Fitch summary highlights growth, consolidation in telecom industry

Mumbai, Apr 13 (UNI) Consolidation within the Indian telecommunications industry is likely to gain momentum as the larger mobile operators push for pan-national footprints with six major operators expected to emerge over a period of time as a result of this likely consolidation, states a Fitch Ratings summary of the Indian telecom industry, released here today.

The industry is also set to witness intense competition between the GSM-CDMA players and between integrated and ''pure-play'' operators, says the summary, adding that ''robust subscriber growth on top of significant investment in infrastructure is also expected over the medium-term.'' The survey points to the recent government of India's decision to raise the foreign ownership cap to 74 per cent as a key factor that will drive growth in the country's telecom sector.

''As expected, this has generated considerable interest from foreign telecoms, setting the stage for further structural change,'' the summary notes.

It points to the number of mergers and acquisitions that have occurred in the mobile market in recent times with special reference to BTVL and Hutch.

Leading operators are investing heavily in their networks to build both capacity and coverage, taking into account the huge growth opportunity available, says the summary, pointing to the low penetration of both mobile and fixed line in the country, which clearly illustrates the high-growth potential.

The government estimates that mobile subscribers will cross the 10-crore mark by 2007, around double the current base.

The summary highlights the Indian government's ''progressive regulatory regime ' which it states ' is oriented towards enabling sustainable competition.'' Enumerating these, the summary says that industry players are now focusing on the spectrum usage and allocation issues which are to be addressed in the new spectrum policy.

Towards the new spectrum policy, the industry regulator has already issued recommendations on spectrum allocation and pricing which included actions such as lowering the ceiling on annual spectrum charges and releasing unutilised spectrum in the 900/800 MHz bands to GSM/CDMA operators respectively.

Revisions to the spectrum allocation criteria have, however, met with opposition from the industry, which currently uses 'subscriber-based' allocation criteria, observes the summary.

UNI JJ PP SKB1912