Indian telecoms market recovery after players exit

01 March 2012 | Guest

India presents endless excitement, mystery and most of all potential for the telecoms market. It’s also never short of drama.

Etisalat and Batelco have become the first companies to swiftly exit the Indian market following a Supreme Court ruling that revoked 122 mobile licences originally awarded in 2008 by the now imprisoned former telecoms minister, Andimuthu Raja. Other companies, such as Telenor, have now found themselves in the extremely tenuous position of having to quickly find an Indian partner before the fresh wave of auctions in four months’ time.

Regardless of whether these companies choose to flee or stubbornly persevere in the Indian market, the ruling has jeopardised major investments by those swept up in the scandal and potentially damaged further foreign investment. It’s no surprise then that the new telecoms minister Kapil Sibal has wasted no time in announcing wholesale changes to the country’s telecoms law, looking to rectify some of the large failings of the previous system. The policy, which is planned for this April, in particular will relax stringent M&A laws and for the first time allow mergers that can create a combined market share of up to 35%. A silver lining is therefore already starting to appear from the country’s recent controversy, and if you consider also the meteoric rise of Indian players in the wholesale space in recent years, then the nation has even more reason to feel optimistic.

Indeed on a lighter note, Capacity recently found itself in the luxurious surroundings of the Mandarin Oriental Hyde Park in the company of Tata Communications’ CEO Vinod Kumar and the president of Formula One, Bernie Ecclestone. The company had just signed an exclusive connectivity partnership with the major racing championship, which may not amount to much in terms of pure traffic volumes on its network, but will certainly heighten the brand’s global profile. It’s a further reminder of why Indian companies could eventually race ahead of the pack.

Alex Hawkes, Deputy Editor