& cplSiteName &

Going Gets Tough for India's Smaller Telcos

Gagandeep Kaur
3/9/2015
50%
50%

Shut out of India's latest airwaves auction, the country's smaller operators now risk falling even further behind their bigger rivals.

Both Aircel Ltd. and Tata DoCoMo were barred from participating in the auction because they could not meet the telecom regulator's strict financial requirement that bidders each have a "net worth" of at least 1 billion Indian rupees ($15.9 million).

Indeed, each operator was way off the mark when judged on this basis. Tata's net worth was a negative INR71.9 billion ($1.15 billion), while Aircel's was a negative INR66.7 billion ($1.06 billion).

Yet neither player is insignificant. With 78.7 million subscribers at the end of December 2014, Aircel controlled about 8.3% of India's mobile market. Tata's share stood at approximately 7% on the same date.

In the meantime, Sistema Shyam TeleServices Ltd. , the country's only pure-play CDMA operator, has decided not to bid for 800MHz spectrum after complaining the regulator's minimum prices were too high. Last year, it had been the only player to bid for spectrum in this particular band.


For all the latest news from the wireless networking and services sector, check out our dedicated mobile content channel here on Light Reading.


There's no doubt that India's smaller operators have lost relevance in the past few years. Formerly a pan-India service provider, Aircel was three years ago forced to shut down operations in the circles (service areas) of Madhya Pradesh, Chattisgarh, Gujarat, Haryana, Rajasthan and Punjab in order to cut costs and free up resources for more profitable circles. Similarly, Tata has shut down CDMA operations in many circles and GSM activities in three.

Their exclusion from the auction will further strengthen the big players. A form of passive consolidation is already underway in the telecom market, with Bharti Airtel Ltd. (Mumbai: BHARTIARTL), Idea Cellular Ltd. and Vodafone India all continuing to bulk up. Last year, this trio controlled as much as 70% of the market, according to data released by the regulator, and their market share is growing at the expense of smaller rivals.

Balance sheet weakness will make it hard for smaller operators to invest in upgrading their networks or buying spectrum in future. That, in turn, will make it even harder for them to compete in the mobile data era and render them less attractive to potential buyers once true consolidation begins.

Ideally, that process should provide an exit route for the likes of Aircel and Tata. Recent media reports have suggested that Uninor , an Indian operator backed by Norway's Telenor ASA (Nasdaq: TELN), is interested in buying the stake in Tata DoCoMo held by Tata Teleservices Ltd. . Similarly, Aircel has reportedly attracted the interest of Reliance Jio, a new entrant rolling out 4G services.

Ultimately, though, regulatory and market uncertainty could rule out any such moves. "The telecom market should either be policy driven or market driven. Right now it is neither fully policy driven nor fully market driven in India," says Deepak Kumar, the founder of analyst firm BusinessandMarket.net. "Even if they want to exit, the policy is not clear. In the present circumstances, a shake-out of smaller players is happening but a sell-out seems distant."

– Gagandeep Kaur, contributing editor, special to Light Reading.

(3)  | 
Comment  | 
Print  | 
Threaded  |  Newest First  |  Oldest First        ADD A COMMENT
iainmorris
50%
50%
iainmorris,
User Rank: Blogger
3/9/2015 | 12:32:43 PM
Fate of smaller operators
Given the way the auction was designed, it seems as though Indian authorities have littie interest in supporting smaller players, and yet they were keen to invite them in several years ago. Vodafone now appears to be the only operator controlled by a foreign entity that has really flourished, and its entry into the Indian market was obviously by way of acquiring a major player. 
Gagandeep Kaur
50%
50%
Gagandeep Kaur,
User Rank: Blogger
3/10/2015 | 2:38:09 AM
Re: Fate of smaller operators
That is true. Indian Government is just not interested in supporting smaller players. This is also in conflict with the recent policies of `Make in India' and `Digital India'. The big players as of now are fairly metro centric. The smaller telcos could have played a significant role in expansion in rural segment. Uninor is a good example of this. Besides Vodafone, I think Uninor is now very nicely poised to expand and succeed in the Indian market. Their policy of offering the cheapest in the service areas in which they are operating is clearly doing well. Lets see if they are able in the ongoing auctions...
R Clark
50%
50%
R Clark,
User Rank: Blogger
3/10/2015 | 3:08:26 AM
Re: Fate of smaller operators
I'm guessing there's no real policy rationale behind the squeeze on smaller players  - it's surely just a result of the big guys leaning on the government.

 
Featured Video
From The Founder
The 'gleaming city on a hill,' Steve Saunders calls it. But who is going to take us from today's NFV componentry to the grand future of a self-driving network? Here's a look at the vendors hoping to make it happen.
Flash Poll
Upcoming Live Events
September 28, 2017, Denver, CO
October 18, 2017, Colorado Convention Center - Denver, CO
November 1, 2017, The Royal Garden Hotel
November 1, 2017, The Montcalm Marble Arch
November 2, 2017, 8 Northumberland Avenue, London, UK
November 2, 2017, 8 Northumberland Avenue – London
November 10, 2017, The Westin Times Square, New York, NY
November 30, 2017, The Westin Times Square
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Could 5G Have Found Its Glass Ceiling?
Dan Jones, Mobile Editor, 9/20/2017
1 Million Pirate Set-Top Boxes Sold in the UK
Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation, 9/20/2017
Why Amazon May Be Cable's Biggest Threat
Mari Silbey, Senior Editor, Cable/Video, 9/22/2017
Comcast Shuts Down OTT Again
Mari Silbey, Senior Editor, Cable/Video, 9/19/2017
T-Mobile, Sprint in Merger Talks, Again – Report
Iain Morris, News Editor, 9/20/2017
Animals with Phones
Live Digital Audio

Understanding the full experience of women in technology requires starting at the collegiate level (or sooner) and studying the technologies women are involved with, company cultures they're part of and personal experiences of individuals.

During this WiC radio show, we will talk with Nicole Engelbert, the director of Research & Analysis for Ovum Technology and a 23-year telecom industry veteran, about her experiences and perspectives on women in tech. Engelbert covers infrastructure, applications and industries for Ovum, but she is also involved in the research firm's higher education team and has helped colleges and universities globally leverage technology as a strategy for improving recruitment, retention and graduation performance.

She will share her unique insight into the collegiate level, where women pursuing engineering and STEM-related degrees is dwindling. Engelbert will also reveal new, original Ovum research on the topics of artificial intelligence, the Internet of Things, security and augmented reality, as well as discuss what each of those technologies might mean for women in our field. As always, we'll also leave plenty of time to answer all your questions live on the air and chat board.

Like Us on Facebook
Twitter Feed