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Goodbye!

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VoicenData Bureau
New Update

Finally, goodbye to a not so good 2010. The year has created mixed sentiments in the Indian telecom market which is taking more time to show maturity.

At one point of time, the industry thought the year 2010 would be free from the global recession and there would be huge investments in rollouts and other expansions. Three big things became stumbling blocks. First, the government-articulated import policy to avoid security issues, which caused delay in purchase orders; second, delay and related confusion in 3G/BWA auction which caused decline in 2G investments and third, the 2G scam orchestrated by the tainted ex-telecom minister, his office bearers, and lobbyist of telecom operators. The new licencees are unable to go ahead with their investment plans.

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On the user front, a section of the industry has finally admitted that the reporting of subscriber base is wrong. A correction in manipulated user numbers will damage telcos' evaluation which will pose challenges in M&A. It will affect their fund-raising abilities in the short-term. Many telcos feel that 15-20% of the users are not active or are just multi-SIM owners. This can be vouched by the operator revenues. The recent 17 mn per month subscriber addition is bogus. We must take corrective steps to show the actual numbers.

The silver lining is that most operators have corrected their tariffs in the last 1-2 quarters. The changes in voice rates will help in rebuilding profits next year. Broadband services, following the rollout of BWA and 3G services, may see some changes in tariff. The forthcoming MNP regime will not see major changes in rates, but there can be freebies and value-added offerings.

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Recently, domestic financial institutions came under the scanner for their unholy nexus with borrowers after the LIC episode. Telecom operators depend heavily on debt for their growth strategy. If new operators have already showed their fudged balance sheet to grab spectrum, they will be under pressure from banks to show their true balance sheet.

What's in store for 2011. 2011, which will be the stepping stone for the next decade, will see exit of unviable operators exiting/merging the business. VAS players will see some action because there are discussions among major VAS players to unite and compete with the mighty operators.

Regulatory scene will continue to be bumpy. Expect slow action on VoIP, green, manufacturing, LTE, QoS, etc. We will continue to look at the western world for leads. Have an exciting new year!

Baburajan K

baburajank@cybermedia.co.in

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