Idea's Kumar Mangalam Birla says telecom sector in a fight-to-finish war
12 October 2017
The battle weary telecom sector in India has started showing signs of depression and in the years to come the sector will have to consolidate fast if it is to save some operators exiting the scene, says Kumar Mangalam Birla who heads the Aditya Birla Group telecom firm Idea Cellular.
Birla, who will reportedly head the merged Idea-Vodafone entity, which will be the largest telecom operator in India with 400 million customers, said the price war is so fierce that in years to come only a few "fittest" mobile operators will survive in the business.
"The telecom sector is undergoing a very turbulent and difficult phase," Birla said in an interview with Bloomberg this week. "Probably the fittest three will survive," the business news portal quoted him as saying.
While the merger with British telecom operator Vodafone will make Idea-Vodafone the largest telecom operator in India with some 400 million customers, a number much larger than incumbent market leader Bharti Airtel's which is over 225 million, it may not save the operator from the worsening price competition.
While Birla expects "the tariffs should stabilise at some point," it's still hard to say when prices will stop falling.
The aggressive telecom sector price war that started with the entry of Mukesh Ambani-led reliance Industries with his Reliance Jio Infocomm in September last year, there is no sign of the competition easing any time even after the passing of a full year.
Jio, which started off with a free offer for the first six months or 180 days of its launch, continues to undercut other service providers with freebees – Jio offered free unlimited 4G data and made its free voice calling service from its network a lifetime offer.
This has caused huge revenue losses to incumbent players, including Bharti Airtel, Idea Cellular and Vodafone that have taken up the issue with country's regulatory authorities.
Jio, however, has blamed the business model adopted by these companies as the real culprit.