Consolidation the way out of thick telecom canopy

With more than a dozen mobile telecom companies in the country, the revenue distribution of operators is increasingly making consolidation in the industry inevitable.

Based on Telecom Regulatory Authority of India data on gross revenues of telecom companies for the quarter ended June, the top four operators — Bharti Airtel, Vodafone, BSNL and Idea Cellular — account for 73 per cent of the total revenue of telecom companies. Revenues of all telecom companies — mobile operators, bandwidth sellers, broadband companies, fixed line companies and international long distance & national long distance operators — were considered.

New operators (which secured licences in 2008) have a share of only 2.9 per cent. Among these companies — Uninor, Sistema, Videocon and Loop Telecom — the largest, Uninor, accounts for 1.86 per cent of the revenues. The company operates in 13 circles (now, it has decided to operate only in nine). This is lower than state-owned Mahanagar Telephone Nigam Limited (MTNL), which operates only in Delhi and Mumbai, and is not known for its services.

OVERCROWDED Too many players spoil telecom pie
Telco name	Gross revenues (April to June in Rs cr)
Bharti	14,605.44
Vodafone	9,970.03
BSNL	7,143.49
Idea	6,396.13
RComm	3,995.77
TTSL	3,671.61
Aircel	2,365.86
mtnl	987.11
uninor	976.95
mts	415.48
Loop	151.55
Source: TRAI

What is also significant is the huge difference in revenue shares of the top four companies, and the next four (Reliance Communications, Tata Teleservices, Aircel and MTNL), which have a share of 21 per cent. As MTNL is state-owned, some operators say these companies might be forced to consolidate either among themselves, or with one of the big players.

Of the top seven companies, in terms of the revenue generated (excluding MTNL, as it is state-owned), Aircel is the weakest. The company was able to record revenue of only Rs 2,366 crore, about a third of the revenue of Idea Cellular (fourth in the list) and a sixth of Bharti Airtel’s revenue. This, perhaps, is a reason for speculation on an Aircel takeover, despite the company denying it. However, chief executive Sundip Das says the company could choose a strategic partner, without losing control.

Reliance Communications, the fifth in the list, has already stated it was willing to divest 26 per cent equity in the company.