My Blog: Vivek Madan - With tough Competition in Indian Mobile Sector , Is aquision similar to AT&T and T Mobile make sense in Indian context

Recently AT&T decided to merge T-Mobile with AT&T positioned at No 2 and T-Mobile at No 4 . Two big giants in USA decided to merge .

Indian market has been competitive and flooded with operators approx 9 . Is merger and acquisition on cards in Indian context. Questions to be answered:

• Will any of Top 4-5 will merge together
• Will any of Top 4 will merge with small operator

Lets see comparison of USA and India market in context :

USA Market

• Subscribers:USA has 4 operators with AT&T (92 mn) and T-Mobile (34 mn) being the largest GSM operators. The two other Tier 1 US wireless carriers Verizon (96 mn) and Sprint Nextel (48 mn) are CDMA operators. Then there are local players like Metro PCS (8 mn) and Leap Wireless (7mn).
  

• Revenue: Average ARPU = $50 , Data as % of revenue =30%-35%
• Products : Bundle smart phones.
• Technology : 3G, HSPA, WIMAX , EVDO , LTE.

For non technical readers Data services on GSM has evolved from GPRS/Edge to 3G(UMTS) to HSPA, HSPA+ and introduction of LTE networks.

Lets understand why AT&T aquired T-Mobile :

• Addresses wireless spectrum challenges facing AT&T, T-Mobile USA, their customers, and U.S. policymakers

-Provides the spectrum and network efficiencies necessary for AT&T to address impending spectrum exhaust in key markets driven by the exponential growth in mobile broadband traffic on its network.
-Because AT&T has led the U.S. in smart phones, tablets and e-readers – and as a result, mobile broadband – it requires additional spectrum before new spectrum will become available.

• Improves service quality for U.S. wireless customers

AT&T and T-Mobile USA customers will see service improvements - including improved voice quality - as a result of additional spectrum, increased cell tower density and broader network infrastructure.

• Coverage and Expands 4G LTE deployment to 95 percent of U.S. population – urban and rural areas

- AT&T will immediately gain cell sites equivalent to what would have taken on average five years to build without the transaction, and double that in some markets.
- Combined AT&T and T-Mobile will be able to deliver LTE service to 46 million more Americans than they could separately.

Key Message from above are :
- Mobile Data Growth is implied reason needing spectrum, coverage and faster LTE roll out
- Its not about aquiring subscribers through merger

Government Concern are:
- AT&T and T Mobile merger will create Duopoly with Verizon .
- Will this eroded competitive landscape and government wants more competition in data services
- Will this serve good for US economy and government aspiration to have 95% penetration of data services.

Lets see how this compares to Indian market which has seen full controversies with 2G spectrum.

INDIA Market

• Subscribers:India has 9 active operators with Airtel (142 mn) , Reliance (115mn), Vodafone (113 mn) , TATA(80 mn), Idea (72mn) , BSNL (70 mn) , Aircel (44mn ) followed by small operators who were given licenses under controversial scam.
  

• Revenue: Average ARPU = INR 200-250 , Data as % of revenue =15%, Teledensity= 67%
  
• Products : Bundle expensive smart phones but unbundled phones mostly
• Technology : 3G, HSPA, WIMAX , EVDO with LTE on horizon
  

Recent Market trends (last 2 years)

• Penetration of smart phones
  
• Focus on data services with roll out of 3G networks by all major operators with exception of new 2G license operators who opted out of 3G race
  
• 3G auction with exorbitant spectrum prices driven by lack of 2G spectrum as paid high price in circles where they are market leaders for voice.
  
• No Pan India 3G provider , meaning 3G roaming will be reality
  
• Broadband WirelessAccess (BWA) licenses in bits and pieces with Reliance as Pan India player, this allows use of LTE for data services. Looks LTE action will happen in near future.
  

Mergers case in India

• New license operators financial condition is not good will look for partner. Existing Indian operators interest in them is very bleak. Foreign operator may invest to expand into emerging market.
• Data growth is at initial stage , operators are still in roll out stage making merger distant dream . Once data reaches to 50% of revenue this may change as spectrum , coverage , service quality vs individual investment may push for merger.
  
• Operator will look by circle before collaborating merger , Pan India merger looks remote.

Summary
Acquisition trends are shifting more into synergy driven by
- Technology adopted and maturity like LTE, HSPA, WiFi etc . If operators see one is in advance stages of roll out , other can leverage same.
-Spectrum and network coverage synergy
- Data service will be key decision criteria
- Acquisition into different continents will continue.

My Blog: Vivek Madan - Is India loosing direction in Economic Growth : Revolution like Middle East can happen in India. Power of People

Last 2-3 years brings forwards lots of things to ponder :
- Scam worth thousands of crores (Spectrum , Common Wealth etc )
- Wealth by manupulating policies and resources of country
- Helpless of leader to reign government
- Lack of leader to take this country to league of super power

I think worlds biggest democracy has to handle these developments carefully as citizens of this country are frustrated on various accounts :
- Unemployment , although government says of 10% GDP growth
- Decline in poverty line with inflation at peak seems confusing
- Proper and affortable Education and Health services available to mass. Ask your driver and maid , they will tell issues on same.
- Large scale looting of natural resources into hands of business houses making their wealth grow exponentially. Scams , the way lands are allocated for SEZ (Speacial economic zone), oil /gas exploration , telecom licenses etc to name few.
- Lack of inspiring leader . How may of us look forward to hear our leader during republic day , independence message. Atleast not me.
- You can travel from Metro to other parts and can easily witness the gap. Which clearly means hardly 10 -20 % of population is reaping the benefits.
- Agriculture is one which has maximum impact on our economy and is the one which is left to GOD to take care.

During Finance budget , I see people glued to TV sets . In my last 2o years , i have never understood how it will impact my and ordinary citizens life. Its all about taxes , FDI etc .

There is ugent need to draft Vision for India and Government should present yearly to citizens with scorecard on its performance. This must include:
- Whats its plan to provide affordable Education , Health and Living . This is key and in simple terms citizens should connect and appreciate.
- Focus on 5-6 Industries proactively where india can be top 3 , rather than leaving to business houses .
- Articulate and regulate clear policies where applicable for next ten years.
- Protect consumer agains dumping , low standard products ex Gold Drinks, medicines etc . Are we not sesitive to Health of Indians ?
- Involve civil citizens in key decisions , shaping future

Recent agitation by Anna Hazare is testimony to the fact that although we have democratic elected leadership . Unrest like one in Egypt , Libya are possible in India , only it requires trigger and thoughtful leadership like Mahatma Gandhi to lead who united India for cause.

Its time our leaders realize power of citizens , otherwise day is not far when small phase of economic depression can have huge unrest in India.

Its high time India need a leader who can take this country into league of super power. We need leaders and not economist to lead country. We don't need image sensitive leaders who wants to potray themselves weak and allows mass corruption under , also leader who can realize India potention rather then playing into hands of appeasing USA and other nation.

Above are my personnal assessment and you may have different opinion. Those who are harping benefits of economic growth may not agree , I am also one of them but as general citizen we all feel there is something wrong the way India is being led at this time.

JAI HIND