Will India become a two-operator market?

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India is the world’s second largest wireless market with 1.173 billion mobile phone subscribers and 615 million internet users. And yet, telecom operators such as Bharti Airtel and Vodafone-Idea are dealing with challenges such as taxes, government policies and high cost of spectrum.

Only a few years ago, over a dozen operators were looking to find a foothold in the market. Most have folded. Among the remaining three large private operators, analysts see Vodafone-Idea as the most vulnerable. For the three months ended September 30, Vodafone-Idea took a one-time hit of ₹256.8 billion related to fees to be paid to the government, and posted a net loss of ₹509.2 billion, the company said.

However, there are some signs that the worst could be over. Telecom companies took a 12-38 percent tariff hike in December across plans. Also, Trai announced that the implementation of zero interconnect charges has been deferred till January 1, 2021. This would benefit Airtel and Vodafone-Idea as they are net call recipients.
 
“If Vodafone-Idea shuts down, the biggest beneficiary for smartphone users would be Reliance Jio Infocomm [Reliance Industries owns Network 18, the publisher of Forbes India], but for 2G feature phone users, it could be Bharti Airtel as users won’t have to change their handsets and buy a Jio phone,” says Tarun Pathak, an associate director at Hong Kong’s Counterpoint Technology Market Research, a consultancy.

 However, for Jio, the feature phone user base attraction has stalled, Pathak adds. Once there are more data-hungry users, maintaining quality of service will need investments. Jio could also be spreading itself thin with multiple projects and initiatives, and will need to focus and prioritise, he says.