Competition in the telecom sector could intensify with over 250 entities queuing up for taking a licence to become a Mobile Virtual Network Operator (MVNO). Most of these entities are small-time operators offering DTH or cable services in their localities.

For example, an applicant from Punjab said he aims to bundle his existing DTH and Internet services with free voice calls that he would be able to provide on obtaining the licence. Another applicant from Surat, currently selling SIM cards and mobile phones, said that he wanted to expand into services.

An MVNO is an entity that purchases the resources of an existing mobile operator and utilises them to offer its own, branded services to consumers.

Popularised by Richard Branson’s MVNO Virgin started in the UK in 1999, the concept has taken a considerable amount of time to take off in India.

Back in 2008, when the country had just 300 million mobile customers, foreign players had shown keen interest in the Indian MVNO market but lack of clarity in spectrum allocations and procedural ambiguities in the issue of new licences had impeded progress. Virgin Mobile, launched in 2008, used Tata’s bandwidth till the former walked out of the venture in 2011.

The main challenge for MVNOs would be to get dedicated capacity from traditional mobile operators at a time when there is a crunch in capacity in general. Most telecom operators are finding it tough to meet the growing demand for data services despite investing billions in dollars.

Cost-effective

Rajesh Chharia of Gwalior-based CJ Online told BusinessLine that smaller firms will be able to achieve good margins by buying from bigger players at wholesale rates, reducing overhead costs and selling at cheaper prices to customers.

Market analysts, however, expressed scepticism about MVNOs. One analyst said that it would be difficult to justify the economic benefits of MNVOs unless they are offer niche services. “Tariffs for voice calls in India are already at rock bottom levels due to intense competition. The entry of Reliance Jio is now pulling the data pricing downwards. There may not be much for an MVNO to offer unless they cater to the untapped segments,” said an analyst.

Rajan Mathews of the Cellular Operators Association of India said, “We have always said that it is a tough business”. There is a consensus, however, that MNVOs would play a key role in servicing ‘under-served’ segments in urban areas, boosting rural penetration and bring value to smart cities and airports.

“Rural India offers promising growth for data usage as there is low focus of existing players. This could offer potential opportunities for subscriber acquisition,” said a report by Deloitte.

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