FREE

MOSL: TELECOM-Overall all-India data capacity adequate-However, room for addition in top cities

​Telecom: Overall all-India data capacity adequate; However, room for addition in top cities

We hosted Telecom Day in New Delhi. We had a series of meetings with the telecom regulator, equipment vendors and service providers to gauge the business/regulatory outlook on the sector. Our key takeaways:

• Based on our discussions with the regulator, we surmise that the Vodafone-Idea merger should be concluded in 9-12 months. However, it could take 4-6 quarters post the merger for network synergies to start kicking in.
  
• On pan-India basis, the top telecom service operators have data capacity equivalent to 8-10x the current consumption. In the top cities, however, the capacity-consumption gap is lower. Bharti has data coverage and capacity close to RJio’s, but as capacity requirements would be higher in top cities, it would continue to make capital investments.
  
• The increase in data capacity would be disproportionately high relative to the capex incurred due to (a) lower cost of technology advancement, (b) higher share of investments in low capital-intensive components like software, and OSS/BSS v/s BTS, and (c) reduced optic fiber investments in smaller tier cities owing to better backhaul microwave technology.
  
• Interconnection usage charge (IUC) is not the key priority for the regulator, but it is likely to announce revised IUC in 3-6 months. Gradually, IUC would be reduced to zero. Call drop is no longer an issue.