Indian telecom space to witness consolidation: Macquarie

Press Trust of India / New Delhi October 07, 2009, 18:30 IST



The intensifying tariff war among telecommunication players in India is likely to result in consolidation of smaller, regional and startup operators in the telecom space, global research firm Macquarie says.

"This rapid re-basing in pricing by an incumbent (as announced on Monday) will seriously affect and threaten smaller, regional and startup operators, perhaps shortening the period before which industry consolidation inevitably takes place," Macquarie said in its research report.
Anil Ambani led RCom on Monday reduced call rates across the board--local, roaming and long-distance--to 50 paise/minute across networks. Earlier in July Tata Docomo had switched to one-paisa-per-second plan for all customers.

Though competitive tariff plans are not new to the Indian wireless market (like cut in Lifetime prepaid fees and gradual decline in the NLD and local voice tariffs), none has been as severe as the one of the three wireless incumbents.

India's tariff plans are among the lowest in the world and competition among mobile operators is set to increase further with operators coming up with price plans to offset those unveiled by their rivals.

In such a scenario, smaller telecom players would be forced to shut shop as they would be unable to keep up with the competitive market forces at play and are likely to eventually sell off their operations to bigger operators, experts believe.