Brokerage CLSA, in a note, said that the consolidation drive will further accelerate as Norwegian operator Telenor’s India unit is expected to either merge its operations or sell its spectrum, which will help bigger telcos like Bharti Airtel, which has been chipping away the revenue market share from players such as Telenor India.
“Smaller operators like Telenor may either have to merge, curtail their operations further or trade their spectrum (like Videocon did),” CLSA said.
Telenor India is currently struggling for growth in the country. CLSA said that Telenor is facing subscriber churn at the top end due to its lack of 3G/4G offering is impacting revenue growth, driving the need for data spectrum.
Over the past year, Telenor’s revenue market share has been stagnant despite a 110 basis points increase in subscriber market share, indicating a fall in average revenue per user, CLSA said.
“Telenor India’s revenue growth has moderated sharply from more than 30% during the calendar year 2014 to 6-7% over the past four quarters, mainly due to a decline in Arpu over the past six consecutive quarters to Rs 90 per month during the first quarter of calendar year 2016,” CLSA said.
The note added that capacity issues are one big limitation holding Telenor’s growth back in the country currently experiencing a massive data mobile surge.
Recently, Telenor’s management said that while it needs more spectrum in India, it will do so only if the returns are commensurate.