The Indian telecom industry is going through a consolidation phase

Rajan S Mathews, DG, COAI 

The Indian telecom industry has been faced with dramatic changes for quite some time now, due to rapid technological innovation, dynamic and intense competition and the unpredictable regulatory environment, has only added to it. The year 2017 has been a landmark year in every sense. On the positive side we have the proliferation of 4G and the strengthening of support infrastructure like mobile towers and networks with an investment of over INR 10,44,027 crores in the sector. This is against the telecom sector’s consistently falling revenues, financial instability and a cumulative debt of INR 4.6 lakh crore.

Because of the influx of new entrants, telecom players had been seeing a decline in profitability and margins. As a corollary, the sector is undergoing a consolidation phase, earmarked by a series of mergers & acquisitions as well as severe disruption. This has resulted in the Bharti Airtel – Tata Teleservices – Telenor combine; Idea Cellular – Vodafone combine, RComs’ exit and Aircel filing for bankruptcy. One must note that disruptions are nothing new in this segment. However, it is also true that all brands are intensifying their investments and rethinking strategies to retain existing customers and acquire new ones.

Free voice calls, plummeting data tariff rates and cut-throat competition are causing major changes in the very fabric of the sector. Such paradigm shifts will play a critical role in consolidating the industry, a move away from its current fragmented structure. Additionally, companies will be upping their ante with respect to service quality, make investments to improve their networks, infrastructural facilities and spectrums to compete better. We expect all these major swings to eventually benefit the end consumers, as prices are expected to come down.

Rising competition and resultant tariff wars, combined with India’s preparedness for 5G and emerging technologies such as AI, AR and IoT are all contributing towards making PM’s vision of digitally empowered India a resounding reality.

What the industry need however is urgent relief and rescue through substantive and meaningful government interventions. It has also called for a stable and predictable regulatory and policy environment which also facilitates innovation and encourages investment.