As the sun dawned on 2009, the world was being battered by the global economic slowdown. In India, telecom was among the least affected sectors. As the economic position around the world improved, India added 141.5 million new subscribers in the first 10 months of 2009. That?s over 28 million more subscribers than the 113 million mobile subscribers added in 2008.
However, with 2009 ending, there are a couple of issues that still need to be resolved. The 3G auctions have been delayed. The introduction of mobile number portability (MNP) has also been postponed. So, what do we foresee for 2010?
While it is likely to be a great year for the Indian telecom subscriber, it will be a reasonably tough year for operators. With tariffs at 1 paisa a minute, subscribers are already having a great time. Intense competition at lower tariffs could mean that margins could be hit for smaller operators in the immediate future. But that should not be a major problem in the mid- to long-term future.
The big event slated for 2010 is the auction of 3G and BWA spectrum that would provide subscribers with quicker access to information on the mobile phone. As private operators launch 3G services, higher paying subscribers will migrate to the network. They will get better quality voice services apart from access to high-speed data downloads.
Migration to 3G will result in spectrum being released on the 2G network. In turn, these subscribers too will get better voice connectivity. Call drops that had become a feature of mobile calling in India would get reduced substantially. Also, existing mobile network operators will be in a position to lease capacity on their networks to mobile virtual network operators. As operators roll out BWA, subscribers will be in a position to access the Internet easily. That should, over a period of time, result in increased revenues per subscriber.
As voice quality improves, the Indian telecom user will be in a position to retain his mobile number while migrating from one network to another. That will happen as MNP becomes a reality. New operators would try to target high ARPU customers from rival networks. To ensure that such subscribers do not migrate to other networks, expect operators to woo such subscribers with a variety of schemes.
The telecom subscriber will have a surfeit of operators to choose from in case he decides to opt for MNP. In 2009, Sistema Shyam, Unitech Wireless and S Tel launched services. 2010 will see all these operators completing their network coverage. Apart from that, there will be the launches of Etisalat DB and Datacom.
But, like in everything, there are some challenges for the telecom sector. India needs a regulatory roadmap that clearly defines the path ahead for the next few years. That one thing could make things a lot easier for the telecom industry. The government needs to clear the confusion surrounding the future provision of 2G spectrum and a clear understanding of the mergers and acquisitions norms in the sector.
That is important since it is almost impossible for over a dozen operators to survive in a telecom market even if it is adding close to 15 million subscribers each month. Logically, India should have between 6-7 large operators. Overall, despite a couple of thorny issues, 2010 should be a reasonably good year for the Indian telecom industry.
The author is partner, Ernst & Young. Views are personal