A top executive of India's largest mobile services provider, Bharti Airtel, has expressed confidence that it will be difficult for rivals to emulate the success of his company and warned that intense competition will drive out new players from the market.
According to Bharti Airtel's chairman Sunil Mittal, new entrants into the sector will collapse within 36 months owing to the pressures of high costs and competition.
Any new player offering talktime of 20 million, 50 million or even 100 million minutes a day can only make losses, Mittal said on the sidelines of the GSM Mobile Congress in Barcelona.
Noting the spurt in applications for telecom licenses in the past few months, Mittal said most of the new proposals are not viable. These firms will take at least 12 months to build their network and 24 months after that they will struggle to survive in the market, he added.
According to Mittal, Bharti Airtel has battled hard to achieve a customer base of 60 million subscribers in India - both mobile and fixed-line and broadband - and now boasts of at least one billion minutes of traffic going through its network per day.
To be among the top telcos (in the world) is a significant achievement not only for us but for the Indian telecom industry, said Mittal, who was the recipient of the GSM Association Chairman's Award 2008.
It has been a privilege for me personally and Bharti Airtel to have been a part of this telecom revolution that has delivered affordable telecom services for all and has transformed the lives of millions across India, Mittal said.
Bharti Airtel in January announced strong quarterly results - a rise of 42 percent in its net profit - beating market forecasts.
In the GSM space, Bharti Airtel's nearest rival is Vodafone-Essar. While Airtel added 2.3 million subscribers in January, Vodafone-Essar added 1.3 million during the same period. Vodafone-Essar's total subscriber base stood at 41.1 million at end of January, data from the Cellular Operators' Association of India (COAI) showed.
According to Mittal, Vodafone-Essar has risen in ranks over the years and but the number two cellular operator in India still has to battle out the final match with Airtel. And I am sure to win that, Mittal said, adding, Whenever we face competition from strong players like Vodafone, Airtel has emerged even stronger and consolidated its position to be number one player.
However, one thing worrying both the players is scarcity of spectrum. Both are seeking more spectrum as record subscriber additions crowd existing airwaves, causing congestion and weak connections. While Mittal has urged the government not to allocate spectrum to new players at the cost of growth of existing players, Vodafone's CEO Arun Sarin has expressed interest in buying spectrum from the market in case it did not get the additional frequency from the government.
Both Bharti Airtel and Vodafone-Essar have capitalized on the rush in the telecom sector in India, the world's fastest growing wireless market, where fewer than one in five people own a mobile phone. Thanks to call rates of as low as one U.S. cent a minute, availability of cheaper handsets and expansion of networks to smaller towns and rural areas, virtually every business group are seeking to sell wireless, fixed-line and Internet-access services in India. At the end of January, total GSM users, excluding Reliance, rose to 178.4 million, COAI said.
Though India's mobile revolution is mainly confined to the cities, the real prize for phone companies is the vast rural market, where nearly 70 percent of India's 1.1 billion population live.
Analysts claim consolidation will start soon in the telecom sector and that only a couple of new players will be able to survive eventually.