Ronnie05's Blog

Indian Telecom Story (Part XXXIII): Consolidation setting in

Posted in Industry updates by Manas Ganguly on August 27, 2010

Inevitability finally catches up with the new comers in the Indian Telecom space. It is a no brainer to see that a market with 15 players will not have space for the bottom listers. Thus new entrants are beginning to scale down the roll out plans and shying away from reducing the tariffs further. With 14-15 Telcos jostling for share of the consumer purse, consolidation is now setting into the Indian Telecom markets. In most circles, only about 6 operators continue to sustain market momentum. The Top 6 players account for 90% of the market shares by subscriptions and higher shares by value.

The intensity of competition is coming down visibly. Some of the new entrants in the telecoms market have not rolled out networks in many geographies despite being granted spectrum. All new entrants – with the exception of Sistema – are under probe by both the Central Vigilance Commission as well as the Prime Minister’s office for delaying the rollout of their operations. While it has been close to three years since these firms bagged their license, Etisalat DB is yet to launch commercial services, Loop Mobile has started services only in Mumbai while Videocon has launched mobile services in only in five of the 22 circles. Even Uninor and S Tel, the other new entrants, have failed to meet all their rollout obligations. Many new entrants did not bid for 3G and broadband spectrum. All this are tell-tale signs that consolidation has started in the minds of companies.

Consolidation has also started in the minds of customers. Even in this crowded market, six operators now account for almost the entire revenue market share, indicating that customers have learnt to recognise bigger, more established, stronger and better brands. The increase in minutes of usage for larger mobile companies is proof that only certain players are present in the minds of consumer. The top six players have an unique advantage as they have a larger and longer brand recall. The top 3 Telcos have registered increases in the minutes of usage in the quarter.

Tata DoCoMo, Telenor and MTS set off a savage tariff war last year when they entered the Indian market. This resulted in a fall in profits and revenues of all operators. But the rate of growth posted by these companies slowed substantially in the last quarter. Uninor, STel, Loop, Etisalat DB, Videocon, and Sistema together added less than 12% of 18 million customer additions in June. This is in sharp contrast to last year’s numbers when Uninor added a million users within 30 days of launch. STel managed to clock one million subscribers in 90 days from three small circles. While Videocon added 1.39 million users in May, it could add only a third of that in June. The new entrants together account for less than 3% of India’s 600 million mobile users.

With 10 million and more subscriptions happening per month, The Indian Telecom Market is the largest growing Telecom market in the world. However, Telco after Telco have made the mistake of entering the Indian Market without a proper and thought through strategy. The three pronged strategy basis volumes from 10 million subscriptions, ARPU from Data services and high end customers from MNP has not really worked. MNP has not kicked in yet, and moreover, the incumbents today have the scale, information and cumulative resources to dig deep into the consumer wallets. The Challengers in this scenario were required to out-innovate, not out-run the market by larger marketing dollars and cheaper call rates. That unfortunately has not been the forte of the Videocons, Etisalats and Telenors of the world. Reminds me of an old blog post on the merits of MNOs/MVNOs. There still is space in that corner, but the new Telcos need to re-look at their complete thought, perspective and the revenue generation dynamics.

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  1. […] View original post here: Indian Telecom Story (Part XXXIII): Consolidation setting in … […]

  2. […] See the original post here: Indian Telecom Story (Part XXXIII): Consolidation setting in … […]

  3. […] Link: Indian Telecom Story (Part XXXIII): Consolidation setting in … […]

  4. […] this link: Indian Telecom Story (Part XXXIII): Consolidation setting in … This entry was written by apanhamentirosos, posted on 27/08/2010 at 12:47, filed under GSM, […]

  5. […] link: Indian Telecom Story (Part XXXIII): Consolidation setting in … This entry was written by apanhamentirosos, posted on 27/08/2010 at 12:47, filed under GSM, […]

  6. […] View original post here: Indian Telecom Story (Part XXXIII): Consolidation setting in … […]

  7. […] more than just their hands. In an earlier post in the same series of blogs, I had written about how consolidation is setting into the Indian Telecom markets. According to recent article by Economic Times, The telecom department (DoT) is examining proposals […]


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