New mobile entrants in India: success to date and future outlook
Many new players entered the Indian mobile industry in 2008. Although India already had five national players and many regional players at that time, potential for further growth due to low teledensity attracted both speculative and strategic investors. While many new entrants are struggling to launch services, a few have started strongly. We think it is unlikely the Indian mobile market can support so many players; only a few of the efficient new entrants are likely to be successful in the short term. As subscriber growth slows in a few years, many of the new players will lead a wave of consolidation in the industry.
Executive summary
In a nutshell
Key messages
Efforts to increase competition have led to a crowded market
New players include global telcos and Indian business houses
Launch strategy aims at optimizing capex and reducing time-to-market
Primary focus is on low-income customers and the youth segment
A mixed bag of strong starts and launch struggles
Incumbents defend market position
Ovum view
Potential for short-term success is primarily due to high subscriber growth
Industry consolidation is inevitable, likely to start from 2012
Long-term survival will be challenging for most new entrants
Even the strongest new entrants will have trouble replacing existing players
Some new entrants may go under even before M&A activities begin
The entry of new mobile operators in India
Efforts to increase competition were taken a bit too far
Who are the new entrants?
Aircel
Sistema Shyam TeleServices (SSTL)
Uninor
Etisalat DB
Videocon
S-Tel
Loop Mobile
Go-to-market strategy and progress
Network rollout and IT infrastructure deployment
Network deployment strategies: infrastructure sharing leads the way
New players are adopting an IT outsourcing and managed services model
Attention to underpenetrated markets for network rollout
A few new entrants are also in the race for 3G spectrum
Industry positioning and marketing strategy
Focus on low-income and youth segments
Some emphasis on value-added services and network quality
Claims to offer simplified tariff plans
Conventional sales and distribution strategy
Success to date: a mixed bag
A strong start by Aircel, SSTL, and Uninor
The rest are struggling to launch and expand footprint
Incumbents’ response to new entrants’ inroads
Big players continue to dominate high-ARPU segment
Incumbents have the lead on 3G spectrum auction
Driving high-speed mobile broadband services
Big players have launched application stores
“Call and Buy” service by Tata
Incumbents have the upper hand in the pricing game
Focus on rural areas and Circle C markets
Expansion in rural areas
Focus on Circle C markets
Future outlook
Short- to mid-term gains for some new entrants
Expected continuation of high connections growth is the main driver
Mobile number portability presents an opportunity, though a small one
Delay in industry consolidation due to M&A restrictions by DoT
Strong leadership and efficient execution are the keys to success
Consolidation in the medium term
Prospects will rapidly recede once subscriber growth subsides
Long-term survival requires replacing some of the incumbents
Mid-term survival presents challenges for some
Closing window of opportunity
Unattractive target for new international strategic investors
Attracting and retaining talent is difficult
In a nutshell
Key messages
Efforts to increase competition have led to a crowded market
New players include global telcos and Indian business houses
Launch strategy aims at optimizing capex and reducing time-to-market
Primary focus is on low-income customers and the youth segment
A mixed bag of strong starts and launch struggles
Incumbents defend market position
Ovum view
Potential for short-term success is primarily due to high subscriber growth
Industry consolidation is inevitable, likely to start from 2012
Long-term survival will be challenging for most new entrants
Even the strongest new entrants will have trouble replacing existing players
Some new entrants may go under even before M&A activities begin
The entry of new mobile operators in India
Efforts to increase competition were taken a bit too far
Who are the new entrants?
Aircel
Sistema Shyam TeleServices (SSTL)
Uninor
Etisalat DB
Videocon
S-Tel
Loop Mobile
Go-to-market strategy and progress
Network rollout and IT infrastructure deployment
Network deployment strategies: infrastructure sharing leads the way
New players are adopting an IT outsourcing and managed services model
Attention to underpenetrated markets for network rollout
A few new entrants are also in the race for 3G spectrum
Industry positioning and marketing strategy
Focus on low-income and youth segments
Some emphasis on value-added services and network quality
Claims to offer simplified tariff plans
Conventional sales and distribution strategy
Success to date: a mixed bag
A strong start by Aircel, SSTL, and Uninor
The rest are struggling to launch and expand footprint
Incumbents’ response to new entrants’ inroads
Big players continue to dominate high-ARPU segment
Incumbents have the lead on 3G spectrum auction
Driving high-speed mobile broadband services
Big players have launched application stores
“Call and Buy” service by Tata
Incumbents have the upper hand in the pricing game
Focus on rural areas and Circle C markets
Expansion in rural areas
Focus on Circle C markets
Future outlook
Short- to mid-term gains for some new entrants
Expected continuation of high connections growth is the main driver
Mobile number portability presents an opportunity, though a small one
Delay in industry consolidation due to M&A restrictions by DoT
Strong leadership and efficient execution are the keys to success
Consolidation in the medium term
Prospects will rapidly recede once subscriber growth subsides
Long-term survival requires replacing some of the incumbents
Mid-term survival presents challenges for some
Closing window of opportunity
Unattractive target for new international strategic investors
Attracting and retaining talent is difficult
LIST OF FIGURES
Figure 1: Mobile penetration and ARPM (average revenue per minute)
Figure 2: Operators’ share in Circle C markets in January 2010
Figure 1: Mobile penetration and ARPM (average revenue per minute)
Figure 2: Operators’ share in Circle C markets in January 2010
