India’s Telecom Industry Continues to Face Price Disruption

GSMA, a telecom group recently announced that the currently prevalent price disruption amongst the incumbent telecom operators will continue for at least another year, owing to the stiff competition. The present situation according to the group is similar to other markets where tariffs have been brought down to face intense competition.

GSMA – World’s Top Telecom body

GSMA is a London-based telecom group having more than 800 operators on board including Bharti Airtel, Idea Cellular, Reliance Jio and others. In one of the reports published by GSMA, the Director General Mats Granryd told ET that the present telecom industry in India is going through a consolidation of market. “You take the example of Europe, telcos operate in low revenue, and similarly in North America, where a couple of operators are trying to beat competition by lowering tariff” said Granryd.

In September 2016, Reliance Jio’s market entry had a huge impact on the Indian Telcos. Giant telecom operators like Bharti Airtel, Vodafone India and Idea Cellular have already cut down their tariffs. Furthermore the sharp competition is leading to forced industry consolidation. Operators like Vodafone and Idea Cellular have signed a $23 billion deal to enter into a merger. Companies like Reliance Communications, Aircel and MTS are also set for merger. Bharti Airtel on the other hand is in the process of buying out Telenor India.

GSMA has presented its views on the consolidation stating that it’s a relatively newer phenomenon for the Indian telecom firms and would help on long term basis. According to the group India’s telecom market is becoming more data centric and they are including further data services like video streaming etc. into their offerings. There is also news which says that Kumar Mangalam Birla and Sunil Bharti Mittal have approached the Government for rationalization of taxes in order to overcome the financial stress.

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