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telecom | IST

Big Deal: Telecom sector on its way to become duopoly, experts weigh in

Telecom is in news with many material developments over the past few days. The largest being the developments at Vodafone Idea, which may change the entire landscape of this particular sector. What are we looking at, duopoly, 5-G play and the big digital thrust to put all that into perspective, CNBC-TV18’s Nisha Poddar spoke to experts in this sector - Enda Hardiman of Hardiman Telecommunications; Peeyush Vaish of Deloitte India, and Jwalant Nanavati of Nomura.

Telecom is in news with many material developments over the past few days. The largest being the developments at Vodafone Idea, which may change the entire landscape of this particular sector.
What are we looking at, duopoly, 5-G play and the big digital thrust to put all that into perspective, CNBC-TV18’s Nisha Poddar spoke to experts in this sector - Enda Hardiman of Hardiman Telecommunications; Peeyush Vaish of Deloitte India, and Jwalant Nanavati of Nomura.
Hardiman said, “When the mobile communication industry started, there were incumbents and then there were incumbents and one new licensee. Question that the industry asked was how many operators could a market sustain? And, India was actually looked at by the rest of the world because the de-regulation in India happened very quickly.”
“As it turned out, too many licensees were afforded opportunity in India and that, of course, led to inevitable consolidation. Similar things happened in other markets internationally. But by and large, in large markets and in developed markets, I would not even say by and large, it's an inveterate move mobile markets have converged on three operators.”
“Now, that happened in India and usually, the way markets get structured is such that there are two operators who have been there for a while and the disruptive innovator, and we have seen that in India, as well, we have seen Jio introduced disruptive innovation into the market to the benefit of consumers and to the benefit of the industry over all. So the short answer is that, it would be unusual for a market of the size and sophistication of India to move toward a duopoly situation.”
“The disadvantage of a duopoly in any mobile market is that it inhibits innovation. If the two incumbent operators start to become comfortable then that of course acts as a detriment of their variety or the quality of service that is provided to users.”
Talking about impact of duopoly Vaish said, “Apart from the losses on the jobs, which is just not for an operator, but really for the entire ecosystem I think largely, if you look at it, the other big sector that is going to really get impacted is going to be the entire tower companies. Because the whole genesis of building up the tower companies was really on the multi tenancy aspect.”
“Today, if you look at it, the tower sector, is almost a $3 billion sector in India, and for the tower sector to be profitable, you got to have tenancy, at least to the extent of 2.2 -2.5 tenancy a tower. If this was to happen, I think probably the tower company will merely become cost centres. So I think that is another area which will probably get hit and there is big money that has actually got invested into the tower goes. So I think that is another area which will probably come to hit us if this was to happen.”
For full interview, watch accompanying video...