industry

Telecom sector won’t lose more players: Trai


By Anandita Mankotia

NEW DELHI: The telecom regulator doesn’t believe the industry will lose any more players and said that despite ongoing competition, the sector is at the threshold of next wave of growth, especially now that the Vodafone India-Idea Cellular merger has been completed and demand for data surging.

Some analysts have painted a grim picture for Vodafone Idea, saying the newly created telco will find the going very tough as Reliance Jio is unlikely to relent on pricing anytime soon.

But a senior official at the Telecom Regulatory Authority of India (Trai) said the merger will take some time to settle in and for synergies to show, and pointed out that the merged entity is backed by two fundamentally very strong parents — UK’s Vodafone Group Plc and the diversified conglomerate Aditya Birla Group.

“There is intense competition and that has led to such a big merger in the sector, all this is indicative of the new telecom landscape in the country, companies are reorganising themselves to suit the new customer requirements and demands,” the official told ET.

“We don’t think the sector will go down or any more companies go down any further,” the official added.

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The official was responding to questions on whether the intense pricing pressures on the industry, mounted the continuing aggressive pricing of Reliance Jio and matching offers by Bharti Airtel, could add further pressure on the top lines and bottom lines of the industry, especially the new entity which lags its rivals in terms of 4G footprint and has been losing revenue market share (RMS).

Commenting upon the financials of the combined Vodafone Idea company, an internal note of JP Morgan said, “Our view is that the math post-merger does not still look good; it is likely to be an uphill climb, especially as Reliance Jio is unlikely to relent on pricing.” But Trai is upbeat about the future of the new company and the industry.

“Reorganisation, restructuring of any kind is painful and requires changing the routine, so that is happening-…everyone understands that there must be a certain minimum number of players in the market to provide choice to consumers,” the official said.

In a recent investor presentation, Bharti Airtel too said the long-term opportunity in the Indian telecom market was “massive”, despite a currently challenging business environment.

Airtel said that even as the average revenue per user (ARPU) has eroded by 40% in recent times, there was an unprecedented investment in telecom networks and rollouts.

Airtel itself had invested a record Rs 23,800 crore in capex for the year ending 2017-18 and has earmarked another Rs 24,000 crore for the current fiscal.





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