Choose Country: India | USA


Live free or die hard!


Live free or die hard!

Letter # 32

A ‘Fire Sale’ is an all-out cyber warfare attack that mounts a three-stage systematic attack on a nation’s computer infrastructure. Hackers called it Fire Sale because “Everything must go”.
Stage 1: Shutting down all transportation systems such as traffic lights, railroad lines, subway system and airport systems. Stage 2: Disable financial systems, including Wall Street, banks and financial records. Stage 3: Turn off public utility systems such as electricity, gas lines, telecommunications and satellite systems.

If you recognized the dialogue, you are a fellow fan who grew up watching Bruce Willis play John McClane (the dialogue is from the 2007 movie Die hard 4.0). For those who haven’t seen the movie (oh, you should), the central thesis of the movie was—steal data through the anarchy created via the Fire Sale. As much as the movie was fun, it sounded, in equal measure, ludicrous. Now, after 14 years of release, it no longer is.

Technology is continually changing the rules of engagement across the globe. This week, we look at how warfare between countries, as well as between telecom companies in India, has evolved.

A few weeks ago, we had written about how China plans decades and centuries in advance and the reason why we believe it engaged in a protracted standoff with India (read it here). On October 12, 2020 (around the time when the border tensions were at peak), a grid failure resulted in a massive power outage in Mumbai, bringing the Maximum city (including its buildings, trains and hospitals) to a grinding halt. Two days later, the state’s Energy Minister Nitin Raut told the media that sabotage cannot be ruled out (1).

This week, Recorded Future—a Somerville, Mass.-based company, that studies the use of internet by state actors—made a startling revelation (2). Stuart Solomon, Recorded Future’s COO, said that the Chinese state-sponsored group, which the firm named Red Echo, “has been seen to systematically utilize advanced cyber-intrusion techniques to quietly gain a foothold in nearly a dozen critical nodes across the Indian power generation and transmission infrastructure (3).” The report further says that 10 distinct Indian power sector organizations, including 4 of the 5 Regional Load Despatch Centres (RLDC) responsible for operation of the power grid through balancing electricity supply and demand, have been identified as targets in a concerted campaign against India’s critical infrastructure. Other targets identified included 2 Indian seaports.

And, it does not end here. Earlier this week, Reuters also quoted cyber intelligence firm Cyfirma that Chinese state-backed hacking groups had targeted the IT systems of two Indian vaccine manufacturers (Serum Institute and Bharat Biotech) (4). “The real motivation here is actually exfiltrating intellectual property and getting competitive advantage over Indian pharmaceutical companies,” said Cyfirma Chief Executive Kumar Ritesh, formerly a top cyber official with British foreign intelligence agency MI6 (as literal an equivalent of ‘Q’ in a James Bond movie as I have ever come across in real life).

Whereas most countries have a military doctrine for fighting wars (conventional and nuclear), how different countries choose to react to these new tactics is still developing. Moving on from countries to companies then. The recently concluded airwaves auctions brought back memories of how the war in the telecom sector has changed over the past two decades.

By 2010, the Indian telecom market was growing fast, but was already overcrowded. Reliance Jio still decided to enter it, albeit by stealth. It first acquired a broadband wireless spectrum (BWA) licence, which later got converted into a unified licence. By 2016, the original licence (internet service provider) also got converted to allow voice telephony and Jio launched its services.

If you were listening, corporate India hadn’t heard a louder battle cry in a while. Having already invested USD32bn, Jio wanted majority (if not all) of the Indian telecom customers. It went for the kill.

First, it launched its much superior services free for three months and extended it by three more months. The difference between ‘ten dollars’ and ‘one dollar’ is large, but the difference between ‘one dollar’ and ‘free’ is HUGE. Competition was ready for a price war, but not to compete with ‘free’. Along with the shockwaves, it sent the average per user revenue (ARPU) tumbling— it halved over the next two years. Second, it created capacity to serve an even larger customer base by signing a spectrum sharing arrangement with Reliance Communication for the 800MHz spectrum. The net resultmergers, shutdowns and bankruptcies. A 13-players’ market in 2014 became a 4-players’ market (5), with Jio emerging as the largest company with 35% of subscriber market share. That was a straight-out war.

Although India now is effectively a 4-players’ market, three companies account for over 92% of revenue—Reliance Jio (Jio), Bharti Airtel (Airtel) and Vodafone Idea (VI). Around 2019, things had started looking rosy—a consolidated industry, players raising prices in late 2019, APRU rising 20% plus since lows. Despite the price hike, the industry was generating return ratios that were far lower than its cost of capital and investors assumed that with the wars now behind, greener pastures lie ahead. Jio had other plans, as it moved from an all-out war to salami slicing tactics.

In September 2020, Jio launched post-paid plans at an aggressive price point and followed it with a bundled Jio phone launch last week. For its part, Airtel added 10-20MHz of additional spectrum in the 2,300 band (in category B & C circles) last week. It is essentially telling Jio that I am here to stay.

The intended target, then, is… VI. It still has close to 25% of customers and is a large No.3 player (at least by subscriber market share). Fighting the massive wars have left it with a negative net worth (USD4bn) and continues to report quarterly losses. If Jio and Airtel delay another price increase, say by a year, they deprive VI of billions in earnings. Jio and Airtel get hurt in the process as well, but it becomes an existential crisis for VI. The company will have to dilute equity massively to survive (and that assumes that capital is somehow available).

In the end, what doesn’t kill you makes you stronger. In the long rum, a 2-players’ market is certainly far more profitable (well, for those two players) than a 3-players’. As the tactics for cross border warfare change, telecom wars in India have also changed tactics. It is now up to VI to roll up its sleeves and defend its territory—time to ‘Live Free or Die Hard’!

(1) October 12 blackout was a sabotage (
Chinese Group RedEcho Targets the Indian Power Sector Amid Heightened Border Tensions (
China Appears to Warn India: Push Too Hard and the Lights Could Go Out – The New York Times (
Chinese hackers target Indian vaccine makers SII, Bharat Biotech, says security firm | Reuters
List of telecom companies in India – Wikipedia


Information in this letter is not intended to be, nor should it be construed as investment, tax or legal advice, or an offer to sell, or a solicitation of any offer to make investments with Buoyant Capital. Prospective investors should rely solely on Disclosure Document filed with SEBI. Any description involving investment examples, statistical analysis or investment strategies are provided for illustration purposes only – and will not apply in all situations and may be changed at the discretion of principal officer. Certain information has been provided and/or based on third-party sources and although believed to be reliable, has not been independently verified; the investment managers make no express warranty as to its completeness or accuracy, nor can it accept responsibility for errors appearing herein.