Mobile users, here's why 'discount days' may not end soon - Just news updated

Latest News Today - Find latest News in English and Latest News Headlines based on current affairs, sports, politics, entertainment, automobile, technologies.

Friday, June 29, 2018

Mobile users, here's why 'discount days' may not end soon



KOLKATA: The telecom sector is likely to further consolidate down to an effective two-private player market—Bharti Airtel and Reliance Jio Infocomm—with the combined Vodafone-Idea entity expected to be a laggard, with the prospects of telecom price wars continuing for another 10 quarters, analysts said.

The Jio-fueled pricing disruptions, they said, could continue well beyond the originally estimated four-to-five quarters duration as the Mukesh Ambani-controlled carrier is not expected to let up on aggressive pricing till it reaches at least a 30% revenue market share (RMS) from its current 20% level to achieve the requisite returns on the near $40 billion invested in its greenfield 4G operation.

“If Jio remains aggressive for the next 10 quarters and not four, there is the possibility of the market turning into two-private player (turf) from the current three, especially as pricing-related disruptions continuing for a longer period cannot be ruled out,” Rajiv Sharma, HSBC director and telecom analyst, said in a note seen by ET.

Former-Bharti Airtel CEO Sanjay Kapoor backed the view, saying that “sustaining three equi-sized telecom players may not be possible” if Jio-led price wars continue for the next 10-12 quarters.

“Given the current market realities, Airtel and Jio appear better positioned to be closer to the pole position vis-a-vis the Vodafone-Idea combined entity as the latter have been laggards in 4G data-related investments, and would be further burdened with the additional challenge of putting together a complex merger that could be taxing, both on their time and resources,” Kapoor said.

Vodafone India and Idea Cellular are close to completing the largest M&A deal in the telecom industry which will see India’s second and third-largest carriers combining operations to create the country’s largest telco by revenue and subscribers.

But the closure of the merger is expected to spill over beyond the June end deadline set by the two companies, with some saying that the final closure could take upto a month more. And the delay in the closing the deal is already costing the two companies revenue and subscriber market shares with their two rivals benefiting.

Rohan Dhamija, partner & head of India & Middle East at Analysys Mason, said the disruptive telecom pricing environment could potentially rob the emerging Vodafone-Idea combined entity of 5-10 percentage point of RMS in the first 12-15 months, post-merger, which is likely to be lapped up between Airtel and Jio.

“There is empirical evidence that in a normal telecom pricing environment, two merging entities initially lose about 2-3% RMS, post-integration, but in a disruptive pricing environment like India’s, the Vodafone-Idea combination could lose anything in the 5-10% range,” Dhamija said.


Continue read on https://www.gadgetsnow.com

No comments:

Post a Comment

PropellerAds