According to India Ratings & Research (Ind-Ra), the Indian telecom sector will be a stable industry in 2015-16 and would experience market consolidation leading to better pricing power, and data consumption and improved the financial profiles of operators. However, the firm added that the emergence of competition from Reliance Jio Infocomm Limited could substantially reduce data tariffs and pose concerns for the operators in the coming year.
Ind-Ra said that the sector will witness its largest auction in March 2015 and the sale of spectrum in the 900 MHz band would face aggressive bidding by the incumbents to safeguard their existing operations as the 2G spectrum in the 900 MHz band is available for auction only because licences of incumbents are expiring in 2015-2016. However, the agency believes that the response for the spectrum in the 800 MHz and 1800 MHz bands will be mixed as there is a lack of demand and limited spectral availability respectively for these bands.
On market consolidation, Ind-Ra reckons that with the exit of many regional players, telecom operators are left with fewer opportunities for further market consolidation. Therefore, it added that the Department of Telecommunications needs to take actions to lay down friendly merger and acquisition guidelines and soon should also notify spectrum sharing and trading guidelines to facilitate further market consolidation and enhance available spectrum efficiency.
