Recently published research from Business Monitor International, "India Telecommunications Report Q2 2014", is now available at Fast Market Research
Boston, MA -- (SBWIRE) -- 04/11/2014 -- The Indian telecommunications market has experienced a considerable number of challenges in the last few years due to constant regulatory disputes and a hostile business environment, which includes an aggressive price war that has eroded operators' profitability. Despite the country's significant growth potential, the industry is struggling to capitalise on the opportunities, which will remain the central theme in the near future as we do not expect the market to reach a swift resolution of these complicated issues.
- In September 2013, the Indian mobile subscriber base fell back slightly relative to the previous quarter, although the overall momentum over the year to date has been positive, and we envisage a rise to 876mn subscribers by the end of 2013.
- We continue to expect ARPU levels to trend higher due to 3G and value-added services, although we highlight the fact that the industry is prone to downside risks such as aggressive price competition, with a number of key operators having recently slashed their 2G data charges.
- Looking longer term, the government's recent move to allow foreign operators to have a stake of up to 100% in local telecom companies is likely to result in the injection of much-needed funds to roll out the nation's 3G network infrastructure.
- We forecast slow but steady fixed broadband subscriber growth as operators and consumers opt for cheaper and more convenient mobile solutions.
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India is in 13th position in BMI's Asia Pacific Telecoms Risk/Reward Ratings, with a Telecoms Rating score of 46.5.
Key Trends And Developments
In July 2013, the Indian government lifted the 74% foreign direct investment (FDI) cap in the telecoms sector, allowing foreign investors to increase their stake to a full 100%. Although this is likely to help stimulate a process of industry consolidation, BMI expects that the process will not begin in earnest until the TRAI issues new M&A guidelines for the sector. Up until now, consolidation has been hampered by the 2G concession cancellations and uncertain acquisition rules.
In February 2014, operator Bharti Airtel announced plan to buy out the assets of smaller operator Loop Mobile, following the Vodafone's decision in January 2014 to increase its equity stake in its Indian mobile operation. BMI analyses the reasons for Bharti's latest acquisition.
Bharti's decision to acquire Loop Mobile lies in the latter's position in the Mumbai telecoms circle. Loop Mobile had previously provided mobile services in 14 of 22 Indian telecoms circles. However, the company was reduced to only operating in the Mumbai circle after the Indian government revoked 122 2G licenses from operators in 2012. Loop Mobile had 2.89mn subscribers in Mumbai in December 2013, according to the latest official data published by the Telecom Regulatory Authority of India (TRAI).
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