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June 16: ACT continues to lead wireline broadband subscriber additions

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BENGALURU: Atria Convergence Technologies Private Limited (ACT, ACT Broadband) continued to lead wireline broadband internet (wireline broadband) subscribers in the calendar year 2016 with 1.6 lakh subscribers added between 1 January 2016 and 30 June. As per the Telecom Regulatory Authority of India (TRAI) data, ACT had 8.6 lakh subscribers as on 31 December 2015 (December 15, or 1 January 2016), and it closed with 10.2 lakh subscribers on 30 June, 2016 (June 16).

Further, as per TRAI data, 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), ACTand You Broadband (You BB).

Among these these, only BSNL and Airtel could be termed as national players at present. BSNL, Airtel and MTNL also provide wireline telephony voice and data and mobile services while Airtel also has a direct to home (DTH) segment. ACT started off as an MSO with operations concentrated in a few major cities and towns located mainly in South India. It started internet services (ACT Broadband) a little later and has grown its broadband internet subscriber base over time thorough organic as well as acquisition growth, to the extent that it is quite likely the biggest private wireline broadband player in South India. You BB offers broadband operations in a few cities in Maharashtra, Gujarat, the NCR region, Andhra Pradesh and Karnataka.

ACT was followed by Airtel which added 1.5 lakh subscribers in the calendar year 2016 until June 16. Airtel had 16.7 lakh wireline broadband subscribers on 1 January, 2016. In June 16, it had 18.2 lakh subscribers. Among the top five wireline broadband players in India, You Broadband (You BB) was the next with 50 thousand subscriber added during the corresponding period. The other two players among the top five – the public sector telecom companies – reported a decline in subscribers in the same period.

You BB began the year with 5.1 lakh subscribers and, as on 30 June 2016, it had 5.6 lakh subscribers. BSNL, the largest wireline broadband player in India, opened 2016 with 99.2 lakh subscribers, but lost 40,000 subscribers until 30 June 2016. MTNL lost 20,000, and had a tally of 11 lakh subscribers until 30 June, 2016.

Please refer to figure 1 below for wireline broadband subscriber data of the top five players:

Overall, the top five wired broadband players added three lakh subscribers (37.04 percent of the total wireline broadband subscriber additions) between 1 January 2016 and 30 June as opposed to the overall growth of 8.1 lakh subscribers during the same period. Please refer to Fig 2 below:

In March 16, the largest-ever number of wired broadband subscribers were added – in absolute numbers as well as in month-over-month (m-o-m) percentage terms. In all, 2.3 lakh wired broadband subscribers were added, with m-o-m growth of 1.37 percent in March 16. The combined subscription numbers of the top five wired broadband players also had the largest-ever subscriber additions in terms of absolute numbers at 1 lakh and at 0.71 percent in terms of m-o-m growth in March 16.

June 16 has seen the second-largest growth in terms of number of wireline broadband subscribers in the current calendar year to date with a m-o-m growth of 0.93 percent and addition of 1.6 lakh subscribers. The top five players saw a m-o-m growth of 0.43 percent

in June 16.

The subscriber numbers share of the top five wired broadband players has reduced from 87.62 percent in March 15 to 83.03 percent as on June 16. During the same period, the all-India wireline internet subscriber base has grown 11.60 percent from 155.2 lakh to 173.2 lakh. The combined numbers of the top five players have increased by less than half of that in percentage terms -- by 5.43 per cent from 136.4 lakh to 143.8 lakh. The top five have added 7.4 lakh subscribers during these 16 months, with ACT and Airtel contributing a major chunk to the growth.

Other wireline broadband players in India

MSOs in India have started providing internet services on the back of their television cable networks using DOCSIS technology. In general, they have started reporting double-digit YoY increase in internet subscribers and revenue. The television cable players see broadband services improving their Average Revenue Per User (ARPU) numbers. Three of the major MSOs and a regional MSO -- Hathway, Siti Cable, Den Networks, Ortel Communications, respectively, whose results are available in the public domain have been showing steady growth in their broadband segment over the past few quarters. All the four have been reporting growth in ARPU.

Overall broadband subscriber numbers for June 2016 including wireless and mobile

Overall, as per the reports received by TRAI from the service providers, the number ofbroadband subscribers (including wireless, mobile, dongles) increased from 159.76 million (15.976 crore) at the end of May 16 to 159.80 million (15.98 crore) with a monthly growth rate of 0.03 percent at the end of June 16. Wireless broadband subscriber numbers that use mobiles and dongles for internet access have dropped m-o-m by 0.09 percent to 141.94 million (14.194 crore) in June 16 from 142.06 million (14.206 crore) in May 16. Fixed wireless subscribers that access the internet through wi-fi, wi-max, point-to-point radio and VSAT have increased 0.83 percent in June 16 to 0.55 million (5.5 lakh) from 0.54 million (5.4 lakh) in May 16.

The top five service providers constituted 84.38 percent market share of the total broadband subscribers at the end of May 16. These were Airtel (40.61 million or 4.061 crore), Vodafone (32.28 million or 3.228 crore), Idea Cellular (27.02 million 2.702 crore), BSNL (20.56 million 2.056 crore) and Reliance Communications Group (14.38 million 1.438 crore).

TRAI’s definition of broadband is internet download speeds greater than or equal to 512 Kpbs.

Comments

ACT must have equalled or replaced the public sector MTNL as the third largest wireline broadband services provider in the country at the time of writing of article. However, the Reliance Jio disruption is bound to happen. Also, given the fact that the public sector telecom giant and largest wireline broadband services provider, BSNL, plans to take Jio head-on with attractive offers for broadband consumers, the wireline broadband ecosystem is in for interesting upheavals in the near future.

As mentioned above, the Cable MSO and LCO fraternity has been banking on higher ARPUs that broadband internet carried on its cable network can offer. Investments into Docs is 2.x and 3.x have been made, and the number of users subscribing to these services has been growing, as is evident from the quarterly results of some of the listed players. The cable TV industry has still to learn to make profits, and is riding on the hope that cable internet is one of the paths to healthy top and bottom lines.

The consumer will probably become king for the first time since internet services were introduced in the country at the fag-end of the previous century.

Notes:(1) The unit of currency in this report is the Indian rupee - Rs (also conventionally represented by INR).The Indian numbering system or the Vedic numbering system has been used to denote money values. The basic conversion to the international norm would be:

(a) 100,00,000 = 100 lakh = 10,000,000 = 10 million = 1 crore.

(b) 10,000 lakh = 100 crore = 1 arab = 1 billion.

(2) TRAI reports indicate data in millions of numbers up to 2 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 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.

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