Discount curbs, loss of exclusivity to hit online smartphone sales


Source: ETRetail.com, Feb 12, 2019

Online sales of smartphones are expected to fall sharply in the January-March quarter after restrictions on discounts, among other curbs, kicked in on February 1, leading handset companies to increase their focus on forming more tie-ups with brick-and-mortar stores.


The share of online smartphone sales may drop to 26-27% in the current quarter as norms prescribed in the rules on foreign direct investment in ecommerce take effect, according to research firms IDC and Counterpoint Technology Market Research.

“There is already an impact…Typically, e-commerce contribution goes as high as 38-40% (of overall sales which includes offline) during the festive season, but in Q1-Q2, it hovers around 30-31%. This time, it might fall by up to 4% because of the policy change,” said Tarun Pathak, associate director at Counterpoint. Pathak said the FDI rules will impact model exclusivity for brands on online channels. “…a lot of companies have agreements in place. This can also delay time-to-market,” he said.

The hit won’t only be on account of exclusive sales, but also due to offers and discounts, which are barred, said Faisal Kawoosa, founder and chief analyst at TechArc. “We estimate that around 35% of online sales are triggered due to offers/promotions and discounts,” he said. The most hurt would be vendors of Honor, Asus and Realme, which are online-only or online-heavy brands, said Prabhu Ram, head, industry intelligence group at market research firm CyberMedia Research. These companies have now started forming partnerships with stores such as Reliance Digital and Croma.

Realme started its offline journey with 10 cities across the country in January and will add 50 cities every quarter. It intends to establish 20,000 outlets throughout the country, the company said in a statement. According to Navkendar Singh, associate research director with client devices at IDC, handset makers will face challenges in offline channels over the next six months because it’s difficult to spread wide and deep very quickly. “To manage operations, brands need a different mindset, different teams because that’s a kind of different animal,” Singh said.

However, even after the expected decline in Q1, etailers will remain sales drivers in 2019, said Upasana Joshi, associate research manager, client devices, IDC India. She said Flipkart and Amazon are finding ways to adhere to the policy. Singh said large format retailers such as Reliance Digital and Croma are in a better position now as they can command better margins from handset companies seeking to form new partnerships.

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DoT panel undecided on spectrum allocation to mobile operators

Source: Business Standard, Feb 12, 2019

New Delhi: The Department of Telecom (DoT) is divided over the allocation of backhaul airwaves to mobile operators, with half of them backing the auction route for selling microwave spectrum and the remaining half sticking to the current practice of allotment on a first-cum-first-served basis.

The latter is international practice. According to at least two persons privy to the development, an internal panel of the DoT that is working on a policy of allotting backbone airwaves has not been able to decide on the matter due to differing views of the members.

Microwave access, or MWA spectrum, is allocated to telecom operators for short distances to provide mobile services.

If the logjam on policy persists, it may have an impact on proposed spectrum auctions because the backhaul or backbone spectrum is an essential component for seamless operation of next-generation cellular services.

Some experts say unless a service provider has robust backhaul spectrum, providing 5G services can become a challenge for the company.

“Nowhere in the world is backhaul spectrum auctioned, and if we adopt that route it would not be in sync with the international best practices,” an official said, adding some officials are suggesting the auction route to avoid any scrutiny in the future.

A sector expert said spectrum was an intangible resource and should be given on administered low prices.

“If the demand for spectrum exceeds the supply, it should be auctioned. Currently, the demand does not exceed the supply,” said Mahesh Uppal, an independent telecom expert.

The Comptroller and Auditor General in its report in January pointed out MWA spectrum was allocated to a telecom operator in 2015 on a first-cum-first-served basis in contravention of the recommendation of a DoT committee, constituted in December 2012.

The DoT panel had proposed spectrum allotment in the microwave band to all the operators through auction.

The Supreme Court in 2012 had struck down the first-come-first-served policy in the 2G spectrum allocation case of 2008-09 and cancelled 122 telecom permits.

The Telecom Regulatory Authority of India in its recommendations in 2014 said the DoT should continue to allot backbone spectrum on a first-come-first-served basis.

FDI in telecom sector jumped five times in three years: Manoj Sinha

Source: Business Standard, Sept 25, 2018

New Delhi: Foreign direct investment (FDI) in the telecom sector has jumped nearly five times in the last three years – from $1.3 billion in 2015-16 to $6.2 billion in 2017-18, Communications Minister Manoj Sinha said today.

Although the Minister did not share specific details, he said FDI would be the key to unleash the full potential of upcoming technologies like M2M, machine learning, artificial intelligence and internet of things.“India lost its chance to get full advantage of the first industrial revolution, but we cannot afford to miss the bus now. India must not only be a pioneer in rolling out these technologies but also in developing them,”Sinha said.

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Vodafone Idea to merge Aditya Birla Telecom

download (3).jpgSource: LiveMint.com, Sept 17, 2018

New Delhi: Telecom operator Vodafone Idea Limited will merge Aditya Birla Telecom Ltd, which holds 11.15% stake in telecom infrastructure firm Indus Towers, with it.

“The Board of Directors of Vodafone Idea Limited (VIL) … has considered and approved a scheme of amalgamation of Aditya Birla Telecom Limited (ABTL), a wholly-owned subsidiary of the company, with the company,” Vodafone Idea said in a regulatory filing.

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Samsung opens world’s largest mobile experience centre in Bengaluru

download (1)Source: Business Standard, Sept 12, 2018

Bengaluru: After launching the world’s largest mobile phone-manufacturing factory in Noida in July, Samsung has now opened its biggest experience centre in Bengaluru.

Opera House, the 33,000 sq ft iconic building in the city’s central business district, has been given a facelift to showcase Samsung’s mobile devices and other consumer electronic products. It has a service centre for phones and is equipped with high-speed public Wi-Fi.

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Xiaomi, Huawei plan big retail push in India

Source: ETRetail.com, Aug 27, 2018

KOLKATA: Two of the biggest Chinese smartphone brands — Xiaomi and Huawei — are poised to stir up the Indian retail market by establishing exclusive outlets in new formats that will be a global first for them.Xiaomi, for instance, is setting up thousands of Mi Stores in rural locations. Its spokesperson said this will generate more than 5,000 jobs in such areas.

The move could further stifle Indian smartphone brands that are surviving on sales in such markets and intensify competition with Samsung since this is the first time any brand is setting up exclusive stores in rural India at such a scale, experts said.

Huawei, the world’s second largest smartphone maker after Samsung as per US-based researcher IDC, will set up 100 large franchise-owned exclusive stores in Indian cities for its Honor handsets, which are sold online globally, executives said. Huawei said its Honor spokesperson was not available for comment.

Xiaomi, the makers of Redmi and Mi smartphones and televisions, will open the franchisee-owned Mi Stores in taluk-level areas. Currently, Reliance Retail is a large player in rural markets through small Jio stores that also sell mobile phones and electronics. A Xiaomi spokesperson said the company will have 500 Mi Stores by the end of the year and “a few thousand by next year, ensuring we keep growing at the same pace.”

Domestic manufacturing of mobile handset saved India Rs 3 trillion: Study

Source: Business Standard, Aug 22, 2018

New Delhi: Driven by the government’s “Make in India” initiative, the mobile handset manufacturing eco-system in India has helped the country save a whopping Rs 3 trillion by replacing imports of completely-built units (CBU) with locally manufactured and assembled handsets during the past four years, said a new report on Wednesday.

In 2017-18, over 225 million handsets were assembled/ manufactured in India which was approximately 80 per cent of the total market requirements, according to the India Cellular and Electronics Association (ICEA) report.

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