Revenue from the traditional voice telephony, according to the telecom report, will grow only at 3 percent annually. Overall, the revenue growth for the Indian telecom services industry will be 6 percent per annum.
The data growth, says the report, is in part thanks to Reliance Jio Infocomm making the service more affordable in terms of mobile handsets and tariffs. Reliance Jio, a subsidiary of Reliance Industries (RIL) is expected to launch its 4G services in India by December this year.
The report said Reliance Jio Infocomm will eat into the revenue market share of the incumbents, especially the weaker players. Reliance Jio will offer both voice and data, but its market-share gains would likely be more significant in data than voice given the trend in the sector.
The report says with relatively inferior spectrum and LTE delays, Idea Cellular, the Aditya Birla group company, will lose the most in the Indian telecom industry. Infratel (Bharti Infratel), in contrast, looks best positioned to ride the data wave. For Airtel, market-share impact could be the least given its best-in-class spectrum.
Incumbent telecom operators will need higher Capex (capital spending) to counter Reliance Jio’s superior spectrum and expand 3G or 4G networks. “Anecdotal evidence shows that the 4G LTE coverage of Bharti Airtel is patchy.
Bharti Airtel that had launched 4G network in Kolkata in April 2012, has by now rolled out 4G in almost 350 towns and cities in India.
The telecom analysis report said the regional threat of new entrants disrupting competition could play out in India as well with the impending entry of Reliance subsidiary Jio. “We expect Reliance Jio, with its heavy investments and superior LTE-related spectrum, to restrict incumbents’ growth,” said the report.
Anil Ambani-promoted Reliance Communications (R-Com) could end-up trading its spectrum with Reliance Jio, as opposed to sharing.
“While R-Com’s spectrum could be used in multiple ways — sharing, merger and acquisition or trading — we believe trading would likely be the preferred route. Sharing would not help increase 800MHz footprint. Jio would not get much benefit as it too needs 800MHz in the same band for sharing with R-Com,” the telecom report said.