The spectrum auctions held recently and the ones held over the past five years have placed huge financial pressure on the telecom industry and on individual operators. Collectively, over $40 billion has been spent on spectrum by Indian telecom players since 2010, more than 1.5 times this year’s predicted industry revenue.
Most of those who have stayed the course have done so because of the long-term promise of being in a stable, mature market where they are able to offer a distinct service which their customers value. And, of course, that this market happens to be the world’s second-largest in terms of subscribers, and one of the ten largest by revenues.
As Indian telecoms have moved well past the 50 percent-plus real people penetration, this market maturity is now approaching rapidly and it is beginning to become evident what the end-game may look like for each player. I still believe that we will have around 5-6 players competing in each circle in India once there is consolidation in the market, as expected. With this stabilisation, we can also expect the emergence of a rather varied set of players, each offering a slightly different set of features to its users. After years, where services were similar, finally, we are seeing the arrival of choice for the Indian customer.
Here is my hypothesis on what the market may look like in the years to come:
I would expect Airtel, Vodafone and Idea to remain the big three since they have now done enough to create daylight in market share between them and the rest. I expect RCom to gradually move to the smaller category where it will join the likes of Uninor, Aircel and Tata Teleservices. Reliance Jio can be expected to be the data player. Overall, I would expect some consolidation along with circle/market exits.
It will be interesting to see which of the players in the market will embrace the digital opportunity that is available in India today, especially in the enterprise market where many industries are likely to start deploying digital technologies to make their businesses more efficient. If an operator takes this route to innovate and create new value outside the traditional telecoms business, it may spark a new range of acquisitions by telcos of software, applications and cloud related businesses.
The thoughts and opinions shared here are of the author.
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