The year 2011 saw strong headwinds on the high degree of uncertainty on the regulatory side and positive tailwinds on consumer demand and traction, said Himanshu Kapania, managing director of Idea Cellular, Indias third largest mobile telephony company in terms of revenue.
The year started with government putting mobile telephony companies on guard, allowing number portability that allowed users to switch operators while retaining numbers. However, MNP failed to find favour with users as only 3% chose to change their service providers until October 2011.
With the implementation of MNP, the industry saw a focus shift towards increasing quality of service and network efficiency by adopting better technologies, said Benoy CS, director of ICT Practice, Frost & Sullivan, South Asia & Middle East.
The intense competition is driving away companies' focus from networks and technology to services and customers, added Benoy CS. The chase for subscribers also ended, as focus shifted towards generating profit. Between January and October, companies connected 79 million, a tad over one-third of last year. India had 881 million mobile subscribers until October, connecting 76% of total population.
Focus shifted towards revenue-generating subscribers and that is why we even saw some operators clearing up their networks and getting rid of free minutes, said Nilangshu Katriar, director, telecom practice at Ernst & Young India, a global consultant.
Bharti Airtel and Reliance Communications launched tablets to drive 3G services, while Vodafone and Idea Cellular launched mobile handsets bundled with data to add users. "In the coming year, we will expand on tailwinds by growing rural demand on voice business and will see stabilisation in 3G networks and ecosystem," says Idea's Kapania.
High tariff, costlier handsets and unfinished network rollout dented customer sentiments to choose 3G services in 2011. Department of telecommunication's (DoT) latest move to ban 3G intra-circle roaming pact turned a dampener for service providers who later challenged it in court. Consultants say 3G intra-circle ban would hamper the telecom companies' growth.
Despite government mobilising huge amount from 3G and BWA licenses, it seems collectively that the telecom industry is witnessing a syndrome kill the goose that lays golden eggs, said Hemant Joshi, partner at consultant Deloitte Haskins & Sells India.
Telecom companies, reeling under pressure to drive data uptake, heavy dependence on voice and an interest burden from loans availed to purchase 3G spectrum, can now look up for better numbers in next year.
Analysts expect better performance in the first quarter of financial year 2012-13, as companies raised tariffs by 20%. "The tariff hike will have a positive impact on revenues of mobile telephony companies and the industry may see another round of tariff hike by 10-15%, Katriar of Ernst & Young said.
Deloitte's Joshi agrees. Hopefully, 2012 will see the revival of telecom industry, which is bleeding cash to help India achieve the vision of NTP 2011 of anytime anywhere connectivity.
But, companies have their challenges to push 3G applications. They need to develop a killer application as powerful as short message service (SMS) and e-commerce to make more money and lack of it may reduce spectrum to a dumb pipe.
The big question facing these operators is to develop a service which is as successful as SMS and in my view it could be m-commerce, said Ashish Khanna, managing director, communications, media and technology practice, Accenture India. "The SMS has survived for 20 years."
The 3G monetisation will be paramount for all the operators," he said. "It will be also about how they develop ancillary or adjacent areas like m-commerce, tele-medicine, and focus on enterprise mobility.
Next year, the telecom industry will separate the men from boys after the government reviews M&A guidelines.
"Year 2012 may well be one that decisively separates the long-term and serious contenders from the rest," said Yogesh Malik, chief operating officer at Uninor, a new operator. "With an effective M&A and exit policy in place and a clear and stable policy environment, we expect that genuine competitors will be able to invest and participate in this market with confidence."