Disruptive pricing will continue for a year: GSMA's Mats Granryd

NEW DELHI: Telecom group GSMA has said that the disruptive pricing due to heightened competition in the Indian telecom space would continue for at least another year and the situation is no different from other markets where carriers were cutting tariff to beat competition.

“What’s happening (declining revenue) in India seems to be a consolidation of market. You take the example of Europe, telcos operate in low revenue, and similarly in North America, where a couple of operators are trying to beat competition by lowering tariff,” GSMA director general Mats Granryd told ET.

London-based GSMA is the world's top telecom body with more than 800 operators on board including India’s market leader Bharti Airtel and Aditya Birla group’s Idea Cellular and billionaire Mukesh Ambani-owned newcomer Reliance Jio.

Granryd believes the disruption will continue for another one year in India. Jio’s entry in September last year on the back of freebies have dragged the earnings of telcos for three consecutive quarters with India’s market leader Bharti Airtel’s net profit alone plunging 72% in the quarter ended March 31.

Incumbent players including Bharti Airtel, Vodafone India and Idea Cellular have had to cut their tariffs sharply to stay competitive following Jio’s entry. Intense competition has also forced rapid industry consolidation with Vodafone’s Indian arm and the country’s third-largest operator Idea Cellular announcing a $23 billion deal to merge their operations. Reliance Communications, Aircel and MTS are in the midst of a merger as well. Besides, Bharti Airtel is in the process of buying out Telenor India.

Consolidation, according to him, is good for India as mobile carriers need stronger balance sheets to fund capex needs for expanding their networks, which in turn help in stronger revenue generation. Telcos, according to the industry group, invest $200 billion annually in capital expenditure worldwide that included a significant portion from Indian players.