Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 174.35

-0.4%

3:59 PM EST

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To: slacker711 who wrote (114442)	2/26/2002 4:50:06 PM
From: arun gera	Read Replies (1) of 152472

Reliance and Tariffs >I have no idea how Reliance plans on making money at the rate plan that they are going to offer....but then again, I dont really understand the way the tariff system works in India.> MTNL has two options for the Garuda WLL Service. Get a handset from MTNL or get your own handset. A deposit of Rs. 5000 (about $100) is required if the handset is provided by MTNL. Smuggled GSM handsets are available easily in India. If Reliance were to follow the same model, their cost per gross addition (CPGA)is going to be less. I will use some LWIN numbers to illustrate. LWIN has about $150 subsidy cost and $80 sales and marketing cost. In India Sales and Marketing cost is likely to be 15-20 percent of US dollar costs. And if Reliance does not provide a subsidy on the phone, we are talking of a CPGA of about $15-20 per gross add. More like $1-2 per month per subscriber. Cost of Service - the equipment aspect should be lower than LWIN, as Indian cities have higher densities (fewer base stations)and installation costs are likely to be much lower due to the cheaper labor. The salaries of technical people are likley to be 20 percent of US salaries. A cost of service of about 40 percent of LWIN costs should be reasonable, which would be $5-6 per subscriber/month. This number will get lower after the first year. G&A numbers will be similar to Sales and Marketing numbers. So another $1-2 per subscriber/month. So operating expenses should be about $8-10/month. Say $9/month. So ARPU requirement for 33 Percent EBITDA, would be about $13-14. The $13-14 ARPU number should include national and international long distance and internet access charges.

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