Vodafone Group’s ex-CEO Arun Sarin says India telecom consolidation good for customers; three reasons why

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Published: February 27, 2017 12:05:57 PM

The ongoing consolidation in the Indian telecommunication sectors with the merger of Vodafone India and Idea Cellular, and Bharti Airtel and Telenor India, will be good for the customers despite three large entities controlling the bulk of the market, as the intense competition between them will continue, Vodafone Group’s former CEO Arun Sarin has said.

vodafone, vodafone goa, vodafone india, india vodafone, 4g vodafoneArun Sarin said that going forward, voice and SMS services will become part of data bundle offers. (Image: Reuters)

The ongoing consolidation in the Indian telecommunication sectors with the merger of companies such as Vodafone India and Idea Cellular, and Bharti Airtel and Telenor India, will be good for the customers despite three large entities controlling the bulk of the market, as the intense competition between them will continue, Vodafone Group’s former high-profile CEO Arun Sarin told CNBC TV18 in an interview.

India’s second-largest telecommunication services provider Vodafone and the third-largest operator Idea Cellular are in talks for an all-share merger, in the first consolidation move in the Indian telecom industry reeling under the pressure of intense competition from Reliance Jio’s free service offers (read more). On the other hand, Bharti Airtel said earlier last week that it will acquire Telenor India, taking out one of its rivals who are undercutting the prices by offering cheaper tariffs in order to gain subscribers (read more).

  • Competitive pricing
    “This is going to be good for the customer because they are all going to compete aggressively,” Sarin said to CNBC TV18, ahead of the impending merger between Vodafone’s India business and Idea Cellular. “Pricing power in telecom sector comes from innovation,” Sarin said, adding that pricing power could also be derived with services that can be bundled which could extract some value from the customers.
    This would be despite the three large entities created post the consolidation would control the bulk of the market. “Jio, Airtel and Vodafone block will have 90% of the market share. These three names you can expect to see for a long time,” Sarin said.
  • Bundled pricing
    Sarin said that going forward, voice and SMS services will become part of data bundle offers. “You would buy a bundle — either an unlimited bundle, or big bundle or medium sized bundle for different amounts of data, while voice and text would be bundled along with it,” he said.
    Earlier last week, Reliance Industries Chairman Mukesh Ambani said that Reliance Jio will offer its “prime” customers 1GB data per day with unlimited voice calls for Rs 303 per month, on a one-time payment of Rs 99 (read more).

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  • 4G services
    Going forward, the high-speed networks will drive several useful services which could ride on the robust infrastructure. “Jio platform has 4G connectivity and many other services associated with it. They have the right vision for what a mobile company could be and should be in coming years,” Sarin said.
    Reliance Jio is offering much larger chunks of high-speed 4G data, as compared to the incumbents. Along with its, Reliance Jio also offers content to keep the users engaged on its network.
    Earlier last month, Fitch Ratings analyst Nitin Soni had said that Reliance Jio may have an upper hand over other telecom service operators with its holistic packages including free music, movies and videos, which may help it retain customers.

 

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