The Hindu Business Line : Telecom growth to continue: Fitch

Fitch Ratings has said that it expects India's telecom sector to sustain robust growth across market segments, underpinned by still-low teledensity, a strengthening economy and rising foreign interest.

"While consolidation is an ongoing theme, competition is expected to intensify given the aggressive expansion plans of certain regional players, some backed by their new foreign partners," said a release.

"Fitch also underscores that the expected continuance of hefty capital investment in an environment of intensifying competition is likely to preclude material credit improvements for most operators over the near term."

The sector has benefited from a progressive regulatory regime, which is arguably the most dynamic in the region, with several landmark decisions in recent years helping to dissipate regulatory uncertainty, it said.

In segments where competition is currently limited, the regulator remains focused on lowering barriers to entry and enabling sustainable competition, it added.

This is reflected in the recent easing of national and international long-distance licensing conditions, as well as the imposition of ceiling tariffs on domestic and international leased circuits.

Fitch also noted the aggressive business plans of some smaller regional telecom companies, but has maintained a cautious view of their plans given the entrenched positions and significant lead advantage of the existing national players.

Although further rationalisation appears inevitable, the next phase of consolidation may be delayed until cellular growth moderates.

Over the medium term, Fitch has predicted the emergence of six operators of scale - BSNL, Bharti Airtel, Reliance, Hutchison Essar, Idea Cellular and Tata Teleservices.

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