Contrary to what the analysts say about the newly merged Vodafone Idea Ltd, the Telecom Regulatory Authority of India (Trai) has asserted that it is confident about the upcoming situation in the telecom sector that no more telecom operators will be facing heat due to excessive competition. The regulator has also said that the industry is on the verge of hitting a new growth wave. The analysts are of a different view as they have predicted that the newly emerged market leader, Vodafone Idea will have a tough time in navigating the waters given Reliance Jio’s harsh pricing techniques. However, a senior Trai official has said that the merger will take time to settle down. The official also highlighted that two giants that have got the stake in the company are strong companies - UK’s Vodafone Group Plc and Aditya Birla Group which means that there is no lack of synergy in the new merger.
Trai Ensures Bright Future in the Industry
The official said about this development, “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.” He added saying that the sector is unlikely to see a further downfall in coming months.
Questions were thrown to the official about the declining revenue in the industry triggered by the entry of Reliance Jio and further the competition being given by Bharti Airtel. He was asked whether or not the growing competition would worsen the situation in the sector. Also, the fact that the newly merged Vodafone Idea Ltd is losing Revenue Market Share is a cause of concern for the company.
Merger Will Take Time to Settle Down: Trai
About the issue, an internal note of JP Morgan, which was read by ET, 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.”
The official said “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.”
It’s also worth noting that only a few days ago, in an investors’ meeting, Bharti Airtel remarked that the upcoming opportunities in the Indian telecom market were “massive” even though the current situations are harsh. The former market leader also said that ARPU has eroded by 40% given the heavy investments in the past months. To recall, Airtel itself had put in a massive Rs 23,800 crore in capex for the year ending 2017-18 and has allocated additional Rs 24,000 crore for the present Financial Year