The Hindu Business Line : BSNL seeks Govt nod for expanding network in foreign shores

New Delhi, Oct. 6 In a bid to expand its operations beyond India, State-owned Bharat Sanchar Nigma Ltd has approached the Government seeking permission to invest in the telecom sector in other countries. The company is looking at emerging markets including Oman for expanding its network.

BSNL’s market share in the Indian market has been dwindling owing to fierce competition from the private players. The company’s profits have also been on the decline. While it is still the largest fixed line operator in the country, the PSU has slipped to number four slot in the cellular segment.

But it’s just not BSNL which is looking to venture out. Saturated urban markets, declining average revenue per user, tighter acquisition laws and the desire to achieve global scales is driving Indian telecom operators to invest into other emerging countries.

Bharti Airtel, Reliance Communications, Tata Communications and State-owned Mahanagar Telephone Nigam Ltd have already launched services in some of these new markets and are hungry for more.

“This is not a surprise development because as the Indian urban market gets saturated, these companies are looking at other emerging markets to sustain the growth. Africa, for instance, is one of the growing markets outside India. The other reason would be to get global scales, just like foreign multinational companies that are entering India. Indian telcos are also eyeing the advantages related to global scales,” said Ms Arpita Pal Agrawal, Associate Director, InfoComm Advisory Services, PricewaterhouseCoopers.

High Revenue

While ARPU in India is just around the $5 level, this is much higher at around $11 in other emerging markets. By foraying into such territories, Indian companies are hoping to cash in on higher margins.

Analysts also point out that the Indian mobile market has already reached the 300 million mark and another 200 million subscribers are expected, mostly from rural areas. This is enough to sustain the current growth rate for only about 3-4 years more after which operators may come under pressure.

But Indian companies also have to deal with challenges related to higher cost of operations, different regulatory environments and competition from large global European and American majors who are also eyeing these emerging markets. One advantage that Indian operators have is that they have learnt the trick to make profits even as they offer the lowest tariffs in the world.

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