Tata GSM: Top telcos won't lose out

Even if the Tatas initiate a price war in their GSM foray, the top telcos may not retaliate.

It’s unlikely that any of the top GSM players —Bharti, Vodafone or Idea — will be impacted by the arrival of one more deep-pocketed player into the GSM space.

It’s the newcomers that need to watch out because although the Tatas may not have made a success of their CDMA effort, the GSM foray could turn out to be an altogether different story.

Even if theTatas initiate a price war, the top telcos may not retaliate — Reliance Communications’ GSM launch in January this year showed that subscribers tend to revert to their previous service after cashing in on the new offer.

RCom added fewer subscribers, 3.3 million, in February, compared with 5 million in January. In fact, analysts had pointed out at the time that net additions had collapsed in circles where the offer had been withdrawn. And it wasn’t as though GSM net additions had tapered off — they were a strong 9.2 million in a shorter month compared with 9.3 million in January. Bharti Airtel’s share of net additions may have fallen from 35 per cent in October-November last year to around 30 per cent but it nevertheless has 32 per cent market share in revenue terms. Idea Cellular has been gaining share in many of the newer circles that it has entered but is still making losses in some of them.

ARPUs (average revenue per user) for most players may come off with greater competition and a bigger presence in rural markets. Those players who are able to bag 3G spectrum can upgrade their services and stay ahead of the competition. Both Bharti and Idea are strong candidates.