Daybreak - Will Starlink in India pull off what giants Airtel and Jio couldn't?

Episode Date: March 13, 2025

In this episode we fill you in on some of the biggest business and tech stories from The Ken newsroom. We will talk about Reliance and Airtel’s latest deal with Space X’s Starlink Internet; how Dhan, the stock broking underdog, is defying all odds; and finally, we discuss the market for treating farmed animals humanely. Stay tuned Check out the stories and podcasts we mentioned in this episode: Dhan is the stock-broking underdog that Chryscapital and Hornbill are after. But why?How big is the market for treating farmed animals humanely? 

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Hello and welcome to daybreak. I'm Snickda and I'm Rahil. And in this episode, we're going to be filling you in on some of the biggest business and

tech stories from the Ken's newsroom. In this episode, we talk about Reliance's latest deal with SpaceX's Starlink Internet how dhann the stock-broking underdog is defying all odds, and finally, the market for treating farmed animals humanely. Stay tuned. Clear night, which is unlikely if you live in a big city in India, but if you're lucky, you may see a string of evenly spaced bright lights moving across the sky. That is Stalling.

Elon Musk's satellite internet constellation owned by his company, SpaceX. The tech billionaire has more than 7,000 of those. up there in the sky as of now, and he plans to have more than 40,000 of them in the orbit in the coming years. Very soon, if things go according to plan, these satellites will bring a whole new internet revolution to India. Ever since it started operations in 2019, Starling has changed internet connectivity around the world thanks to its unique technology. You see, unlike normal satellite internet that depends on stationary satellites that are at least 30,000 kilometers, up in the sky, Starlink uses low orbit satellites at about 550 kilometers.

And this really changes internet performance. It can basically give access to high-speed internet in the most remote regions of the world. And that is perhaps why Starlink is seen in a good light as a company that is helping narrow down the global digital divide despite the volatile reputation of its owner. In a country like India, you can imagine how transformative this could be. Despite all efforts on part of telecom companies and the government also, many regions remain barely connected to the internet. Actually, Starlink has been trying to break into the Indian market for a while now, but it has been a rollercoast override. Regulatory hurdles,

political pushback and competition from homegrown giants kept Starling away. Now, let me take you back just a little bit. In 2022, Starlink actually made an ambitious, move and decided to accept pre-orders from Indian customers eager for high-speed satellite internet. But the Indian government was not happy. Authorities slammed the brakes saying that Starlink did not have the necessary permits. Musk's company had to refund customers, put its expansion plans on ice and go back to the drawing board. Indian telcos too have vocally opposed the entry of Starlink in the last few years.

Even rivals Airtel and Gio came together to say how it is unfair and that Starlink should pay spectrum prices if it wants to operate here. Just last year, at the All India Mobile Congress of 2024, Airtel Sunil Mithel supported Mukeshambani stance that satellite companies must pay license fees and buy airwaves for their telecom services, just like legacy telecom companies. But in a dramatic turn of events, both of the top telecom play of India, BARTY AirTEL and Reliance Geo announced their deals with Starlink this week. Musk has found powerful allies in India's top businesses.

First, Bharti Airti Airtel, India's second largest telecom provider, came on board. And the idea? It was simple. Airtel and SpaceX will explore offering Starlink's equipment in Airtel's retail stores and Starlink services via Airtel to business customers, and also to connect communities, schools and healthcare centers in the most of the most of the market. most rural parts of India. And then came Mukashembani's geo, Airtel's biggest rival and India's telecom disruptor. Of course, how could it be left behind?

Now, as we all know, Gio and Airtel are not exactly friendly competitors. Geo revolutionized India's telecom industry by offering dirt cheap mobile data, forcing Airtel to slash its prices. So for both of them to align with Starlink, that is a clear signal. satellite internet in India is about to become a big business. Now, of course, no tech revolution happens without a little bit of regulatory drama. India's telecom watchdog, the TREI, is now proposing a five-year cap on satellite broadband permits. Starling, unsurprisingly, wanted a 20-year license because it is launching and maintaining these satellites

and that is not exactly a short-term game. but the Indian government wants to play it safe and wants to test how well the market adapts before committing long term. It is a classic tug-of-war between innovation and regulation. So what does this all mean for India's internet future? It is going to be a game-changer, not just for personal use, but for education, health care and even disaster management. For Musk, this is another step towards his grand vision of a connected world. For Airtel and Geo, it is a new battleground in their ongoing telecom war. And for Indian consumers, it could be the start of a whole new internet revolution.

Buckle up, because this story is just getting started. Coming up next, how Dhan, the stock-broking underdog is defying all odds. Stay tuned. It's a tough time to be a stockbroker in India. Just a couple weeks ago, Nitin Kamat, the founder and CEO of Zirodha, and one of the most prominent voices in the broking industry dropped a bomb. In a LinkedIn post, he said that brokers are seeing a massive drop in both the number of trades and traders.

And yet, deep-pocketed investors are undeterred. They are still constantly on the lookout for the next disruptor in the space. Just last month, in fact, two private equity firms, Chris Capital and Hornbill Capital, reportedly expressed interest in investing nearly 150 to 200 million, million dollars in Dhan, an online discount broker. Should any of these deals go through, the four-year-old company valued at $125 million as of 2022

will become one of India's first unicorns for this year. This, despite the fact that brokers are facing somewhat of a double whammy at the moment. Firstly, the stock market is volatile as ever. Then, Sebi went ahead and decided to tighten the rules around trading in derivatives. Don't worry, we will get into exactly. what that means in just a little while, but what you need to know right now is that most brokers are very,

very worried about their businesses, especially because in the last five years, the discount broking business has become a far more competitive world. What we're left with is a saturated market and a jittery bunch of brokers. But that begs an obvious question. In such a scenario, why would private equity firms bid for a place

on a stockbroker's gap table? That two of a player, like Dhan, who hasn't even cracked into the top five in terms of active clients. Dhan must be doing something right, right? How has it managed to emerge as this dark horse in the race and carve out a space for itself among far bigger and more experienced players like Grow and Zerodha? Well, for starters, Dhan recognized that there's no place for a new or existing player to grow in the broken industry without offering a better and differentiated experience to its users.

In fact, Praveen Jadha, the founder and CEO of the platform, wrote as much in a blog post back in 2021. So, how is Dhan different? Well, according to its website, the platform is built for super traders, that is, experienced market participants. It focuses on these experienced traders who want to dive deep into the nitty-gritty of options trading.

Without getting too technical, this is a type of derivative trading. It's essentially a kind of financial instrument whose value is derived from an underlying asset, like a stock or currency. Let me try and explain that with the help of an analogy. Say you enter an agreement with your landlord where they let you pay rent for an apartment they own, but you have the option of purchasing it from them

at a set price at the end of the year. So when you're renting the house, you don't own it yet, but you're essentially betting that the price will go up eventually. If it does, you can choose to buy it at that earlier agreed upon price and make a profit. But if it goes down, you don't have to buy it, and you have the option of simply walking away. Now, most of the users who use Dhan for this sort of trading,

85% to be exact, are what it describes as power traders, basically highly experienced folks. The company's USP is to offer options trading features that delivers speed and stability. And the trading community seems to be quite happy with Dhan, which explains why its active user count grew over 10 times in just two years. Of course, its client base is still.

relatively small, but it's been growing leaps and bounds and it's also spending big bucks. Dan's average revenue per user or ARPU stands out for a player of its size and age. As per our calculations, it stood at around $12,900 as of March

2024, which, interestingly enough, is quite close to Zerodha and far ahead of grow upstocks and angel 1, which is probably how Dhan managed to break into the top 10 discount broker platform in India last year. It even managed to overtake PTAM money.

All of this, along with the steady growth in financials, could be exactly what is driving these investor bids. But it is also thanks to its founder, Praveen Jadav's experience. You see, he's no stranger to developing disruptors. Back in 2017, he also founded PETM money, which was the last player to get into the mutual funds business in India back then. In less than 18 months, the company garnered over 50% market share in all direct SIPs

and was adding 18% of overall new investors every month. Now with Dhan, he's added all over again. As of January, it commands nearly 2% market share. Back in 2021 in a blog post, Jadav said he was of the view that one can't grow exponentially in the business by spending lots of money on marketing, growth or customer acquisition, which is why he probably wanted about 90% of the business. of Dhan spends to be in product, technology and customer experiences instead.

But while that may be true now, it wasn't quite the case when Dhan was still getting started. In FI23, its advertising and promotional expenses were as much as 70% of its revenue. And it does make sense. After all, that is what it takes to be visible in a dog-eat-dog industry dominated by massive players like Grow and Zerodha. but by the next year, it was able to cut down to just about 7% of its FY24 revenue. Keeping costs, including advertising and check, contributed to thunds made in profit in FY24. But of course, it's not all rainbows and sunshine, especially when the stock market crashes. You see, the markets have been in correction mode since September.

Add to this, the regulatory hammer on derivatives trading and brokerages are super worried. Zeroda earlier indicated. a possible 30 to 50% hit on its FY25 top line, and Dhan has similar concerns. But most analysts we spoke to said it may be able to weather the impact. The fact that it is mainly built for power traders will also work in its favor, especially when it comes to the regulatory concerns we discussed a while ago. You see, that is the biggest strength of this platform,

that it's built for people whose primary source of income very often is trading itself. Dhan's users are not hobby. In fact, that's also something that private equity investors consider, because the focus is on long-term sentiments and not short-term volatility. For these PE investors, Dhan 2 is a long-term game. Next up, the latest episode of 2x2. I have a question for you. Do you think we should care about how the animals that a lot of us eat are raised and killed?

Should meat and fish eaters be willing to pay a premium to ensure that the animals or their products, that they consume are treated as ethically and humanely as possible? There is no easy answer to this question. But one thing is for sure, people are thinking about it now far more than ever before. Which is why things like free-range eggs and chicken have been gaining popularity in India for a while now. The market for humane meat has been growing slowly but steadily. In the latest episode of 2x2, my colleagues host Rohan Dharma Kumar and Praveen Kopalakrishnan try to get to the bottom of this phenomenon. They try to answer some of the most

fundamental questions. How big is the market? How fast is it growing and how should we think about it? And they were joined by three wonderful guests. Dinesh Kumar Shahnamugam, the co-founder and CEO of Early Origins, a farm to table startup, Sandeep Reddy, the CEO of India Animal Fund and KY, the founder of a meat startup called Meat Right. Here is a small clip from the episode. Now the question are free range eggs or ethically raised chickens or human meat oxymorons? Short answer is that it's not an oxymoron. It is something that matters a lot and it's important. If you look at it from a consumer lens, meat and fish eaters, the way that I would equate it is similar to sort of, I don't know, mass laws hierarchy.

So if you look at the bottom of the pyramid, it would be all the physiological needs. So the equivalent of the Maslow's hierarchy would be food, water and air and so on. And for a meat and fish eater, that would be what you would get in a wet market, right? What is minimally priced, reasonably good quality. That's what I would say as the basic minimum stuff at that side. Then there are consumers, and this is really when we started as a brand, where a brand plays a role in certain very, very important table steak elements. When we started out, perhaps it was quite early.

But now many brands are adopting it, and which would be on a Maslow's hierarchy would be about safety. And from this side, it would be about antibiotics. It would be, in the case of fish, it would be no ammonia or no formalin, or things like that, right? That would be the second level. It used to be emerging as a trend. The brands like us or others have probably popularized it. And now it's become a de facto standard, right? And that's just there.

We are moving much more to never used antibiotics right now versus antibiotic residue free. That's a discussion we can have a little bit later. What's more interesting is to see the number of people now there are going up the Maslow's hierarchy, right? And comparing that to our fish and meat side. The third side of things is really where we are seeing a lot more clean label-ish, what we would call us clean label or whole foods kind of behavior. And this is going to things like, you know, byproducts of the meat having no preservatives or no sawbates like a hot dog or sausages or do not having any nitrates or sawbates and things like that. That would be where we see a significant portion of the market behaving. Obviously, there are two more tiers in the Maslow hierarchy, right?

And that's like what you're referring to. And as the tip of the pyramid goes up, the amount of people subscribing to that reduces. But it's still important. That's why it's not an oxymoron. To listen to the full episode, you can click on the link in the show notes. And with that, it's a wrap for this week.

Have a great weekend. Daybreak is produced from the Newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the Ken website.

Today's episode was hosted and produced by Rahil Filippos and I, Sankta Sharma, and it was edited by Rajiv Sien.