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To: slacker711 who wrote (114442)	2/25/2002 9:19:58 PM
From: Jorj X Mckie	Respond to of 152472

That is my understanding as well.

To: slacker711 who wrote (114442)	2/25/2002 11:01:41 PM
From: arun gera	Respond to of 152472

>I have no idea how Reliance plans on making money at the rate plan that they are going to offer> It will not be easy. And Dipy is right in the sense that Reliance has a lot to learn about being a wireless carrier. I know a couple of people who have been approached by Reliance for Senior positions. According to them, Reliance is trying to collect talent from within and outside India. But right now they are behind on the learning curve. Hope they hire some good people. Their top management is great at extracting deals from their vendors. And Reliance moves fast when it sees a market opportunity. Reliance may not mind the lower access prices on basic rates as long as they can make money on the long distance and international rates. International dialing rates to and from India are going to come down sharply (50 percent or more from the current 50-60 c/minute) in the next few months as VSNL loses its monopoly status. This could move thousands of Call Center and Customer service jobs to India. Maybe millions in the next 10 years. These telecom and internet enabled services could be a decent sized market for Reliance. Arun .

To: slacker711 who wrote (114442)	2/26/2002 4:50:06 PM
From: arun gera	Read Replies (1) \| Respond to 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.

To: slacker711 who wrote (114442)	2/26/2002 7:55:13 PM
From: arun gera	Read Replies (1) \| Respond to of 152472

Other Viability Numbers for Reliance Slacker: I looked at the numbers for BPL, a large GSM provider in India. Just to do a reality check. They are expecting about $200 million annual revenue for the year ending March 2002. They expect to have about 800,000 subscribers by then. Operating margins are expected to be in the 25 percent range. On a per subscriber basis, this works out to an ARPU of $20. The operating expense per subscriber would then be $15/month. Reliance has grander plans, aiming for 10+ million subscribers (actually much more than that). With the economy of scale and by using CDMA 1x, they should be able to bring the average operating costs to $10/subscriber/month or less. Remember that they can subsidize long distance and backhaul costs if they are already building those networks. In fact they need the WLL demand to partially fill their backhaul networks. I think Reliance should have positive EBITDA in the wireless side of its business by the time it has 2-3 million subscribers. The rest of the subscribers will be added to fill the backhaul networks. After all Reliance plans to invest $50 billion in the fiberoptic network... Is that correct? I have seen numbers of Rs. 250 billion. Arun