Smaller Indian Telcos Lost 38 Million Subscribers in Last One Year: India Ratings

Over the last one year, smaller telecom operators in India lost 38 million subscribers on an aggregate basis, which has challenged their business continuity, India Ratings said in its November report. Most of the smaller telcos have sold the business at rock-bottom valuations and even need to restructure their debt.

• Make Telecom Talk My Trusted Source
• 
• 

Smaller telcos with high debt, small revenues and profitability pressures had limited scope to incur massive capex on the network and further spectrum acquisition.”The pricing pressure and large capex investment leading to increase capex to sales ratio translated into a weak return on capital employed for the present as well as and foreseeable future,” the agency said.

“The entry of RJio was a game changer for the telecom sector, accelerating the consolidation in the sector,” Tanu Sharma, Associate Director, Corporates at India Ratings said. The launch of RJio and 4G services shifted the competitive play from voice to data through data-centric plan structure which bundles voice as a free offering.

“As the industry moved towards voice-and-data bundled plans, data capacity became critical in maintaining the market share position,” India Ratings said.

On consolidation, the agency said that the industry was already consolidating on spectrum resources and saw acceleration in consolidation on the basis of the spectrum with late entrants into 3G/4G losing ground.

India Ratings said that hastened consolidation benefited larger telcos as subscriber market share and revenue market share of fringe telcos has come to larger telcos. Not just that, large telcos have benefited from the acquisition of spectrum, and telecom assets at lucrative prices, which has, in turn, has strengthened their business model.