Cellular market bane to operators
If India’s cellular revolution is a boon to consumers, it has become a nightmare for operators that is likely to get worse before it gets better.
Consolidation in the 15-player market, which is the world’s second-largest with more than 600 million users and growing by 16 million a month, looks at least a year away unless rules change.
The just-completed auctions for 3G and broadband airwaves cost far more than expected. They also reintroduced an unpredictable 900-pound gorilla to the market in Mr Mukesh Ambani’s Reliance Industries, India’s biggest listed firm, which bought the only company to win country-wide broadband wireless spectrum.
With newer entrants backed by foreign players such as Telenor, Sistema and Etisalat ramping up service, tariffs continue to fall, to the detriment of market leaders Bharti Airtel, Reliance Communications and Vodafone’s Indian unit.
“With 12 players in the circle it would be too bullish to expect that 12 players will behave rationally,” said Mr Vsevolod Rozanov, president and CEO of Sistema Shyam Teleservices, the Russian firm’s Indian subsidiary, whose ongoing rollout will be bolstered by a $600 million investment by the Russian government.” The stress is showing, and not just on investors who have seen share prices fall by more than half from peaks for Bharti and Idea Cellular, and 76 per cent for Reliance Comm.” Most of the telecom operators may get funding overseas and their ability to compete in the near term only increases,” said Mr Prateek Agrawal Bharti Axa Mutual Fund.
Both Bharti and Vodafone have lashed out over the regulatory proposal to price additional 2G spectrum based on 3G prices. Vodafone, booked a $3.5 billioncharge against its India business — Reuters
Post new comment