Tricks For Tele Boom

Consider this. In the US, out of all the bankruptcies filed from Jan till
June this year, 21 percent of the companies are telecom companies. And analysts
agree that the slowdown in telecom is expected to continue, worldwide. Except
India and China.

This said, we must also not forget that slowdown in global companies tends to
be global. In spite of all the growth opportunities that India has, it must be
on guard.

1. There was a mismatch between the huge network capacity that was created by
   incumbent as well as new service providers and the consumption. As of now,
   India hardly has any capacity to talk about but service providers need to be
   careful and not get into frenzy.

2. Lack of differentiated applications and services did not give consumers
   enough opportunity to demand more. In India, service providers will have to
   fundamentally change their business models and remember that unless they
   bring differentiators in their portfolio of services, business will be be
   tough to retain.

3. Equipment vendors have been known to influence the government to
   liberalize and de-regulate, and service providers, with their rollout plans.
   It’s more business for equipment vendors. What they seem to overlook is
   that it is just a short term strategy, as in the long term, it could create
   too many players fighting for a small pie, and thereby result in a slowdown.

4. The ‘feel very good’ factor in telecom, lead the way to easy
   availability of capital. This in turn, leads to liberal network expansion
   and acquisition of highly priced startups leading to debts. And when it was
   not backed by adequate revenue stream, foundations started shaking.

5. Finally, slowdown is not just about business. There is likely to be an
   impact of licensing policies and tax structures. The earlier they are sorted
   out and simplified, the faster will the business plans move.

At the end of the day, it is a chain reaction.

Indian telecom experts accept that in spite of all the
lessons that having been there for quite some time, many operators are repeating
the mistakes. If we don’t learn from the others, mistakes we will surely be
inviting trouble.

Ibrahim Ahmad