This is equivalent of Vodafone India buying up Loop/Videocon + other smaller players who got in the “telecom business” because they could encash the spectrum deal. It is a basic premise, should not take long to understand.
A lot of “influential idiots” are not happy about it because it spoils their ecosystem. The big network wheelers and dealers would have deal with a giant monolith and they would not be able to get the same “rates” as they would get otherwise.
Its difficult for me to base any comment on the merits of the case since I am not an expert nor US market is the focus. But it is a bad omen for this country to have international players in the country (can anyone give me any reason as to why BSNL cannot be made proactive) and they are messing up with public property.
I agree to an extent that teledensity has improved with entry of private players. Yes, BSNL has been a failure. Its a pathetic useless company to deal with. But at least it’s publicly owned. The point here is that BSNL could have been made to sweat out, be made to work. It wasn’t done. And then, you don’t have a legislative framework to keep the consumer interests paramount. The regulators have their heads up their ass.
Raja has done it again. Reliance has managed to trip over it’s nearest competitors, Bharti and Vodafone and ordered 80-100 million lines. They can easily manage to swing lower equipment costs and hence lower prices to start off with. They have the spectrum, the money, the towers (in form of their infrastructure subsidiary) and enough experience to upset the equations with the existing players.
If Sunil Bharti Mittal is not shitting in his pants yet, he is the biggest moron in the industry. Reliance would be smart enough to upstage the existing players by slashing the costs ruthlessly. I am sure they would sweeten the deals with subsidised handsets or may even give them free initially. Imagine the multiplier effect it would have! They would make their money with locked in handsets and if I can see the situation right, they would go in for bottom of the pyramid where the real voumes lie. Unlike Airtel which has not been able to differentiate it’s offerings or establish it’s brand identity or the typical South Delhi crowd that ohhs aahh’s about the Vodafone screwed up pug. You get the drift.
Raja changed the rules of the game. Videocon (and notice the word “con”) too joined in the fray. Dhoot Sahib is the newest entrant to the millionaire club though would appeal to a typical pan chewing marwari unlike Bharti Mittal who gets himself invited to fancy conclaves. Dhoot too has the foresight to hit below the belt; even though he is an also ran in the electronics market, he has enough foresight to cash out his investment and make a neat pile. Interestingly, a company called as Swan Telecom has been allocated spectrum. I have heard (from my sources) that it is a front end for Reliance only.
In the game of shakers and movers, Airtel can look forward to monetise it’s investment in fixed line telephony. Even though there is a lot of brouhaha about the 3G licences on stake, it would not happen overnight. India is a volumes market and GPRS/EDGE is seriously a load of bull crap multiplied several times over. 3G handsets wouldn’t be affordable atleast for the next 5 years and crowing about Mbps wireless speeds makes no sense. Atleast to me. Unless we speak of Wifi networks in public places. Of course, being powered by fixed lines….
Raja has done a great deal of disservice to the nation by not auctioning off the spectrum. It’s difficult to quantify the exact money that has played in here. We need to know as to why cross over licence was given to the select few. Further, GSM companies have had to eat crow for their insistence on subscriber linked spectrum allocation and for too long they have been getting away with it. When TRAI declared that the subscriber’s number should be 2-3 times the existing number (and all kinds of Government agencies came into limelight to ascertain the spectrum issue), the companies had to sit back and huddle in silence.
The next move is being planned by smart ass lawyers who are going to make a killing in the next few weeks. The legal eagles would surely feast on this unholy carcass.