2009 for India telecom

Telecommunications in India has not been hit by the global slowdown, yet. In the three month (September-November) period, the country added 30.84 million new mobile subscribers. That's over 10 million new additions every month. It seems unlikely that growth rates will drop substantially in the immediate future.

The big advantage is that while the big Indian telecom operators are mildly leveraged, there is a huge demand for connectivity across the country. Also, all the big operators including state-owned Bharat Sanchar Nigam Ltd (BSNL) are looking at sharing infrastructure. That will reduce their capex for now and opex in coming years.

So how will 2009 be?

A lot will depend on how the 3G auction fares, well, when it happens. In case the global operators are not present, it will be an opportunity for domestic operators to strengthen their position.

But competition is going to become more intense in 2G. Reliance Communications has already launched its GSM service. As of now it is unclear that there will be another price war quite like 2003 when Reliance launched its CDMA service. In such times, a price war could be just futile.

But there seem to be question marks over when other bidders will launch services? Datacom Solutions is in the process of resolving its ownership issues. Real estate major Unitech (which owns Unitech Telecom in collaboration with Norway's Telenor) is still trying to clear out its real estate dues. Swan Telecom is enmeshed in the dispute over BSNL providing it intra-circle roaming services. While most operators talked about launching services in mid-2009, as things stand, end-2009 would be a better bet.

However, this could just be the time for BSNL to get back into the reckoning. It's long delayed order of 23 million lines is being deployed now. That means it will have enough capacity to meet the needs of consumers in 2009. Plus, its 93 million line tender is being evaluated. it has launched IPTV services and is also expected to launch 3G services later this month.

So can we expect to see BSNL rising up the ranks in 2009?

It is also high time the government started lowering the levies and duties imposed on the sector. Unless that is done quickly, consumers should brace themselves for an increase in tariffs. But, that could end up slowing the Indian telecom growth story. It is not something that the government would want.