|
|
|
|
|
            
|
[Contn.] Telecom's Toreador The New Equations The resurgent competition only compounds the already difficult act that the fourth licence holder must make. For instance, in the second round, Bharti bid Rs 203.66 crore for Mumbai, where BPL and Hutchison are already well entrenched. Starting off afresh would mean nearly a year of launch time, especially if the quality of services is to be ensured. What that means in effect is that Bharti will be facing a situation where its core businesses will be under threat and the new ones won't be generating any cash flow. ''In any case, Bharti shouldn't expect more than 18 per cent market share even after five years of launch,'' says a Mumbai-based analyst. ''That's the norm the world over, and not unique to India,'' he adds. Agrees Dilip Modi, head of Modicorp's cellular businesses: ''There is a premium for the first two movers.''
Small wonder, then, that Mittal's rivals-none of whom plans to invest in more than two or three fresh circles-have opted for fresh licences only to fill gaps in their footprint, and not to drive growth. Taking on six or seven fresh networks would require an enormous amount of cash and management energy. And Mittal's cellular operations will necessarily get only a limited amount of either, given that he has other businesses across the telecom spectrum: fixed line, broadband, domestic long distance, submarine cable, and Internet. Even as Mittal takes care of all this, he will have to watch over his shoulder for the wiLL competitors. While the issue is under litigation at the moment, if the soft terms now proposed for wiLL operators are made final, cellular operators like Bharti will come under immense price pressure. For example, a wiLL operator in Delhi would be able to offer rates of Rs 1.20 for a three-minute outgoing call and free incoming calls, compared to Bharti's and Essar's average of over Rs 6 for the same duration. A price war between the two services would spell bad news for both, but more so for cellular companies. ''We Know These Animals'' If Mittal is worried about the competition, he isn't showing. He is nearly nonchalant when he says that the recent spate of consolidation hasn't made competition much tougher, but only clearer to him of who he is up against. ''We are in a unique position,'' Mittal claims. ''We will be defending in some territories and attacking in some...we know these animals.''
What works against Mittal in the new circles, works for him in his bastions. Most analysts agree that no new competitor with the same kind of service can set rates lower than those of the existing player. The decisive factors, then, will be the quality of network and customer service. But what TELCOs are really banking on is the promised explosion in the number of cellphone users. Over the next five years, the subscriber base is expected to balloon 10 times to 40 million. ''The market is just exploding now,'' says Rana Kapoor, Managing Director of Rabo India Finance, ''We could have a cellular services market similar to Hong Kong's. Where four of the six operators are making money.'' Things could have been worse for Bharti if the government-which holds the third licences all over India through Bharat Sanchar Nigam Ltd-had been any quicker at launching its servic |
