Consolidation to further help telcos like Airtel: Report

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.

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“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.

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15 Comments on "Consolidation to further help telcos like Airtel: Report"

 

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tonpe vijay
May 16, 2016 3:35 pm 3:35 PM

I think AVOID is as one big telco another BSNL and third is RELIANCE(rcom,jio) out of which jio will give competitive price for about two years. In the present scenario india need at least one new pan india operator.

Rhishav
May 16, 2016 10:02 am 10:02 AM

I want better services from every operator. We pay for the service we want then we should be able to fully use it. If the need is less serious operators to close down and more serious operators to stay then that is what should be done. Prices may rise. My pick of the opertors that will be there in the market after all the consolidations are Airtel, Vodafone, Idea, BSNL, Jio. With enough spectrum and fiber back haul they can give us a truly international experience.

Rohit
May 16, 2016 11:32 am 11:32 AM

Don’t forget rcom coz it can alone maintain competition in the market

Rhishav Kumar Das
May 16, 2016 12:14 pm 12:14 PM

I am not sure. But I feel that RCom will merge with Jio in the future. This is just a thought.

Kaushik
May 16, 2016 3:00 pm 3:00 PM

Doubt it, because RCom already has ownership from Maxis and Sistema. I doubt those companies would be too happy with a merger with Jio which will almost certainly lead to their total disappearance from the Indian market. India is too important now to just leave, this is why Telenor is thinking twice right now….

S Gopal
May 16, 2016 7:37 am 7:37 AM

In the present scenario consolidation will be a welcome move, however, the tough time for the regulator will be when competition is reduced to less than four operators (who own network infrasturcture) as seen in UK where the likelihood of O2 (Telefonica) merging with Three (Hutchinson Whampoa company) was felt by the European regulator that mere three operators who own network infrastructure would hurt competition.

May 16, 2016 9:28 am 9:28 AM

DoT has taken into consideration such scenarios and has regulatory policies in place in the form of spectrum caps for operators. This ensures that no operator can own more than 50% of the available spectrum in any particular band in a circle or more than 25% of the overall spectrum across all bands in any circle. This ensures that each and every circle will have a minimum of 4 operators at any given time, be it a Pan India operator or a regional one, but healthy competition will always be maintained.

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