India Calling- yet Challenging!

Indian telecom market is like that turbulent sea, where if you survive, you play in billions, or else your ship is permanently wrecked (figuratively speaking in a ‘Titanic’ style). Looking through a few telecom magazines of last month– it seems there is a war going on, and everyday there is something strangely new happening. Here are a few snippets:

  1. If Vodafone thought it was basking in glory of operations and expansions in India, it probably got the shock of its life having to pay $11Billion, as tax to the IT department, because of the acquisition of Hutch-Essar in India.   
  2. ‘Chindia’ –as The Economist likes to name the two most important powers of the Asian market- India and China, with the help from UK based universities are planning to set up research teams for creation of next-gen telecommunication networks.
  3. The Lucrative India – yet look how it screws businesses up: I read a report in Business-Standard in which Gartner said India would have 660 million mobile users in 2010, and that the penetrations of mobile connections is projected to reach 82% by 2014. Bingo, Sweet November! Anyone who thought of rejoicing at the projections, here are the things to be worried about: Tata DoCoMo has introduced 1paisa/sec international call to USA and Canada in Punjab circle. That is like 0.02 US cents per second. The real impact is that in general calls to the countries are charged at Rs. 6.50 per minute. That is over 80% reduction in prices. Let the other compete. In such a scenario, if you  have near zero revenues, what is the point of 82% penetration.
  4. If you thought that was enough– Future group has introduced the new concept of ‘Unpaid‘ as an offering in a market that knows about Prepaid and Postpaid. The way companies are contesting for share, it seems like a complete freak-show. 
  5. Imagine posting a loss of  over 2 billion INR in one quarter. That is what Idea posted due to operational costs on newly provisioned services. Revenues down, Services down, costs up, competition up– Time to grab the share of the pie.
  6.  Hello fraudsters— TelecomLive magazine reports that operators have reported 2150 cases of mobile cloning in FY10. 
  7. Grab the Rural Pie– Operators in their wake of penetrating deep into rural India, is now joining hands with Power Grid Corporation of India to use the electricity transmission towers to set up mobile transmission systems. PGCI has about 105,000 such towers in rural India.
The Darwinian theory of ‘Survival of the Fittest’ has been put to test in probably in its ultimate form by the dynamic market. What remains to be seen is how operators and service providers react – either to live or to wither away.
Don’t forget, there is a new entrant changing the rules of the game completely- Google. I wrote about how I see the change happen in my last post.
Like always, do feel free to post your comments — even if you completely disagree to what I say.
(PS: Please point out grammatical, spelling errors and or typos. I would be happy to correct)
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This entry was posted in 'Chindia', Business, IDEA cellular, telecom, Vodafone. Bookmark the permalink.

2 Responses to India Calling- yet Challenging!

  1. SportsFan says:

    These that you referred to are the 'Major-major' role players. However, the normal small/medium business owners are nor able to manage their business risks professionally due to the high cost implications. Have a look at http://www.riskalyzor.com where us normal guys are able to do formal business plan management and risk management online thereby helping us to act professionally.

  2. Maverick says:

    Dear SportsFan,First I would like to thank you for taking the time to read through my post and commenting on the same. Thanks once again for the url that you provided- I really think it is a great tool. Allow me to take this opportunity to add a further point to the context of my post– India has a lot of opportunities and an equal number (or may be more) challenges that needs to be addressed. As a matter of fact- telecom operations (which is primarily my core focus area of discussion) is one sector which relies on high investments and very long term ROIs. In my following posts, I would try and highlight the key findings from my study of this business landscape. I would really be expecting a lot more inputs and thoughts on the subject matter.Thanks and Regards-Maverick

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