Local business hit by high licence, spectrum fees

Overseas businesses are becoming more important for telecom companies in view of the huge licence fees and spectrum charges that they have to bear in India.

Analysts believe that in the long term, the domestic as well as international business would form an equal pie in terms of revenues for telecom companies.

Tata Comm

Telecom company Tata Communications, which conducts its South African operations through its subsidiary Neotel, has seen revenue increase to Rs 484.01 crore at the end of September 2012 (from Rs 462.76 crore in the year-ago period). Neotel turned EBIDTA-positive from the second quarter of this financial year. It offers wholesale international voice and data transit, enterprise business solutions for the wholesale and corporate market, telephony and data services for retail customers in South Africa.

“The Indian market is an overcrowded market. The cream of the telecom market is thoroughly exploited. Many telecom companies are betting on Africa to generate some revenue for them,” said Jagannadham Thunuguntla, Strategist and head of research, SMC Global Securities.

Bharti Airtel

Telecom major Bharti Airtel acquired the African operations of Zain Africa in 2010. For Bharti Airtel, revenues from mobile services in Africa have increased to Rs 6,051.2 crore at the end of September 2012 from Rs 4,703.2 crore in the year-ago period.

“Bharti Airtel is yet to be profitable in their African business. We expect that Bharti Airtel will break even at the net level in the next one to two quarters. In the long-term, business from India and international business would contribute equally to revenues,” said Gaurang Shah, Assistant Vice-President, BNP Geojit Paribas. “We expect some consolidation in the Indian telecom market. The next big revenue-generators for telecom companies are 3G and 4G services,” he added.

For telecom companies that do not have a presence overseas, it would be difficult to expand operations now. “Africa is definitely the last of the high-growth bastions and telecom companies that are already there are doing well. Those who are not are also stretched financially at this point, so they may not be able to make any major acquisitions,” said Harit Shah, Telecom Analyst, Nirmal Bang.

Reliance Comm

In Reliance Communications' Global Enterprise business, the company generated revenues of Rs 2,433 crore in the quarter ending September 2012 against Rs 2,335 crore in corresponding period last year.

Priya.s@thehindu.co.in

(This article was published on November 8, 2012)
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