Expensive 3G bids Justified as India set to be World’s Biggest Telecom market in 3 years
Any guess as to why those telecom companies went all out to conquer those prized 3G telephony spectrum? Read this…
Even as the exchequer mops-up a whooping Rs. 68000 crore, a feeling gradually sinks in that probably the government might have underestimated the real value of the scarce 3G spectrum resources. All thanks to the highly competitive and transparent bidding process, that led to a meaningful discovery of the real market-determined rates for the valuable 3G possession.
Here is some number crunching… As to why should telcos fought it out, until it got really dirty and expensive, to grab every possible scarce resource to ring in incremental revenues?
According to a telecom report, India’s cellular subscriber base is set to more than double from about 580 million mobile phone users currently, to 1.159 billion by the end of 2013, making it the world’s largest mobile market; beating the forecast for China’s potential subscriber base at 1.106 billion mobile users until next 3 years.
The report further points out that the increased competition on the back of over-crowding of operators and prevalence of multi-SIM activity would keep fueling growth in India’s subscriber base, as against lower competition led by limited number of operators in China.
This would lead to higher subscriber penetration rate at 75% in India, as against 69% for that in China for the next one year. In fact, the study reveals that by the end of 2014, India’s subscription penetration will be 101%, which means there will be more mobile connections than actual number of people !
With the above forecasts related to such high growth in the subscriber base over next 3 years, it is but obvious that most of the incremental subscriber additions are likely to trickle in from the younger generation particularly enthused in accessing high-end data services such as e-commerce, increasingly popular social networking and most of all high speed broadband internet.
The advent of smart phones, in affordable category, is one more reason that would allow the next generation to access internet browsing on mobile phones. We’ve already discussed about low-cost mobile handsets a number of times in the past over here.
Under such circumstances, the bid amounts for the 3G airwaves which are for 20 years of spectrum control may not be as costly an affair as has been made out. Thus, the spectrum air waves were of critical significance for the telcos to conquer the prized possessions even if they came at relatively higher bid prices.
Probably, it would be more appropriate to say that with depressed scenario for voice call charges, it may work out well for the telcos to focus on customers with high ARPUs and increase their revenue stream from the high-end data and value added services at a premium to the subscribers in a bid to register enhanced earnings prospects. Currently, value added services contributes just 8-9% of telecom revenues of major operators.
The telcos that put their 3G-powered infrastructure to best use will ultimately triumph in this battle.