India’s telecom industry: Survival of the fittest
With Aircel filing for bankruptcy, the last of the small telecom companies is out of the way. It leaves the behemoths—Airtel, Vodafone-Idea and Reliance Jio—to slug it out
With Aircel filing for bankruptcy on Wednesday, the last of the small telecom companies is out of the way. It leaves the behemoths—Bharti Airtel, Vodafone-Idea and Reliance Jio—to slug it out.
Late last year, telecom secretary Aruna Sundararajan said 2017 had been a year of consolidation for the sector, while 2018 would be a year of growth. She was certainly right with regard to the former; the disruption caused by Reliance Jio’s entry has led to a wave of telecom mergers. But there are several caveats when it comes to the latter.
The sector has been under pressure since 2009. High financial leverage caused by rising capex—the industry has a cumulative debt of around Rs4.6 trillion, while revenues are under Rs1.8 trillion—and increasingly thin margins thanks to Jio’s pricing strategies mean there’s a long way to go.
If 2018 is indeed to be the year of growth, much will depend on the new National Telecom Policy, the relief package the government is putting together and the big three’s ability to find new revenue streams such as financial payments and streaming services.
Editor's Picks »
- Not every film can become a ‘Mahanati’: Actor Keerthy Suresh
- India to launch retaliatory tariffs on US imports from 4 August
- Swiggy raises $210 million in fresh funding from new, existing investors
- Pivot from oil or prepare to suffer: Un environment official tells Opec
- A ghost army that haunts Gulf rulers
- Why Indian paint makers are shifting to water-based paints
- 2019 elections still some time away but defence stocks get the jitters
- Complan and Horlicks sale signals low energy in health drinks market
- With fall of the last dove, MPC minutes portend more than one RBI rate hike
- RITES IPO ticks the valuations box, but not the growth one