The consolidation in the otherwise crowded Indian telecom industry has been hastened by Jio’s free voice call and data plans, forcing incumbents to slash tariff at the cost of profits.
The fresh round of consolidation unfolding in the Indian telecom market is likely to yield five major players ensuring “enough competition but not fragmentation of spectrum”, Telecom Secretary J S Deepak said. His comments assume significance as India — the world’s second largest mobile services market after China — is in the midst of massive consolidation with incumbent operators joining forces to take on aggressive newcomer Reliance Jio. The consolidation in the otherwise crowded Indian telecom industry has been hastened by Jio’s free voice call and data plans, forcing incumbents to slash tariff at the cost of profits. “Dropping revenue is a concern which we are also addressing…Era of free service and falling revenue will change…In this backdrop, the investments in India are not only welcome but are also likely to be productive,” Deepak told PTI.
On consolidation playing out in the telecom market, he said, “The way things are…this consolidation is going to be very good for India as we are likely to get four private and one government player…BSNL-MTNL…which is ideal.”
Asked if the spate of buyouts would leave enough room for competition in the Indian market, Deepak said, “Ideal is five players for India, which is what is likely to happen”.
Stating that the consolidation is potentially resulting in five big players would ensure “enough competition but not fragmentation of spectrum”, he said, it will be “optimum for the Indian market”.
Last week, India’s largest telecom operator Bharti Airtel announced acquisition of Norwegian Telenor’s India unit.
Bharti Airtel’s revenue market share will rise to 35.6 per cent following the acquisition. Telenor India currently has 2.6 per cent share in Indian market.
Vodafone and Idea have already said that they are considering merging their businesses in India, a move that would create the biggest telecom operator in the country with about USD 12 billion in sales.
Anil Ambani-led Reliance Communications has already signed a pact to merge its wireless business with smaller rival Aircel.
Deepak, who is attending the Mobile World Congress (MWC) here, is slated to meet senior officials of leading global telecom and tech companies like Vodafone, Huawei, AT&T, Nokia, Ericsson, Intel, and Facebook over the next three days. The Department of Telecom will showcase major reforms undertaken in the Indian mobile market to the global audience.
In his presentation at the MWC, Deepak would touch upon the USD 10 billion Foreign Direct Investment inflows into the telecom sector in FY17, and outline flagship programmes like Digital India, Smart Cities and Start Up India.
Asked about concerns on tariff war hitting profitability of telecom companies, Deepak said, “Telecom is scale business…with scale-up of business, even with low tariffs it is possible to make profits as companies have demonstrated. While profits may not happen immediately but those who stay on for the long-term, will make profits.”
Also, with spectrum harmonisation, the sector’s efficiencies are likely to go up and reduce cost, which in turn will help companies, he added.
It may be recalled that the government received commitment of Rs 65,789 crore by selling 964.80 MHz of spectrum in an auction in October last year.
The Telecom Department undertook a slew of reforms in 2016 aimed at facilitating ease of doing business. This included formulating the right of way rules for faster telecom network roll-out, spectrum harmonisation, increasing the availability of spectrum through auction and introduction of Aadhaar-based eKYC for new mobile connections.
Online Source: The Indian Express