (3.03 per cent to operating revenue) as compared to the Rs 5.21 crore (1.96 per cent of operating revenue) in Q1-2016 and Rs 1.44 crore (0.49 per cent of operating revenue) in the corresponding year ago quarter.

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