Mukesh Ambani’s Reliance Jio foray puts Rs 26,000 crore worth MVNO market in tatters

NEW DELHI: The mobile virtual network operator (MVNO) market opportunity, envisaged at Rs 26,000 crore, could take a serious hit at a time when Reliance Jio Infocomm’s disruptive pricing has dented incumbent telco revenues and hastened consolidation in the telecom sector, analysts and industry experts said.

So much so, MVNOs, they said, are likely to find it tough to negotiate viable terms with potential partner telcos, which are engaged in a bruising battle to hold on to margins, amid rising competitive intensity following Jio’s entry.

“The dynamics for the MVNO industry could change with Jio’s ultra-affordable pricing impact, and with the number of telcos also likely to fall with the current wave of consolidation, the parenting landscape for VNOs might shrink as there will be fewer telecom operators,” Amitabh Singhal, director, Telxess Consulting Services, told ET. Singhal is also one of the founders of ISPAI (Internet Service Providers Association of India) and VNO Forum president.

Singhal also said fierce competition among incumbents to retain customers and revenue market share following Jio’s disruptive pricing would pose huge challenges for MVNOs to “negotiate viable terms with telcos”.

EY’s global telecom leader Prashant Singhal agreed that telcos’ mobile data revenue growth is affected due to a lower tariff regime adopted by service providers with increased data allowance leading to an effective downfall of price per GB.

A year ago, the Modi government had unveiled a policy allowing telcos to sell bulk voice minutes and bandwidth to smaller entities — categorised as MVNOs — which could resell in less-penetrated rural and remote regions where tele-density is still below the half-way mark.

The Future Group and tablet maker DataWind, however, believe the telecom regulator’s recent proposal of having district-level virtual networks is executable as there is adequate demand in the market.