In the past 2 years, Indian Telecom sector is in the news with more negatives than positives. The legal wrangling on multiple issues is flashing print media most of the time. It impacted telecom sectors and transformed from growth sector to crisis sector. In the past few quarters mobile operators started trying to get out of woods. The 2G license cancellation and subsequent legal order forced multiple operators to shut their services without any fall back solution for mobile subscribers. Most of the affected mobile operators were the initiator of price war and grabbed large chunk of mobile subscribers. Their on-going legal issues offered an opportunity to other mobile operators to define and redefine industry trends. Most of the incumbent mobile operators experienced lower churn rate last quarter and MNP request even though all of them raised tariffs in selected or all circles. In order to streamline customer service delivery and information management, incumbents initiated clean-up process of non VLR active mobile user base. It was viewed that incumbents are losing market share but in-turn incumbents were busy in cost streamlining process to be prepared for the new user addition post the closure of services from many mobile operator post legal decision. Based on COAI Jan 2013 subscriber data, it is evident that Tier 2 and Tier 3 mobile operators lost around 4.5Mn Subscribers whereas Incumbents added around 5Mn. The new added subscriber can be termed as revenue generating active subscriber. It would offer incumbents an opportunity to move towards the growth path again in next one or two quarters. The incumbents would be vying for additional 7 Mn subscribers in Feb- March 2013, duration post closure of Unitech Mumbai Circle and MTS 10 circle. I believe the temporary lower competitive environment is going to help incumbent reduce their advertisement cost and subsequently per user acquisition cost.
It’s sad to see thousands of job losses, Billions of $ lost in potential investment which would force to invest few more Billion $ to be able to resurface. In my point of view, it would be extremely difficult for mobile operators to regain the confidence of their loyal subscriber base once they are back with services.
In conclusion, it would be interesting to see the revival of mobile operator who closed their services. Post number of regulatory changes, any tariff war is going to be more damaging than supportive.
Background Reference Posts: Free roaming in India – Full of hidden Opportunities , Indian wireless sector may experience negative net subscriber growth for many quarters , MNP Regulation – Regulator’s Vision Verses Reality, MVAS Regulatory– Technology and Business Impact on VAS companies , 840 Million Indian Wireless Subscriber by March 2013
