HomeNewsTelecom sector consolidation likely to have no impact on tariff

Telecom sector consolidation likely to have no impact on tariff

Consolidation will also lead to better mobile telephony services be it 2G or 3G, says CRISIL.

There will be lesser number of telecom operators in India in future that would lead to tariff reduction and better mobile telephony services, according to a research report of CRISIL.

The research firm said that new operators are losing money as they are not able to cope with the competition. Moreover, spectrum is now only with the established players. This situation will result in consolidation and only 6-8 operators will remain while the rest will merge within the established player.

While there is no denying that consolidation will happen, in fact it has not happened only because rules do not allow it right now. But rules are set to be relaxed.

There will be lower capital expenditure by operator per subscribers because each tower will be fully utilised, all though right now also most of the towers are shared between the operators. But since it is only the tower which is being shared, each operator has deploy separate set of radio equipment which in most cases goes under utilised, meaning higher cost per subscriber.

Moreover, other costs like marketing, sales and maintenance will also get reduced substantially thereby reducing the overall cost of service and therefore the tariffs.

Apart from the tariff reduction, other benefits could be in terms of reduced network congestion. Consolidation of spectrum available with the operators will help in reducing congestion in the network as currently some bands lie unused parked with operators with very few subscribers while the available with an operator with huge subscriber base remains congested. This will also free up more space for internet services through mobile providing better speeds even with 2G network.

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