Tuesday, 31 March 2020

Towards A Telecom Revolution

Updated: April 3, 2010 12:00 pm

Not even the sky appears to be the limit for the sensationally successful telecom story in India. Out of only four 100 million plus subscribers telecom companies world over, India can now well boast of hosting two such telecom majors.

            The story that began here with the journey of the PCO blurring the digital divide now has now put India firmly on the global telecom map. While Reliance Communications joined its compatriot company to join the exclusive 100 million plus club, top financial institutions including India’s top bank were busy giving finishing touches to the $ 10.7 billion Bharti bid to acquire Zain, to mark India’s ascendancy in a globally competitive business vertical dominated by big bucks and even bigger business minds.

            Telecom watchers say it would not be long before India would add another 100 million plus company to its stride given the somewhat unstoppable telecom growth in the country. The sector is set to witness the advent of the 3G, which in turn would revolutionise the audio video component of mobile connectivity. The next level technology, much delayed, is set to finally see the light of the day, this year-end.

            Reliance Communications, only telecom operator offering nationwide CDMA and GSM mobile services, has announced crossing the landmark 100 million wireless customers, making it the second largest wireless operator in the country, after Bharti Airtel, to achieve this milestone. The momentous achievement has been attained within seven years of Reliance Communications first launching its pan-India mobile services in 2003. Incidentally, it is also the fastest ramp up of mobile customers in the world.

            A company statement quoting the company chairman, Mr Anil Dhirubhai Ambani, Chairman, Reliance ADA Group said: “The landmark 100 million mobile customer base makes us the youngest telecom operator to achieve this milestone in such a short span of time. Reliance Communications pioneered the mobile revolution in India and since then we have been the frontrunner of telecom innovations in the country. As we take the leap to achieve the 200 million mark, we will lead it from the front with more customer-centric innovations and service approach.”

            Reliance Communications now aims to achieve the next 100 million customers within the next 1,000 days. As part of this new leg of company’s journey, the company is adopting a multi-pronged customer-focussed strategy with the expansion of its GSM network and CDMA mobile broadband network, while focussing on customer-centric innovations and enhancing the overall Customer Experience. Reliance Communications is planning to rollout CDMA mobile broadband network offering Internet speed up to 3.1Mbps beyond 60 cities within the next 100 days, taking the total number of cities covered to 125 offering mobile broadband service.

            According to Syed Safawi, CEO Wireless Business, Reliance Communications; “We are delighted and humbled and thank our 100 million wireless customers who

helped us cross this landmark in such a short span of time. We also owe this achievement to our trade partners who have bestowed confidence in the Reliance Mobile brand. Going forward, the customer additions will continue to be complemented with profitable growth. Our market leadership in the CDMA space combined and our recent entry into pan-India GSM service gives us an opportunity to go after the revenue growth. We shall strive to offer our CDMA and GSM services in new geographies and make it the most technologically superior service in India.”

            Just about a week before the month closes, the Indian telecom uprising should have sealed Bharti’s bid for Zain, if everything goes as per the company stated plan. Airtel announced in mid February it had entered an exclusive discussion with Kuwati telecom major Zain until March 25 for the acquisition of the latter’s African unit. Bharti said the discussion to acquire Zain Africa BV was based on an enterprise value of $10.7 billion.

            “This potential transaction does not include Zain’s operations in Morocco and Sudan and remains subject to due diligence, customary regulatory approvals and signing of final transaction documentation. There can be no assurance that a transaction will be consummated. Further announcements will be made in due course,” Bharti Airtel said then in a statement.

            This is the third attempt by Bharti to enter the African telecom market. It had earlier tried twice to merge with South Africa’s MTN but regulatory hurdles came in the way of the deal. Though Zain’s African operations are not as big as that of MTN, if Bharti manages to push through this deal it will have access to an estimated 42 million customers across 15 African countries, including Nigeria and Uganda.

            As and when the deal goes through, it would be the second largest overseas acquisition by an Indian company, after Tata Steel Ltd paid $12.9 billion for UK-based steel maker Corus Group Ltd in 2007.

            It is not as if Bharti and Reliance are the only Indian telecom companies making headlines globally. Mobile firms in India added record 19.90 million subscribers in January; Taking total users in the worlds fastest growing, and second-largest, wireless market to 545.05 million, the Telecom Regulatory Authority of India said. In December, the firms had added 19.10 million users. Mobile subscribers grew at a monthly average of nearly 15 million in 2009. Tata Teleservices, 26 percent owned by Japan’s NTT DoCoMo, led additions for the sixth month in a row with three million new users in January, taking it to the fifth slot from its current sixth position in the country’s mobile market, Vodafone, BSNL, being the number three and four players, while Idea, was the sixth player.

            The telecom scenario in India has got a fillip with several new players, some of them backed by global players entering the crowded telecom space. The year has already witnessed MTS, Datacom, Swan Telecom, Uninor, getting active here, as also waiting for release of more spectrum to get into the pan India format. While current telecom leaders in the India pack feel that the market here has now enough players, especially in the 2 G space, the appetite among new comers to share a slice of the action is unending. The key argument forwarded by the newcomers was that yet despite the thundering success, only half of India was mobile connected. The clutter argument though holds true in top metros where in Delhi alone for a population of 1.7 crore, there were 2.5 crore mobile phones in operation.

            These select metros of course await the big bang 3G evolution given their capability to move beyond voice as the fundamental reason for mobile connectivity. Analysts exuded optimism over the 3G (hope the government meets this deadline since it has already missed two timelines for launch of the service) evolution. The 3G advent is expected to unveil an experience that brings about the perfect blend in audio, video, and data, leading to a windfall in terms of revenues for existing telecom, most of whom are set to grab the opportunity. The newcomers too have shown early interest but without significant numbers, they might want to play the waiting game.

By K Anjna

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