Indian telcos lack punch on foreign turf

MUMBAI: For Indian telecom operators, there’s no place like home. They have bid for providing fixedline and mobile services abroad, but have been largely unsuccessful. Call it the lack of deep pockets, inadequate focus or tough regulatory environment, operators have not been able to repeat the India success story abroad.

According to analysts, operators may also be lacking in adequate evaluation of assets as the level of awareness about markets outside India is relatively low. KPMG director (telecom) Romal Shetty feels entering foreign markets on their own does not augur too well for Indian players. “It isn’t always feasible to go alone as you may not be knowing local players and regional dynamics. You may not know what’s exactly required from a bidding perspective. While Indian operators have all the capabilities, they may be lacking on some technical grounds,” he told ET.

In such a scenario, it’s best to bid in consortium with a regional player. Furthermore, operators also need to improve their evaluation of foreign licences or companies. “The market size and evaluation are not as thorough as it ought to be,” Mr Shetty added, referring to the thorough evaluation undertaken by Vodafone while bidding for Hutchison Essar. The record of Indian operators abroad has not been very encouraging.

In March, a consortium led by Kuwait’s Mobile Telecommunications bagged Saudi Arabia’s third mobile licence with a $6.1-bn bid. While RCOM lost a $3-billion bid for the licence, other Indian operators who had participated in the tender were Bharti Airtel and MTNL. MTNL had also lost out in the bid for mobile licences in Kenya. Besides Kuwait, RCOM unsuccessfully bid for mobile licences in Saudi Arabia, Kenya, Egypt, Bhutan and Sri Lanka and for fixedline licence in Bahrain.

Bharti has, however, won the licence to become Sri Lanka’s fifth GSM operator. It offers services in Seychelles and has licences to operate 2G and 3G services in Jersey and Guernsey in Europe. Arpita Pal Agrawal, associate director, PricewaterhouseCoopers, however, feels Indian operators have a bigger opportunity back home. “They are doing very well and there’s a larger growth story here. There’s no need to worry about cases abroad,” she said. Moreover, licence conditions in a country are a combination of many factors, including political factors and domestic conditions, not necessarily in the hands of the operators, she added.

Furthermore, Agrawal said Indian firms are more realistic about what they are bidding. “A developed country operator with a saturated teledensity in domestic market will bid more aggressively. But Indian companies don’t need to do so. They have extremely good opportunities in the country itself,” she said. “With so much success in India, I think they will go abroad only on their own terms.”

An analyst who did not want to be quoted said regulation and costs are crucial variables. “If regulation is not conducive to foreign players like it was in India some years back, then Indian firms are likely to face failures abroad. And if costs are prohibitory, it may be better not to bid at all,” the analyst said.