Dark Night Before Dawn – Signs of the Light

Indian competitive situation should improve as players focus on repairing their balance sheet. Tariffs have moved up in a few cases. Bharti’s African acquisition is now complete. Sentiment should move up as management unveils the details of their African Strategy.

Despite strong competition, Bharti has lost less than 120bps revenue market share in last 12 months. New players are launching to meet roll out obligations rather than to compete. Possibility of spectrum trading? Tariffs have stabilized over
past 6-8 months.

We expect Companies could go into a balance sheet repair mode thereby limiting competition either on tariffs or onnetwork expansion. Lower than expected RPM decline should lead to a bottom in margins and better operating profits.

Will RIL & Mukesh Ambani Matter ? Late entrants have seldom made headway into leadership. No global example of a successful advanced technology player without having basic voice services and Mukesh Ambani doesn’t even have an acceptable business track record when it comes to consumer oriented services. If RIL acquires a current player,
then it would need to manage the value of acquired asset too.

Regulations and Political Interferences – Matter has now been referred to Empowered group of Ministers headed by
finance minister. Expect a more consumer oriented hearing on this front. Probability of multiple law suits remain high if matter not resolved amicably. Stay tuned for more updates.

Author: Webmaster