A few years ago, the telecom industry was the poster boy of India Inc with multiple operators in each circle. The recent consolidation wave has resulted in a significant downsizing of the number of players. From about 9 to 10 operators per circle, today we are moving to an industry where only 3 to 4 key players with a strong foothold.
However, with India being the second-largest telecommunication market with the third highest number of internet users in the world (Source: IBEF analysis of Indian Telecom Industry) the industry still has tremendous prospectus for growth.
The ongoing consolidation will prompt telecom players to realign their agenda and streamline the business operations in order to adapt to the transformations in the industry. It will strengthen the sector creating an environment of balanced investment and competition. It will lead to a growth in capital efficiency.
On the other hand, as many experts have expressed, consolidation is likely to create few pressure points, compelling operators to identify and remove redundancies in the sector. Realignment of the hiring process, increased pricing discipline, and fewer discounts are few setbacks that we may see in the industry.
Impact of the consolidation
One of the most talked about impact of the telecom consolidation is employment opportunities in the sector. Consolidation in the sector is expected to create pressure on employment. According to a report by GSMA, India’s telecom sector directly employs 2.2 million people and 1.8 million indirectly. Consolidation in the sector is expected to impact these job numbers. Some of the departments that may feel the heat of this consolidation are sales and distribution.
Telecom companies are not only creators of direct jobs but also responsible for augmenting a varied profile of jobs indirectly. These jobs are created through their franchisee partnerships, call centres, distributors, retail stores, tower and network maintenance staff. Unification in the sector will result in a drop in hiring by these areas as well.
While this phase of amalgamation in the telecom sector is expected to adversely impact certain job profiles, many studies predict that it will also create more opportunities. According to market experts, telecom sector is expected to generate four million direct and indirect jobs over the next five years.
This phase of hiring is most likely to be seen in the profiles of cyber security professionals, I-DAS engineers, services & infrastructure technicians as well as back office & administration. This surge in hiring will be driven by multiple factors like technological disruption in the sector, the government’s efforts to increase – mobile phone usage, internet penetration in rural areas and smart phone sales.
While job cuts may be a concern for the sector, there are other significant contributors which will balance and continue to support the industry. The industry today is witnessing an explosion with regard to adoption of digital services like payments, e-governance and entertainment. This is being fuelled by multiple factors like- major investments in mobile data networks, the digital India vision, demonetization and other reformist policies of the government. Consolidation of players will pave way for easy adoption of technological transformation.
Another transformation supporting the growth of the industry is the increasing focus on the evolution of 4G and 5G services. With 4G witnessing continuous evolution, several telecom operators are gradually upgrading their telecom sites with 4G services.
LTE-Advanced Pro is deploying new features such as higher levels of carrier aggregation and interference management, which provide faster data rates and better performance at the cell edges. Consequently, telecom companies are directing their efforts in accelerating the transformation of their delivery model towards a low cost per MB model, leading to large cost-efficiency initiatives and optimization of their 2G/3G/4G networks.
The technological and infrastructure improvements in mobile and broadband technologies will also aid the growth of the sector post consolidation. New revenue streams are expected to emerge continuously for applications and services that the telecom operators provide.
By Surajit Khan, business director, Maxeed, a division of Quess Corp
Surajit Khan has over 20 years experience and was associated with Essential Energy India, Viom Networks Ltd, Bharti Infratel and Otis Elevator India.