The Hindu Business Line : Talk and cross-talk in the telecom space

The telecom terrain seemed to have just the usual talk and cross-talk till the Hutch issue sprang up, like a call from the blue. For light amidst the buzzing sound bytes, Business Line approached Prashant Singhal, Telecom Industry Practice Leader, Ernst & Young. "The recent saga over the Hutchison sell out in their joint venture with Essar Group has sent investment bankers and telcos alike into a tizzy," he acknowledges, and pauses just long enough for us to ask him a few urgent questions. Such as...

Chakkar kya hai?

While the industry yo-yos with fresh speculation every day, the consumer is struggling to decipher what difference does it make to him. Most mobile subscribers, in fact would by now, have resigned to becoming oblivious to all the rumblings in the press and only Hutch users would occasionally stare at their handsets and wonder if the screen will soon read any different. A new and unexpected chapter in Indian telecom may unfold.

Suna tha, they have high ARPU. Means?

Hutch, today, is a significant player in the industry and occupies the comfort of a niche position. It earns one of India's highest ARPU (Average Revenue per User) of about $8-9 per month from its 22 million plus subscribers, and is seen as a high-end urban operator, making the Indian telecom giant a delectable cuisine.

Is competition calling?

The entry of new global players in the industry could inject some explosive nitrogen fuel in an already competitive environment, and more importantly a change in the management at Hutch would bring new ideas and innovation. New ownership of Hutch will shift the competitive landscape in the industry and bring clear consumer benefit.

Consumer? Usko kya milega?

Directly or indirectly, users in India will hear the foreign management scream Dimaag ki batti jalao! in driving innovation with an Indian regionalised flavour to increase market share in a rapidly growing market.

Aur?

We may see new strategies being developed to capture the already low ARPU market such as varied services and schemes apart from a further reduction in tariffs. While, on the one hand, the new operator will target the subscriber with great offers, on the other hand, the industry as a whole could learn from the skills and competencies of global telecom players.

Desi vs videshi?

One cannot rule out the possibility of an Indian operator bringing home Hutch and the pug in tow. With at least two Indian operators planning to attend the Hutch New Year party, the competition to buy this sumptuous meal is getting meatier than ever.

A new Indian management could well drive expansions in the near future with the Hutch pug leading the way into the rural market with its new Indian lord.

Where are the deals headed?

If the final result is consolidation between two major operators, there could be a significant decline in competition, which could be as unexciting as the Baggy Green vs Bangladesh test match on the turf.

This would act as a precursor and drive the rest of the industry towards consolidation to match up with the Warne-like colossus of telecom.

The aggressive stroke play by operators could go out of view and be replaced by a safer, passive strategy. The fall of one more wicket could really change things.

Are there unanswered questions?

One still wonders why one of the biggest stars would choose to exit the Big Boss' House at 3, Indian Telecom Street.

While internal strategy coupled with sell out is being looked at as a route to investment in other ventures, analysts are not ruling out the possibility of a thought out stratagem.

Indian market is growing, so why should anybody exit?

Indian telecom market is set for continued and rapid Dhoom in the next few years, but projections and valuations of Indian telcos would start to flatten out at the end of this decade.

With this tapering growth, saturating urban markets and low ARPU rural markets, it could well be a good tactic to exit at this stage while valuations are still soaring.

The real heroes though, recognise and are attracted to the real opportunity, which is long-term. The big Dhooms' over the next 10, even 20 years are the far larger, sweeter sequels that these players are competing to play leading roles in.

Sounds like a nice ring-tone?

Perhaps. Even as we, the consumers wait for the encore at the end of this `Crazy Kiya re' sequence, the real suspense is about how it might change our lives!

BasicBaatein@gmail.com

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