In the next several months, telcos in India will spend or commit to spending around $10 billion (Rs44,600 crore) on air waves that will enable them to offer third-generation services.
In subsequent months, they will spend at least an equal amount rolling out networks that will facilitate these data-rich services.
It would be reasonable to assume that at least some of this money will come from debt. That may well be the reason why analysts cited in an article in the Financial Times expect another round of consolidation in the industry.
This is only to be expected. Consolidation in the Indian telecom market has been driven by a desire to grow faster or, in the case of new entrants, participate in the India story in telecom. But it has been also driven by the desire to exit of companies overloaded with debt, or which are at the wrong end of a policy or litigation.
And in the Indian telecom business, litigation and governmental intervention that aren’t always rational have always been key contributors to growth.