Blessing in disguise for old telecom operators

There are three types of players, who will be affected by this verdict. First and foremost, we need to look at older players. Older telecom players will gain from this verdict. 

These players did not apply for licenses in the new lot. So they are safe. With the ousting of 122 players from the telecom industry, these older players might see an increase in the number of customers seeking their services. Their market shares are also bound to improve.

Secondly, it is wait and watch for new telecom players. They will have to wait for new licences to be auctioned. Thirdly, banks, which have given out money to these companies, whose licences have been cancelled, will suffer. The main reason being, banks have no asset to seize and make up for the money, which would get stuck.

Boon: With the ousting of 122 players from the telecom industry, the 
older players might see an increase in the number of customers 
seeking their services

The current model is asset light. This means that the companies have no infrastructure of their own. These companies have taken infrastructure on lease. It is important to note that with the UP elections just round the corner, there will be no activity in this regard, for the next four weeks. There will be a state of limbo. 

However, customers have a few options with them. For example � If I am a service provider for one of the companies, whose licence has been cancelled, I can go to a bigger player and offer them my bulk of customers. Due to number portability, this shouldn't be a problem at all. In turn, we can share the revenue earned.

Otherwise, I can get a new SIM card or switch to a bigger company. The third option, which is most likely to happen, would be, to just wait and watch. As far as telecom industry in Mumbai is concerned, one must remember that the telecom industry was doing well even before the new telecom players arrived. But with the arrival of new players, there was competition in the market, which resulted in cheaper services, ultimately leading to average consumer benefit. With 122 companies in trouble, existing players might raise monthly rentals, call charges, etc.  

--As told to Sudeshna Chowdhury

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