The telecom sector is bracing for the next big corporate battle, with incumbent operators readying a war chest of nearly ₹40,000 crore to take on the combined might of the recently reconciled Ambani brothers.
According to industry sources, Airtel, Vodafone and Idea Cellular are preparing a blueprint that envisages increased capital expenditure on networks, a quick rollout of 4G infrastructure and an overhaul of their customer services platform to be ready for the anticipated onslaught from Mukesh Ambani’s Reliance Jio.
The battle lines are clearly drawn between the top three operators, on the one hand, and an alliance between Reliance Communications, Reliance Jio, MTS and Aircel, on the other.
The first salvo was fired by the Ambani camp, which recently announced a spectrum sharing and trading deal in addition to a possible three-way merger between RCom, Aircel and MTS.
The incumbent operators have been strategising in their respective boardrooms to figure out a response, but are reluctant to admit that their efforts are directed at countering RJio.
Upgrading devicesVodafone and Idea Cellular, which until six months ago had no plans to launch 4G services, are rapidly launching the service in new cities and towns almost on a daily basis.
Vodafone is pumping in ₹13,000 crore more in investments in FY16, of which ₹8,000 crore will go to upgrade and expand network coverage. Similarly, Idea Cellular has scaled up investments from ₹3,500 crore to ₹6,000 crore.
However, “too much credence” is being given to the supposition that the enhanced capital expenditure was motivated by the entry of Reliance Jio, said Himanshu Kapania, Managing Director, Idea Cellular. If anything, they are required because of the “very sharp rise” in the number of consumers buying 3G and 4G devices, he added.
For instance, of Idea’s 170 million subscribers, around 55 million now own smartphones that support 3G or 4G. “These smartphone owners had upgraded in the last one year, and of the 55 million, six million have 4G devices,” Kapania said.
Vodafone is also looking to increase its spectrum holding through sharing and trading deals. “We are interested in buying some assets and increasing our footprint, either through trading or sharing or even through fresh auctions,” said Sunil Sood, CEO, Vodafone India. Airtel, on the other hand, is spending ₹60,000 crore over the next three years to ramp up its network.
In addition, Airtel has initiated a slew of initiatives, including simplified tariffs, doing away with complex processes to deal with consumer complaints and incentivising the sales force to get — and retain — quality customers
“It will take a while for Reliance to catch up with the top three operators, who now control 75 per cent of the market, but incumbent players are clearly digging into the trenches for a long battle ahead,” said an industry analyst.