Gartner warns against telecom bubble burst

[Chirag 5]

Gartner warns against telecom bubble burst

Source: Rediff News, Feb 19, 2004

The Indian telecom bubble may burst, just as it did in the US and European markets, if telecom service providers here lose sight of profits and keep focussing on expanding their subscriber base, according to telecom expert Bertrand Bidaud.

"There is no doubt that the Indian telecom market is booming and has tremendous potential. However, the level of competition being so high, there is a risk that companies may lose sight of profits and treat subscriber growth as priority, which can land them into trouble," Bidaud, vice-president, telecommunications (Asia-Pacific), Gartner, said.

According to the expert, while the wireless sector has seen tremendous growth, development in other telecom segments in India has not been very encouraging.

"While the wireless sector is emerging as the important segment in telecom, other areas like Internet have been very disappointing," Bidaud said.

According to Bidaud, the telecom regulator has a key role to play in seeing that there is no predatory pricing in the market.

"A company that is too aggressive on subscriber growth can bring down the industry. The regulator has to step in, not just on issues relating to tariffs, but also on matters like interconnection and unbundling of services," said Bidaud.

"Apart from keeping their sight on profit margins, Internet usage should be promoted. Operators will also do well to offer differentiated services in order to tap the corporate market," Bidaud said.

On the services side, Bidaud said SMS would continue to be the money spinner for operators for some more time.

Bidaud also predicted that there was ample room for growth in the Indian telecom industry, given that the usage level in India was still behind other developing markets in the Asia-Pacific region.

[hovs 0]

It may not happen in India becuase if reforms failed in some country(Brazil?), it does not mean that they should fail in every other country. It may be that the absolute number of Indians who can sustain the market for modern gadgets and services is much higher than in the developed countries or other developing countries though as a nation we may rank in the bottom rows of the table if per capita income is the criteria. It is amazing that in a span of just one decade we have got so many life style changing goods and services. Atleast part of India is shining. The credit goes to Dr Manmohan Singh and ofcourse the wise old man Sri PV Narasimha Rao.

Companies like Reliance or Tata don't espouse the socialist cause of erstwhile DoT or other PSUs. There was another article i don't recall where I read it which states that perhaps only four operators will be left, and smaller operators will either die or amalgamate into the four or five large players. The current subscriber base of about 80 million should be sufficient to see all of them doing excellently well. The apprehension of the author may be misplaced.