Telecom Industry Consolidation Happened at “Astronomical Pace”
Khislavsky said that the ATC India was “growing organically” between 8% to 11% per year during its peak years. “That has obviously not happened the last couple of years,” Khislavsky said. “And the catalyst for that, as you alluded to, was a wholesale carrier consolidation process, where you saw the wireless industry in India go from 14 or 15 carriers, which we knew was far too many, down to basically three large carriers plus a smaller government funded entity in the course of about 12 to 18 months, which is an astronomical pace for carrier consolidation.” Further, Khislavsky said that the one of the three large wireless carriers in India is “in a position where they need to really raise some funds.” The ATC VP said that the particular large carrier working towards raising funds is a “large tenant” of the company in India. “And they’re working [in] re-establishing their strategic path forward at this point, from a network perspective,” Khislavsky said. “So they’re working through that.”
ATC Optimistic About India on Long Term
Khislavsky said that the company is “optimistic” about the Indian market in the long term as a “significant” number of people are still on legacy 2G and 3G networks than on 4G. “And to fundamentally deploy 4G technology across the country, there has to be a tremendous amount of incremental network investment on the part of all the carriers,” Khislavsky said. “There have been some hiccups in that process clearly over the last couple of years.” Analysts have said that the 4G subscriber addition in India has largely been aided by the Jiophone sales with the 4G penetration said to be at 57% as of December 31, 2020. It has to be noted that Reliance Jio in early March unveiled new data plans for its JioPhone users priced between Rs 22 to Rs 152. However, the ATC VP said that the mobile devices from a “pricing perspective have come down” in the past few years and that there is “demand for mobile data usage” in India. “Indian consumers who have smartphones use them at a greater rate than U.S. consumers do, believe it or not,” Khislavsky said. “You have a large population. That population is mobile data hungry. There’s no fixed-line alternatives to speak of.” Crucially, Khislavsky said that the Indian telecom industry structurally “looks much better than it ever has” with the country currently having an “ reasonable wireless market structure” and a “reasonable tower industry structure.” Rod Smith, chief financial officer at ATC on Monday said that there is a “window of hope” for the operators in India as “government has accepted” to recalculate the adjusted gross revenue (AGR) dues. “Our hope is that the government makes some decisions here that is supportive of the carriers because the digital India initiative is important to the government,” Smith said at the Morgan Stanley 2021 Technology, Media and Telecom Conference. “They want to have a robust wireless infrastructure and they need healthy carriers, and they’ve had stated the preference to have three commercial carriers in India. So we think there’s a pathway there.” The ATC CFO said that the telecom tariffs have to rise in India and that the tariff hikes in particular “will be good” for Vodafone Idea. “So we think that there’s some signs that that’s beginning to happen again,” Smith said. “It happened about six months ago, and we think it’s beginning to happen again. That will be good for the industry.”
