The Next Wave of Telecom Revolution in India

 No, we are not referring to the new IT and Communication minister Raja to bring out the revolution but in fact it is the market dynamics which is forcing telecom companies to be on their foot to gather steam in their operations. But, in India, politics and business go hand in hand, and at time when Dayanidhi Maran was bringing big ticket foreign investment and prepared groundwork for 3G launch, he had to resign.

Now with Airtel having launched lifetime prepaid for Rs. 495 (Hutch and Idea also joined in, a common industry practice) and Reliance Communications introducing connection-cum-handsets at just Rs. 777, and with the acquisition of Hutch by Vodafone complete, things could get really exciting in the industry. With the telecom companies, expanding their thrust on rural areas, net subscribers addition could see a manifold increase.

With the FDI being increased to 74%, other international player’s such as Malaysia’s Maxim, Egypt’s Orasum among others are planning to take a stake in some of the Indian companies. As markets in US, Europe and Japan becoming saturated, global telecom industry is crashing due to overcapacity and high value auction of 3G spectrum, so big international telecom players have to expand their footprint into India, the market with highest growth rate.

We perceive that companies such as Aircel, Spice, BPL would eventually merge or be acquired, as the industry is very capital intensive and future holds good only for integrated players who have deep pockets and latest technology. Players like state owned BSNL, GSM providered Airtel, Vodafone and Idea, and CDMA based companies Tata Teleservices and Reliance Communications would be the survivors.

Another phenomenon which would happen is that lot of sharing in terms of infrastructure like towers and spectrum would happen, which would aid them in reducing costs. The Airtel-Vodafone deal is a case in this regard. Falling Average Revenue Per User (ARPU) are putting pressure on company’s margins, but the increasing subscriber base could offset the fall.

The photo displayed is the best indicator for things in store for telecom companies.