Saturday, June 19, 2010

Mukesh Ambani's broadband plan? Kar lo duniya mutthi mein-II

Mumbai: In the Information Age, he who owns the bandwidth owns the game. Nobody knows this better than Mukesh Ambani.

And own he does, 20 megahertz of it, for fourth-generation broadband rollout.
Now, if you are Mukesh Ambani, history shows you tend to think huge, years ahead, and then connect the dots.

The attempt here is not to be Mukesh’s hagiographer; there’senough empirical evidence of very large-scale execution achievement.
So what’s the broadband mega picture Mukesh has drawn?
One can only indulge in some logical guesswork. First of which is that Mukesh rolls out broadband services for folks like you, me and companies, or ‘the subscribers’.
Now what are these services? It could be as varied offering movies in hi-def, multiplayer platforms for online games on the fly, news and data services such as helping companies jigger hi-definition video-conferencing...
One thing that’s unlikely is a return to voice telephony because broadband licensing terms don’t allow it — only Universal Access Service Licence does.
And how would you avail of the services? Through mobile phones, iPad-like devices, laptops, or even the good ol’ desktops and television sets.
Chances are, more than 90% of the delivery will be on mobile phones on the consumer side. That’s the only way the lack of computer penetration in India, which is wallowing at around 5%, can be surmounted.
On the other hand, a substantial chunk of corporate use will be through computers.
Mukesh will offer much more. He will help you pay your bills, buy tickets of all kinds, order food from a restaurant, buy clothes by visually sampling them on your phone, facilitate tuitions, virtual classes ... all this using the ‘fat pipe’ — which is geek for broadband.
He will help companies manage their data by renting his infrastructure (in software, data mean many things, including financial numbers, attendance and salary slips, creating and zipping engineering designs ... all the work that companies do. Video is also data.
All this, however, is the straight part. Mukesh on Friday said he also plans to exponentially grow his retail business, which now has a turnover of $1 billion, to $10 billion in 5 years.
What he didn’t say is growth will be far more exponential after 5 years if India grows at 8%-9% over the next decade, as it is expected to. And when his broadband plugs into his retail business, he will also help you buy a lot of stuff online — practically 90% of what you will need in your daily/weekly/monthly life, using your mobile phone/iPad/PC.
In effect, he will take away business from the neighbourhood mom & pop kiranas, from the neighbourhood malls and supermarkets because, by making geography history, to borrow that all-time great copyline of the beleaguered Iridium satellite project.
By default, he will also lord over India’s largest logistics entity because large physical deliveries will have to be orchestrated using a massive supply chain.
By being with you literally 24x7, in hand, on your mobile, at home or anywhere, Mukesh will own you, the consumer.
He will own you because he will become the King of Convenience, and you, me and everyone else loves convenience.
Who doesn’t want to order groceries sitting at home and have it delivered at the doorstep? Who doesn’t want the convenience of completing non-office chores from home, after a hard day’s work and travel?
If you are Mukesh, you will also do one more thing. You will own a payment gateway embedded in the fat pipe, to collect monies flowing from all those potential billions of personal and corporate transactions. That would essentially mean plugging in a non-banking finance entity or a transaction processing system like those used for credit cards (Reliance Credit Cards!) or even a bank (Reliance Bank!).

Now imagine scale.

On Friday, Mukesh said broadband penetration in India is just 1%. What does that tell you? Only 1.2 crore people have access to it in the country. That may be an overestimate.
Anyway. That also means 99%, or 118.8 crore people, don’t have broadband access, considering India’s estimated population of 120 crore. Get the picture of a gargantuan ecosystem?
One more thing: Mukesh would have paid over Rs 12,000 crore to get the spectrum for his broadband binge. Too much upfront expenditure? In reality, that may not even be a fraction of what he would earn over the next couple of decades — if things go well.
Considering the volume dimensions of the project, Mukesh would’t have to price anything steep, no matter the spectrum fees. Bottom-of-pyramid affordability will more than suffice for telecom’s original price warrior. Remember Monsoon Hungama, circa 2003? Remember his plan then, of rolling all of the things described afore through optic fibre networks? Of Kar lo duniya mutthi mein?
This time round, he is doing the same wirelessly, using airwaves.
All this fantasising, of course, is predicated on the ability of technology to facilitate such an online empire.
On the bandwidth side, at 20 MHz of contiguous spectrum across the country, Mukesh’s got more than twice the 10 MHz that data rivals, the 3G telecom auction winners, have. To boot, they have the spectrum only in some circles, not nationally.
As of now, the technologies Mukesh is riding on — Wimax and Long Term Evolution — are not mass-tested on a scale they need to work in India. That’s the only mountain to climb.
Execution is a non-issue. It’s Mukesh’s middle name.

My Comments:

Execution.......that is the bottomline....
I have written here , planning and execution is the most important factor for completing any project.Remember this always, whether you are working as an employee somewhere, whether you have your own business.
I can write a long article on this 2 words....viz: Planning and Execution....but time do not permits me......sometimes mood also plays important role in what one writes....


  1. Very nice article Rajeev. You see that thing what we are not able to. I couldn't have guessed that mukesh coming into this sector means this lot.

  2. Dear Rajeev,

    Very right if mukesh is into broadband then it means wireless braodband business is set to grow. But rajeev I think sunil mittal is more smarter than mukesh. Yes total govt machinery is behind mukesh so he may wins. Mukesh has big plans in retail he buys major prime lands in auction in delhi in 2007 with huge premium. He start doing construction in 2007 itself but stops construction as recession starts and he still not started the construction. But this momentum changes the rates of land in these areas. All land owners were benifitted immensely as if mukesh is buying at that rates why can we sell or buy at that rates. That is mukesh Phenomena. I think bharti also going that way with wallmart.

  3. Dear Mr Rajeev

    What about Asscam Company, I khow that you have remmonded much earlier, I want to khow whether i can enter now at current rate Rs 20, I heard that
    huge potential in the company, but my only worry is that last quarter sales is down almost by 1/4 and ended with loss. Waiting eagerly for your guidance about assam company

  4. Dear Rajeev,

    When read about Loyal Tex, suddently recalled news about expected demand of indian cotton in coming months.I think many might have noticed this news in E.T. in May-19.However I post the same here just for ready reference for Sri.Rajeev and the attention of other friends who didnt read the article.I feel only experienced hands can evaluate these kind of news which deals with possibilities .(If this news is not worth ,Please deleat this message so as to save the time of the readers who trae each and every line of this blog).

    Global short supply to push cotton prices up
    19 May 2010, 0027 hrs IST,S Sujatha,ET Bureau

    COIMBATORE: Cotton prices are expected to firm up further in the current season as demand is higher than supply in the international market. A trade

    source says that whatever way the Indian government decides on the revaluation of the pending registered cotton exports, the prices will only go up globally.

    At present, Indian cotton prices are lower compared to global prices. While Shankar 6, a much-sought-after variety in India, is selling at 83.5 cents/pound, the international varieties equivalent to this cotton are selling between 92 cents/pound and 94.5 cents/pound.

    As India is a cheaper source of cotton, the demand for Indian cotton has been higher this year in the global markets. India’s global share in the export market is pegged at 22% at 6 million American standard bales (1 bale is 220 kg).

    US is the largest exporter with 14 million American standard bales. While India is a net exporter, today it is struggling to balance between domestic needs and exports. The requirement of cotton has increased globally as the industry is on a revival path following recession.

    The country’s production is estimated at 292 lakh bales (1 bale is 170 kg) and export surplus is kept at 70-80 lakh bales this year. Of the 84 lakh contracted bales, 73 lakh bales have been physically moved out of India.

    If the government permits the export of remaining 11 lakh bales, there will be a definite shortage in the Indian market.

    Cotton analyst A Ramani told ET that if the government decides against allowing the export of remaining cotton, the local mills would be benefited.

    “But the prices in the international market will continue to move up due to shortage in supply,” he added. Sri Gomathy Mills MD and Cotton Textiles Export Promotion Council chairman VS Velayutham told ET that despite an increase in acreage of cotton cultivation, the yield is a bit lower this year due to abnormal delay in monsoon.

    Also the import of cotton is insignificant in India (2.5%) as textile mills predominantly import only the extra long staple (ELS) varieties from the US and other countries to manufacture finer counts of yarn. India has imported 1.9 lakh bales of ELS cotton from US, 1.75 lakh bales from Egypt and 50,000 bales from CIS countries.

    “In Indian cotton, the yarn realisation is less and therefore we import ELS variety cottons from other countries for making thinner fabrics,” said Mr V S Velayutham. His company has imported cotton from Sudan this year.

    Of the non-ELS varieties, India imports around 3 lakh bales every year for a lesser price. In September 2009, imported cotton was 2 cents/pound cheaper than the Indian cotton. But due to price parity, where the Indian cotton is cheaper, only random booking has taken place for the non-ELS varieties after October 2009.

    “But now, a situation is developing where Indian spinners might be forced to import due to compulsion,” said Mr Ramani. Cotton production is expected to go up by around 8% globally in 2010-11. “The increase in supply will be capable of taking care of increasing demand and so the chances of prices shooting up abnormally are remote after July 2010, when the new international cotton season begins,” he added.

  5. Dear Mr Rajeev

    I have read this message from MMB
    company promoters are changed from Shriram EPC to Haldia Coke & Chemicals Ltd. On 15-06-10, 55.17 Lakh shares changed hands from M/S Shriram EPC to M/S Haldia Coke in two bulk deals, at an average market price of Rs.92.58, constituting a total of 40.09% shares of the company. Whether Haldia Coke is planning an open offer to the public

    I like to have your valuable opinion on the above subjec

    Thanks and regards

  6. nirash,
    it is not necessary that with changing in management from shriram epc to Haldia Coke will result in IPO.They are all gr Co and the stake change has happened is due to shriram epc is an Eng Co and so they found it prudent to transfer it to Haldia Coke.

  7. kk,
    if the prices of cotton is going to come down then all textile co will be beniffited from it and the bottomline should go up.....

  8. nirash, Assam Co is a buy and hold per me..

  9. Hi Rajeev,

    Do you follow Sasken Communication Technologies ?

    If you follow it, need you comments on the following facts.

    Telecom sector now bottoming out.
    Hence, 3G and smart phone demand will give big boost to sasken.

    Also, Ashish Dhawan single hand has more than 8% holding in it. Nobody in promoter has this much of holding. So management has to come back with some aggressive share buyback.

    Also, Reliance Capital increasing it stake in sasken.

    One more strength is Kiran Karnik, who is an additional director in effect from Oct-2009. He might change the game for Sasken

    Considering these, is it worth to buy this scrip from 2 to 3 years perspective?


    (I have taken comments from MMB - abhaytiw)

  10. Rajeev,

    In my previous message on Sasken, I have used the word "Fact"

    The first paragraph "Telecom Sector bottming ..." cannot be called as a fact. May be I can call it as a foresee/prediction

    But the rest of them are facts.

    Just avoiding confusion :)