India attracting Gulf telecom operators

May 24th, 2008 - 8:42 pm ICT by admin  

By Aroonim Bhuyan
Dubai, May 24 (IANS) The Indian telecom market has come into sharp focus in the Gulf with a number of telecom operators of the region expressing their intention to foray into the subcontinent. Even as the United Arab Emirates (UAE)-based telecom operator Etisalat is eyeing a $1-billion stake in India’s Tata Teleservices, Bahrain’s Batelco said that it was keen to enter the Indian market.

“The big opportunities are in Africa, or India and Asia-Pacific,” media reports quoted Batelco’s Peter Kaliaropolous as saying. “Really, in the rest of the Middle East, there’s nothing.”

Qatar’s Qtel has also said that it was interested in the Indian GSM market so that it could “capitalize on the country’s growth potential”.

“The reasons behind this interest in the Indian telecom market by Gulf operators are not too difficult to see,” Abhijit Barua, head of strategy at leading Indian ICT company Sify Technologies, told IANS.

“In India the telecom penetration level is very low compared to the Gulf.”

Etisalat, he said, has penetration levels of around 150 percent in the UAE with a subscriber base of 6.4 million as of 2007.

The UAE’s other telecom operator Du got 1.5 million subscribers within a year of starting.

“At the same time, the Indian telecom market has opened up in a major way with the authorities issuing around a dozen fresh licences in the recent past,” Barua said.

“Among those who have acquired these new licences are companies with non-telecom background and they would obviously be looking at having partners with telecom technology expertise,” he said.

Under Indian rules, foreign firms can acquire up to 26 percent stake in an Indian operator.

Videocon, for one, has been approached by several Middle East telecom operators.

“There is interest from Middle East firms. Etisalat, Qatar Telecom have approached us,” published reports quoted Videocon chairman Venugopal Dhoot as saying.

Another reason why the Gulf companies have keen interest in the Indian market is that these companies have huge cash surplus and the Indian market gives wide-ranging opportunities.

Etisalat, for example, had revenues of $6 billion in 2007 and profits of $2 billion in 2007 with a subscriber base of 6.4 million.

Bahrain’s Batelco too delivered strong revenue growth, ending the first quarter of 2008 at 78.1 million Bahraini dinars ($207 million), a rise of 17.4 percent from the same period the previous year.

This happened despite increased competition with the country’s telecom authorities opening up the market.

“We will continue to invest in our chosen segments and will continue to further transform Batelco to effectively face additional competition in the future,” Batelco’s Kaliaropolous was quoted as saying.

Telecom rates in the Gulf are among the highest in the world, while in India it is among the lowest.

Yet the opportunities in India remain too lucrative to be ignored.

“Though India has the lowest service rates in the world, telecom companies in India have still made their cost structure very profitable,” Sify’s Barua said.

It is not mobile services alone where opportunities exist in the Indian market.

There is scope in a large number of additional services too.

While operators like Bharti, Reliance and state-run BSNL have both wireline and wireless operations, companies like Vodafone and Idea have only wireless operations and they would very much like to offer additional services, according to Barua.

Another avenue opening up in India is the mobile virtual network operator (MVNO) under which a foreign firm can use the existing infrastructure of an Indian operator and then customize its own products and sell these under its brand name.

The opportunities in the Indian telecom sector are seemingly limitless.

“However, the biggest hitch is that most companies are concentrating on a few pockets,” said Barua.

Cities like Mumbai and Delhi already have penetration levels of close to 100 percent with people subscribing to more than one telecom service.

Vast areas in rural India still don’t have basic telecom connectivity. This is where India’s incredible telecom growth story is likely to head, he said.

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