India's telecom sector will enter the new year completely transformed with the four remaining major operators looking to revive revenues to solidify their position in Asia's second-biggest economy.
The country's telecom industry has been through a though time this year, as intense competition has led to aggressive price wars, forcing some of the operators to merge and driven smaller players out of the market. Only four major companies now remain in a once over-crowded market, and they undoubtedly dominate the nation's telecom sector.
"The Indian telecom industry has seen lows in the past year due to wars for tariffs and data usage," says Dushyant Jani, the founder and chief executive of Mobclixs Technologies in Mumbai.
Reliance Industries, a conglomerate largely associated with oil businesses and controlled by India's richest man Mukesh Ambani, in September 2016 launched a new telecoms operator, Reliance Jio. This has transformed the landscape of the industry, with cheap data deals, extensive free trial offers and promises of free calls for life. Mr Ambani has described data as "the new oil", as his company makes a push to dominate the sector.
"Due to the Jio effect, revenues of telecom firms have seen a considerable change. Mergers have been on the rise, but the entry of Jio [also] saw many telecom operators shut shop as well," notes Mr Jani.
The four major firms that are now left in India are: Bharti-Airtel, Idea-Vodafone, public sector BSNL-MNTL and Jio. In March, Vodafone's Indian subsidiary and Idea announced they were merging.
“The current scenario in the Indian telecom industry is very, very volatile,” says Malik Gilani, the founder and chief executive of Esar Media and Advertising in Mumbai. “The disruption of the data revenue which has been caused by the inclusion of Jio [in the mix] has changed the balance sheets of operators.”
Telcos have seen sharp declines in profit and some of them even recorded losses this year. The industry is expected to see a 5.3 per cent year-on-year decline in the gross revenues to 1.79 trillion rupees (US$28 billion) in the current financial year, which runs until the end of March 2018, according to JM Financial, an Indian financial services group.
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However, the firm forecasts a recovery in the next fiscal year, and projects that revenues could rise by 6.5 per cent, largely on account of fewer competitors in the market.
“We expect sequential revenue growth to begin from the January to March quarter, driven by the exit of smaller telcos, 4G price hikes and likely adoption of unlimited calling plans by 2G feature phone users,” says Sanjay Chawla, a telecom analyst at JM Financial Research.
Smaller telcos, which include Aircel and Tata Teleservices are expected to either merge or remain niche operators.
Thursday's long-awaited verdict on the 2G scam, one of India's biggest corporate scandals, the court in a surprise decision acquitted all the parties implicated in the case. The long running court battle is a reminder of the upheaval the industry has been through over the last few years and of a time when there were too many operators in the market.
Those cleared in the corruption case include a number of high profile corporate executives and political figures, including the former telecoms minister A Raja, who were accused of colluding in awarding 2G telecoms spectrum licences in 2008, at prices below the market value in exchange for bribes.
The corruption case resulted in the Indian Supreme Court cancelling all 122 telecom licences in 2012, forcing some foreign telecoms operators to exit the Indian market, including Etisalat, after it became inadvertently involved in the issue when it bough a stake in Swan Telecom in 2009, the company which had acquired a 2G licence a year before Etisalat’s investments.
The verdict is seen as a blow to prime minister Narendra Modi's Bharatiya Janata Party (BJP) government which has been running an anti-corruption drive in India. This multi-billion dollar scandal was considered a factor in the Congress party – which was in power at the time of the alleged scam – losing to the BJP in the 2014 general elections.
"It took long to uncover this 2G scam – and now that the current verdict is out, it's shocking," says Mr Jani.
The stakes are high when it comes to India's telecom sector. In a country of 1.3 billion people with a young demographic, the smartphone market is rapidly expanding. India recently overtook the United States to become the world's second largest smartphone market after China, with shipments of phones to India rising 23 per cent in the third quarter of the year to more than 40 million handsets, according to figures from technology research firm Canalys.
Smartphone use is only expected to rise, with many Indians still using older phones expected to migrate to the smartphones, particularly as data costs and the price of devices come down. Manufacturing of budget smartphones in China and India is going to make owning a device easier and more affordable.
"Consumers have become more powerful and connected," says Mr Gilani, who adds that for many Indians, a mobile phone is often the primary mean of accessing the internet and data use is on on the rise in the country.
This bodes well for the operators which are left standing. The surviving players now have a significant opportunity to grow, say analysts.
“The industry revenues could revive over 12 to 18 months period led by Jio increasing its tariffs, the exit of smaller telcos and expansion of the data revenue base, leading to probability of relatively stable pricing environment with lower competitors per circle,” says Tanu Sharma, an associate director at India Ratings and Research.
Ms Chawla expects the gross revenue of the companies that chosen to exit the market will get redistributed among the "big three" and public sector undertakings over the next 12 to 15 months.
Reliance Communications, owned by Mukesh Ambani's brother Anil Ambani (who is struggling with his own debt problems) was forced to shut down operations of his company Reliance Communications at the end of November. He is facing an insolvency case filed against his firm by China Development Bank, according to reports.
This case is expected to come before the bankruptcy court in January; and Reliance Jio is understood to be looking at acquiring some of Reliance Communications assets, including telecom tower infrastructure and spectrum, Indian business newspaper Mint reported yesterday.
There will be more opportunities for telecom companies in the near term as Indian government continues to look at ways to test and meet its target of rolling out 5G technology for consumers by 2020 in the country, which offers enormous potential for the telecom to ring up significant profits.
“The key downside risk is Jio introducing promotional free services or lower prices to drive the uptake of its 4G feature phone, Jio Phone,” says Mr Chawla.
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Starring: Salman Khan, Katrina Kaif, Sunil Grover
Rating: 2.5 out of 5 stars
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Tips for job-seekers
- Do not submit your application through the Easy Apply button on LinkedIn. Employers receive between 600 and 800 replies for each job advert on the platform. If you are the right fit for a job, connect to a relevant person in the company on LinkedIn and send them a direct message.
- Make sure you are an exact fit for the job advertised. If you are an HR manager with five years’ experience in retail and the job requires a similar candidate with five years’ experience in consumer, you should apply. But if you have no experience in HR, do not apply for the job.
David Mackenzie, founder of recruitment agency Mackenzie Jones Middle East
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THE BIO
Born: Mukalla, Yemen, 1979
Education: UAE University, Al Ain
Family: Married with two daughters: Asayel, 7, and Sara, 6
Favourite piece of music: Horse Dance by Naseer Shamma
Favourite book: Science and geology
Favourite place to travel to: Washington DC
Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.
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Producers: KRTI Productions, T-Series
Director: Sree Narayan Singh
Cast: Shahid Kapoor, Shraddha Kapoor, Divyenndu Sharma, Yami Gautam
Rating: 2/5
The specs: 2018 Harley-Davidson Fat Boy
Price, base / as tested Dh97,600
Engine 1,745cc Milwaukee-Eight v-twin engine
Transmission Six-speed gearbox
Power 78hp @ 5,250rpm
Torque 145Nm @ 3,000rpm
Fuel economy, combined 5.0L / 100km (estimate)
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Engine: 3.8-litre twin-turbo V8
Power: 611bhp
Torque: 620Nm
Transmission: seven-speed automatic
Price: upon application
On sale: now
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THE LIGHT
Director: Tom Tykwer
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The Prison Letters of Nelson Mandela
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Indoor Cricket World Cup – Sep 16-20, Insportz, Dubai
16 Indoor cricket matches are 16 overs per side
8 There are eight players per team
9 There have been nine Indoor Cricket World Cups for men. Australia have won every one.
5 Five runs are deducted from the score when a wickets falls
4 Batsmen bat in pairs, facing four overs per partnership
Scoring In indoor cricket, runs are scored by way of both physical and bonus runs. Physical runs are scored by both batsmen completing a run from one crease to the other. Bonus runs are scored when the ball hits a net in different zones, but only when at least one physical run is score.
Zones
A Front net, behind the striker and wicketkeeper: 0 runs
B Side nets, between the striker and halfway down the pitch: 1 run
C Side nets between halfway and the bowlers end: 2 runs
D Back net: 4 runs on the bounce, 6 runs on the full
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Transmission: Seven-speed automatic
Fuel consumption, combined: 10.5L / 100km
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This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
How has net migration to UK changed?
The figure was broadly flat immediately before the Covid-19 pandemic, standing at 216,000 in the year to June 2018 and 224,000 in the year to June 2019.
It then dropped to an estimated 111,000 in the year to June 2020 when restrictions introduced during the pandemic limited travel and movement.
The total rose to 254,000 in the year to June 2021, followed by steep jumps to 634,000 in the year to June 2022 and 906,000 in the year to June 2023.
The latest available figure of 728,000 for the 12 months to June 2024 suggests levels are starting to decrease.
Look north
BBC business reporters, like a new raft of government officials, are being removed from the national and international hub of London and surely the quality of their work must suffer.
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SPECS
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